- The general principle of impartiality
- Exercising professional judgment
- Resolve or desist from acting
- What would a fair-minded observer think?
- Ethical bias
- Technical bias
- Institutional bias or Group Think
- Conflicts of interest
5.1 Principle 3 of the Code provides that:
5.2 Impartiality can be described as the principle that decisions ought to be based on objective criteria, rather than on the basis of bias, prejudice, or preferring to benefit one person over another for improper reasons.
5.3 A Member exercising professional judgement will need to do so, and be seen to do so, in a way which is free from bias (actual or perceived) and that ensures they are able to give advice which is independent of any personal interests or feelings.
5.4 From time to time, Members may be exposed to situations that risk impairing their objectivity. If the circumstances of an instruction, relationship with a user and/or other factors increase the risk of compromising the impartiality of a Member’s professional judgement over the course of a piece of work, then the Member may be better not to accept the instruction. If, having accepted an instruction, a Member identifies circumstances that compromise, or are seen to compromise, their professional judgement, the Member will need to desist from acting; this may involve explaining the situation to the user and helping them make alternative arrangements.
5.5 When thinking about impartiality, Members will need to ask themselves whether there is any conflict between the advice which they are giving, or decisions which they are making, and their own personal interests. A good test is to imagine a fair-minded and informed observer: would this person have any reason to suspect that your impartiality might be compromised? If so, action will need to be taken to rectify this.
5.6 Threats to a Member’s impartiality might include being asked to act in a way that contravenes a Member’s duties under the Code, other professional requirements or even the law. Members directly employed by an organisation might face particular pressures to carry out work in a way that is favourable to the commercial interests of that organisation and will need to be careful to avoid misleading regulators, boards or other users.
5.7 When considering the potential for bias, Members need be aware that there are many forms of bias, including ethical and technical bias. Some examples of bias might include situations where a technical methodology is selected because the Member is familiar with it, even if others are more appropriate (that is not to say that using a technique that can be applied quickly is necessarily wrong; rather that Members need to be clear about the justification for their chosen approach) or where a Member is reluctant to challenge the work of a colleague who is also friend, even though such a challenge would be appropriate.
5.8 Members can mitigate the risk of acting in a way which is biased by being aware of the potential for bias and taking this into account when making decisions or providing advice to ensure they are acting impartially. Being open to appropriate challenge from others and being willing to change or adapt one’s approach can also help to mitigate the risk of acting in a way which is biased, as it is possible to hold a bias and not even be aware of it.
5.9 A further threat to impartiality that Members ought to be aware of is the potential influence of ‘Group Think’ in their decision-making. Group Think is defined as “the tendency for one’s own judgement to be influenced by the apparent consensus view of assumptions, methods, processes or approaches leading to a reduction in the variety of ideas in the market”.
5.10 One of the dangers of Group Think is that it has the potential to result in poor conduct or systematic business failures brought on by working environments in which perspectives are not challenged and people act in the same way as others do without sufficient justification.
5.11 Members can address this risk by being aware of their propensity to participate in Group Think in the first place and by being prepared to challenge or speak up where processes or approaches are not appropriate for the work being carried out. When making decisions in relation to a piece of work, Members may wish to ask themselves whether, in following the crowd, they are doing so because it is easier (or they are reluctant to challenge the status quo) or because it is appropriate to the work.
See further on Conflicts of Interest
 This is the test for bias as set out by Lord Hope in Porter v Magill  2 AC 357, which states that: “The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the [Tribunal] was biased”.
 This is the definition of “Group Think” as set out in the review by the Joint Forum on Actuarial Regulation’ on Group Think - https://www.actuaries.org.uk/documents/jfar-review-group-think
The Review includes guidance for individual actuaries on how to address Group Think.
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Delivered by the IFRS 17 Contractual Service Margin working party.
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