Ethics, trust and integrity

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Public trust in the professions. Ethics, trust and integrity.
One-day conference, 25 February 2010
Speech by Sir Philip Mawer, Chairman, Professional Regulation Executive
Committee
It is a great privilege for me to be invited to address this conference and a pleasure to be
able to welcome you to Staple Inn, the head office of the UK Actuarial Profession. I am
looking forward greatly to learning from today’s presentations and discussion and I must
begin by congratulating Jane Hern and Chris Megone and the conference organisers for
assembling such an interesting set of workshop presenters.
I want also to thank on your behalf the staff of the Actuarial Profession for the practical
arrangements they have undertaken to make today’s conference possible. This event marks
an important step for the Profession as it seeks to take its place alongside others in
encouraging wider public debate on the value of the professions as a whole and on the best
means of regulating them.
As you will have gathered from Chris’s introduction, my particular interest in the issue of
public trust in the professions stems today from my role as the first lay chairman of the
Actuarial Profession’s Professional Regulation Executive Committee – hardly a snappy title
but the body within the Profession, consisting of both actuarially qualified and lay members,
which is particularly charged with undertaking the Profession’s responsibility for the ethical
regulation of its members. I shall therefore make a number of references in what I say to
what we in the Actuarial Profession are seeking to do to achieve our ambition of becoming a
first class professional regulator.
My interest in these matters goes back further, however, to my days trying to regulate
politicians, first as the Parliamentary Commissioner for Standards for some six years and
now as the Prime Minister’s Independent Adviser on Ministers’ Interests. I suppose the view
we all traditionally have of politicians is best summed up in Aesop’s remark that “We hang
the petty thieves and appoint the great ones to public office”.
Politicians of course probably don’t qualify as a profession. They are not subject to a single
governing body; there is no entrance qualification as such; and there is no test of ongoing
competence, unless you regard the ballot box as providing one – although I suspect that
decisions about how to vote are influenced by many factors, of which an assessment of a
politician’s competence is only one. However, the experience I have gained in the area of
political regulation certainly informs much of what I shall say, and my growing experience of
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the Actuarial Profession suggests that many facets of that experience are common to all who
seek to regulate those in a position of public trust. Moreover, the actions of politicians
certainly affect the status and well-being of the Professions closely, an issue to which I shall
return later.
My chief aim today is to examine the issue of public trust in the professions, to suggest how
and why that trust is challenged, and to identify what the professions are doing and must do
to ensure that public trust in them continues. But I also want to couple that
acknowledgement of the responsibility resting on the professions with a challenge to
politicians, the media and the public to value the role of the Professions, and to recognise
the positive part they – politicians, the media and the public - have to play in building
confidence in the professions rather than knocking that confidence down.
First, some definitions of terms. Professions are, speaking generally, learned occupations
whose governing body is responsible for regulating admission to the occupation; for directing
the behaviour of their members within that occupation; and for providing leadership to those
members, acting not merely in their interest but in the interest of the public in matters
concerning the profession. Professions have long been associated with the ideas of vocation
or calling and of service, which together require the pursuit and application of expertise for
the public good or in the public interest.
The characteristics of a profession were set out most clearly by Lord Benson in the House of
Lords in 1992. He offered nine criteria for a group to be considered a profession, including
that:
o The rules and standards enforced by the Governing Body should be designed
for the benefit of the public and not for the private advantage of the members.
o Work is often reserved to a profession by statute - not because it is for the
advantage of the member, but because of the need to protect the public.
o In its specific field of learning, a profession must give leadership to the public
it serves.
This putting of the public interest before the individual needs of their members is what gives
professions the right to self-govern. With it comes an acceptance that specific professions
are best placed to govern their members because they have knowledge of their occupation
that others do not have.
If professions are to occupy this privileged status, their stakeholders, including their clients,
must trust them. But how do we define “trust” in this context?
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Many of you will have read the excellent summary of existing research on professional
standards and consumer trust by Jackie Wells and Mary Gostelow, which was
commissioned by the FSA and published last November. Trust and trustworthiness, they
say, “... are elusive qualities, hard to define and harder still to measure”. My own belief is
that, in the context we are considering, trust involves a willingness to place confidence or
faith in another person or organization to fulfil a course of action competently and ethically.
