Joint Forum on Actuarial Regulation: 2016 risk perspective update
News types: Statements
Published: 12 January 2017
PN 3/17
The Financial Reporting Council (FRC) has published a report Joint Forum on Actuarial Regulation: 2016 risk perspective update (PDF). The report is an update to the feedback statement ‘ Joint Forum on Actuarial Regulation: A risk perspective ’ published in July 2015. The update includes the JFAR’s current perspective on risks to the public interest where actuarial work is relevant and reports the JFAR’s activities.
The report notes that, despite the evolving regulatory, political and economic landscape, the high-level risks identified previously remain broadly unchanged.
Two areas of risk have been prioritised for review in 2016/17:
The Financial Reporting Council (FRC) has published a report Joint Forum on Actuarial Regulation: 2016 risk perspective update (PDF). The report is an update to the feedback statement ‘ Joint Forum on Actuarial Regulation: A risk perspective ’ published in July 2015. The update includes the JFAR’s current perspective on risks to the public interest where actuarial work is relevant and reports the JFAR’s activities.
The report notes that, despite the evolving regulatory, political and economic landscape, the high-level risks identified previously remain broadly unchanged.
Two areas of risk have been prioritised for review in 2016/17:
- the risks posed to the work of the actuary by the low interest rate environment; and
- the risk to the supply of relevant actuarial support in with-profits life assurance business.
The update summarises the findings from three thematic reviews carried out during 2015/16:
- Joint Forum on Actuarial Regulation: Review of transfers from Defined Benefit to Defined Contribution Schemes (PDF);
- JFAR Review: Group Think; and
- General insurance provisions.
Stephen Haddrill, CEO of the FRC and Chair of the JFAR said:
“Actuarial work is central to many financial decisions in insurance and pensions and is an important element in other areas requiring the evaluation of risk and financial returns. During 2016 the JFAR continued its work in considering the risks to the public interest where actuarial work is relevant.
This update is written against a backdrop of an evolving regulatory, political and economic landscape, nonetheless, a key finding is that the high-level risks previously identified remain broadly unchanged.
The JFAR remains committed to the ongoing consideration of risks relating to actuarial work particularly those related to the management of defined benefit pension schemes and the impact of the low interest rate environment.”
Notes to editors:
1. The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
2. The Joint Forum on Actuarial Regulation (‘JFAR’) was established in 2013 by the Financial Reporting Council, the Institute and Faculty of Actuaries, the Financial Conduct Authority, the Pensions Regulator and the Prudential Regulation Authority. The JFAR is a unique collaboration between regulators to co-ordinate, within the context of its members’ objectives, the identification and analysis of public interest risks to which actuarial work is relevant. Actuarial work is critical to many members of society, including;
| Individuals | The financial system | The Community as a whole |
|---|---|---|
| Insurance policyholders | Stability of the UK financial system | Taxpayers |
| Pension scheme members | Consumers / savers / potential policyholders | Wider economic activity |
| Investors (shareholders) | Confidence in the accountancy / actuarial professions | Welfare and social inclusion |
| Creditors (bondholders) | Government / regulators / auditors | The environment |
| Creditors (other) | Boards of companies / sponsors of pension schemes | Future generations |
| Employees | ||
| Suppliers |