Actuaries are warning that proposed government regulations for the sector could “undermine the profession” and “lead to a lowering of standards”.
The Institute and Faculty of Actuaries (IFoA) also urged the government to clearly define the remit of its proposed new regulator for actuaries to prevent practitioners being subject to different rules.
The IFoA’s call follows publication of the government’s response to its consultation on ‘Restoring trust in audit and corporate governance’.
Within its response government set out plans to proceed with reforms that include:
- Establishing a new regulator, the Audit, Reporting and Governance Authority (Arga), with the overarching objective to protect and promote the interests of investors, other users of corporate reporting and the wider public interest
- Recognising the public interest in large private companies, by ensuring they meet the same high standards of reporting and accountability as are expected from large listed companies
- Making large companies’ reporting more useful, with better information about the risks they face and what information has been assured, and strengthened review powers for the regulator
- Strengthening reporting about companies’ internal controls which underpin true and fair accounts, through the Corporate Governance Code
- Improving the quality of audit and making it more informative, driven by the regulator’s responsibilities for standards, inspection and approving registration of auditors for the most significant companies
- Boosting resilience, competition and choice in the audit market, through the introduction of a ‘managed shared audit’ requirement for FTSE 350 companies, and requiring an operational separation of audit and non-audit practices
- Making directors of the country’s biggest companies more accountable for significant failures in their corporate reporting and audit related duties
- Strengthening oversight of the accountancy and actuarial professions to build confidence in the professions and in the UK.
Concerns about proposals
While welcoming the planned new regulator and confirmation from government that the current division of responsibilities between Arga and the IFoA will be retained, albeit on a statutory footing, IFoA president-elect Matt Saker, said he had questions and concerns about the detail of government’s proposals.
“It will be critical to define the scope of Arga regulation clearly and carefully, focused on public interest activities, and how this regulation will be monitored and enforced, consistently and proportionately,” Saker said.
“There remains the real risk otherwise that some rules may still apply to members of the IFoA but not to non-members, who are undertaking the same work.
“We believe this could undermine the profession, lead to a lowering of standards and result in regulation spanning an ill-defined range of activities which would be difficult to monitor and enforce effectively.”
Saker added that in his view actuaries were “essential to a well-functioning” financial system.
“The work they do on a daily basis in the public interest ensures that people receive the pensions they are entitled to, that insurance products are priced accurately for customers and that companies hold sufficient capital to pay claims to their customers,” Saker continued.
“We look forward to continued engagement with government on the development and implementation of its proposals, in addition to other stakeholders, to ensure their success in protecting the public interest effectively and proportionately.”