Trustworthiness is the sum total of the qualities which earn that confidence.
A key point I wish to underline is that trust is a quality that inhabits a relationship between
two or more people or organisations. It is the fact that it exists in relationship that I want to
stress. Much emphasis is rightly and understandably placed on the need for organisations or
individuals to earn or justify trust. However, trust also has to be granted. It is a truism that
trust is easily lost by the actions of a Profession or an individual. It is less commonly
acknowledged that trust cannot exist except as part of a reciprocal relationship, in which the
other party in the relationship has to be prepared to step out in faith if the bond of trust is to
be established.
In the context of trust in the Professions, this means that a Profession has to work hard to
justify or deserve public trust. However, it also means that the public too - and those who
stand as proxies for the public, whether in government or the media - have their part to play
in ensuring that relationships of mutual confidence are preserved.
I have described the nature of the professions and the concept of trust. A brief word now
about what we mean when we refer to “the public”. Again, this is a term we need to define
carefully within its context. Sometimes we mean by it public opinion in general, as
established through opinion surveys. Sometimes we mean the views expressed by particular
spokespeople, by politicians, the media or other stakeholders. Sometimes we have in mind
the views of a particular individual or client who has had dealings with the Profession in
question. So I make a plea for clarity and specificity about to whom we are intending to refer
when we speak of “the public”.
Putting all of these elements together, it is a common perception that public trust in the
Professions has declined seriously in the last 20 to 30 years. I am not sure how well based
in research that perception is but it is certainly widespread. This perceived lack of trust has
been attributed to many factors, some internal to the Professions themselves, others
external in character. Among the former are the effect of widely publicised failures in ethical
standards or malpractice (such as the Equitable Life debacle or the Harold Shipman case)
and occasional instances of members of a Profession questioning the need for or advantage
of abiding by its rules. Among the latter is the widespread lack of deference towards any
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institution (from the Monarchy downwards) in today’s society, increasing individualism, rising
levels of education leading to a more questioning approach, and a widespread emphasis on
checking and regulation (what Smith and Sachs, quoted in the paper I mentioned earlier,
have referred to as a move to “the audit society”).
Certainly, all professions find themselves faced with demands for greater transparency and
accountability. The Actuarial Profession is no exception and it has responded in a similar
fashion to many others. The Profession has traditionally prided itself on having entrance
exams which are among the hardest of any. It has for some time had an externally
invigilated complaints and discipline scheme. In the last year, it has introduced a new shorter
Code of Conduct – the Actuaries’ Code. It is currently reviewing its requirements for
continuous professional development (CPD), and debating the production of additional
guidance for members on such subjects as conflicts of interest and whistle-blowing.
In a recent report to the FSA, the Professional Associations Research Network (PARN)
identified three pillars of any effective system of professional regulation, three ways of
ensuring that professionals are competent and trustworthy and provide professional services
that meet expected standards. Each of these pillars are, the authors of the report suggested,
essential to the effectiveness of professional regulation. The three pillars are:
o Entry standards
o Complaints and discipline, and
o CPD and positive supports for ethical behaviour.
The first two are more traditional ways of ensuring standards: the third – CPD – is a newer
and still developing aspect of arrangements. Traditionally, the professions applied a system
of “regulation by exception”; that is, they relied on strong entry qualifications to weed out
undesirables, and on complaints coming to the attention of the regulator to deal with any
who escaped the initial clearing of the ground. The third pillar embodies a recognition, not
that the traditional approach has to be abandoned, but that on its own it is not enough.
Regulation by exception – reactive regulation – needs to be accompanied by proactive
regulation, including the continuous monitoring and evaluation of professional practice.
In the Actuarial Profession we find ourselves engaged on a similar journey to that on which
many other professions are engaged. Some key features of this are:
o We are moving from a rules-based to a principles- based regime, but find ourselves
wrestling with how and when to supplement the principles with guidance to members
on specifics.
