History and status
The handover of our responsibilities as a recognised professional body to the Financial Services Authority took place on 1 December 2001, when the Financial Services and Markets Act 2000 (FSMA 2000) came into force. We became a designated professional body under the FSMA 2000.
History
In the past, many actuarial firms chose to be regulated by the Institute of Actuaries as a recognised professional body under the Financial Services Act 1986 (FSA1986), while some firms chose to be regulated by the Personal Investment Authority or the Investment Management Regulatory Organisation or another recognised professional body. When the FSMA 2000 was introduced, actuarial consultancy firms needed to review their regulatory position to ensure that they complied with the regulations.
Status
Because of our DPB status, actuarial consultancy firms have had new compliance options available to them. The DPB regime is open to any firm, under certain conditions, that is controlled or managed by actuaries. A number of firms have found the DPB regime attractive and sufficient while others have obtained authorisation from the Financial Conduct Authority (FCA), either instead of, or as well as, making use of the DPB regime for part of their business.
Firms that are managed or controlled by actuaries are able to use the DPB rules directly. These firms are not authorised by the FCA. They are exempt from the main requirements of the FSMA2000 under Part XX of the Act and are able to undertake the non mainstream activity permitted by our DPB rules. DPB firms are not permitted to undertake any mainstream activity, this includes the provision of any specific investment advice to individuals.
Firms that are managed or controlled by actuaries are also able to use the DPB indirectly by becoming an authorised professional firm. These firms are authorised by the FCA. They need to comply with the FCA's rules, but they receive significant exemptions in respect of non mainstream activity, as set out in Chapter 5 of the FCA's Professional Firms Sourcebook. An authorised professional firm is permitted to undertake mainstream activity within the business; no special exemptions apply when undertaking mainstream activity.
Firms that are not managed or controlled by actuaries, and are authorised by the FCA, will not be authorised professional firms and therefore are not able to use the exemptions for non mainstream business. These firms need to comply with the full FCA rules on all their regulated activity.
If a firm wishes to be licensed by the Institute and Faculty of Actuaries as a DPB firm under Part XX of the FSMA 2000, or if it wishes to be licensed as an authorised professional firm, which will entitle it to receive significant exemptions in respect of non mainstream activity, an application must be made to the DPB.
The licence requires a firm to be bound by and comply or ensure compliance with the provisions of our DPB handbook.
We have produced an Actuarial Profession Standard for authorised professional firms. This applies to all members of the Institute and Faculty of Actuaries who are principals of an actuarial firm which satisfies the Financial Services Authority's definition of an authorised professional firm.
For more details, please contact +44 (0)20 7632 2100 or email the DPB.