Oversight of the Actuarial Profession
Published: 25 September 2023
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Introduction
The Financial Reporting Council is responsible for independent oversight of the Institute and Faculty of Actuaries (IFoA). The arrangement is underpinned by a Memorandum of Understanding (MOU) with the IFoA. There is also a communications protocol in place, detailing the way that the FRC and IFoA will fulfil the communication requirements of the Memorandum of Understanding.
Oversight of the IFoA
The FRC undertakes an annual programme of work to discharge its oversight responsibilities. This programme is based on risk and focuses on issues that could have an adverse effect on the public interest and on public confidence in actuaries.
The programme of work involves:
- Monitoring the regulatory activities of the IFoA in relation to its members;
- Monitoring other developments, assessing those issues that could adversely affect public confidence in actuaries;
- Where appropriate, undertaking more detailed research and making formal and informal recommendations to the IFoA or recommending the development of new standards.
The FRC references indicators in its Actuarial Quality Framework when assessing the activities of the IFoA. One aim of the Actuarial Quality Framework is to assist professional bodies in undertaking and reporting on the regulation of actuaries and the entities they inform and advise.
Actuarial Regulatory Reform
The current oversight arrangement was implemented in response to the Morris Review of the actuarial profession (published in 2005). Further details about the Morris and Penrose Reviews may be found in the National Archives.
Following the Kingman Review of the FRC (completed in 2018), the Government consulted on restoring trust in audit and corporate governance in 2021 and in May 2022 it published its response to the consultation.
The Government concluded that independent oversight of actuarial professional bodies (currently, the only such body is the IFoA) should be placed on a statutory footing and be carried out by the Audit, Reporting and Governance Authority (ARGA) which will take over from the FRC.