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o We are increasingly seeing the need to emphasise proactive quality assurance
mechanisms in the work place as a means of supplementing reactive regulation
through codes and discipline schemes.
o We are looking to define the skill sets or competencies we expect of actuaries, not
just at the point of entry but throughout their careers.
o We are increasingly conscious of the importance, not just of technical skills but of
those skill sets which include managerial and presentational skills and are about
aspects of professionalism in its widest sense.
o We are considering moving from inputs-based to outputs-based CPD, and as part of
this process are acutely aware of the need to improve the range and quality of the
CPD we offer in professionalism and other skills.
o We are very much aware of the importance of the working environment to the
professional development of actuaries and whilst we have traditionally regulated
individuals, our members, we are increasingly looking to work closely with firms in
advancing our regulatory agenda.
So we are focussing hard on all of the three pillars identified by PARN, especially on the
third one.
However, I believe that the three pillars identified in the PARN report need to be seen in the
wider context of what I would call the prevailing ethos or culture of a profession. If the three
pillars are regulatory mechanisms, the culture of a profession is the vital fourth ingredient,
which enables the three pillars to achieve their maximum strength. So initial training and
CPD need to be seen, not just as being about the acquisition of skills but as being about the
shaping of members in the culture of a profession. We are not in the business simply of
training but of formation, of forming members in the values and expectations of the
Profession of which they seek to be, and then are, a proud part.
Leadership is vital to the development and transmission of this culture. Exhortation and
professions of commitment to high-sounding principles are not enough. Those who lead a
profession have to be seen to model in their actions the virtues it professes. Only in this way
is right behaviour exemplified and widespread trust built up.
So, if public trust is to be encouraged, there is a big task facing each of the Professions, not
only in getting and keeping their regulatory houses in order but in continually modelling the
behaviour to which they say they aspire. I hope that we in the professions will increasingly
see value in learning from each other in this difficult task.
However, as I have said earlier, trust is a quality that inhabits a relationship. Governments,
the media and the public must play their part in building and maintaining it.
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Governments, and I include with them statutory regulators, and the media must be seen to
value the contribution the professions collectively make to the fabric of society. The
professions are a vital part of the social capital of the UK. They must be recognised for the
valuable functions they perform on behalf of society, as well as on behalf of their immediate
clients and members.
As part of this, professionals have to be treated by everyone (including the professions
themselves) as grown-ups. Space must be preserved for the exercise of individual
professional judgement, and recognition be afforded that not everything a profession does
can or should be measured and recorded. Sometimes professionals will get their judgements
wrong and they must be held to account when they do so. But we should not fool ourselves
into thinking that we can regulate mistakes out of existence.
Next, the media. I value the fact that we have a free and fearless press. They are right to
identify and criticise shortcomings in the professions, as in other walks of life. However, they
need to weigh carefully the potentially corrosive long term effect on levels of public
confidence of the way they report on individual cases. I well recall Lord Scarman saying to
me when writing his report on the Brixton disturbances that, while he would not hesitate to
criticise individuals and organisations where the evidence clearly called for it, he would
exercise great care indeed not to report in such a way as needlessly to damage public
confidence in institutions vital to society. It is a precept I have ever since borne in mind.
Finally, individuals, whether clients or stakeholder groups, have a responsibility too – a
responsibility above all to consider each case on the evidence and to avoid stereotyping and
caricaturing. To take an example, it may be amusing to define the word politics as being
derived from the Latin “poly” meaning “many”, and “tics” meaning “blood-sucking parasites” –
it may be amusing to adopt such a view of politics and politicians but such an approach, oftrepeated,
does nothing to help break down traditional stereotypes of those in politics or to
build confidence in what I believe is not only an inevitable but a vital part of community life.
To conclude, trust in the Professions may be less strong than it was, and those of us in them
must work hard to ensure that it is sustained rather than eroded. But we should not allow
ourselves to be bullied or regulated out of our birthright. We need to assert more loudly and
together the value to society and the public interest of what we do. We also need to draw
clearly to the attention of both governments and the public the active part they have to play
in recognising the value of the contribution the professions continue to make, and in helping
ensure that confidence in that contribution is not undermined.