UK - Government reforms will prevent actuaries giving dual advice to schemes and their sponsors, the Faculty of Actuaries warns.
President Tom Ross said actuaries would have to choose between scheme and sponsor where previously they had serviced both.
Ross said the government’s “action plan” to boost member protection had put conflicts of interest under the spotlight.
And he added: “The potential for conflicts of interest for actuaries is greater than they have been in the past.”
Schemes and their sponsors often hire the same actuarial consultant to save costs.
But Ross believes the June 11 proposals will place actuaries – that advise both a scheme and its sponsor – in a position where they would not be able to give objective advice to either.
He said: “You can think of employers seeking to take steps – particularly if the legislation is seriously ominous – to minimise their risks, as the board of a company needs to look after the interests of its shareholders.
“If an actuary had knowledge of that, and was offered work by trustees, clearly you can’t unlearn what you’ve learned. You’re duty bound to take it into account and it just becomes impossible.”
The Actuarial Profession is not yet at the point where it has issued professional guidance forbidding actuaries from advising both a scheme and its sponsor, but Ross said that he “wouldn’t rule it out”.
One problem is a reluctance by actuaries to refer their clients to other actuaries for fear of losing business permanently.
But Ross stressed that if an actuary does have a conflict of interest, “they must step aside, no matter how reluctant they are to do so”.
He said: “I want to emphasise to members that there is nothing weak about doing that. If you’ve got a good relationship with your client, then they will understand that and once it’s all sorted, there is no reason at all that you should feel your ongoing position is affected.”
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