6.1 Principle 4 of the Code provides that: “Members must comply with all relevant legal, regulatory and professional requirements”.
6.2 This includes any rules governing matters in the area in which a Member is practising, for example, pensions or financial markets legislation, as well as standards imposed by regulators that regulate the Member or their work. It also includes compliance with other relevant legislation, such as equality and diversity legislation applicable to the Member.
6.3 To be able to comply with their obligations under the ‘Compliance’ principle, Members need to be aware of, and understand, the relevant laws and regulations which apply to the work they are undertaking, and ensure that they keep abreast of any changes or developments to those laws and regulations.
6.4 It is important to bear in mind that the relevant legal, regulatory and professional requirements will not necessarily always be those that apply in the geographic location where the Member carries out their work. For example, where a Member works remotely but carries out work for an entity in another country. The IFoA’s Actuarial Profession Standard (APS) APS X1: Applying Standards to Actuarial Work, sets out how to determine which standards are applicable to actuarial work. Guidance for Members to assist them in determining which standards to apply is contained in the accompanying guide which can be found on our International Standards and APS X1 webpage.
6.5 As stated earlier in this Guidance, from time-to-time certain situations might arise in which the legal requirements with which a Member is obliged to comply, appear, on the face of it, to be at odds with one or more of the principles of the Code. Where such a situation arises, the Code makes it clear that legal requirements will take precedence and the Member will not be treated as having breached the provisions of the Code if they are complying with an obligation under an applicable law.
6.6 The IFoA is committed to maintaining public confidence in the actuarial profession. The amplifications to Principle 4 of the Code require Members to disclose certain matters to the IFoA, which may be relevant to the reputation of the profession and the protection of the public interest.
6.7 Amplification 4.3 provides that:
6.8 The IFoA requires that Members maintain a high standard of professionalism and ethics. The events that require to be reported are potentially indicative of a member having failed to maintain the required high standard of professionalism and ethics. As well as threatening the public interest, these events risk the public perception of a Member, and therefore the reputation of the profession. The IFoA requires that these events are reported so that the IFoA can consider whether any action needs to be taken, which may include disciplinary proceedings.
6.9 As stated in amplification 4.3, Members must disclose certain professional or regulatory findings; certain civil court findings; and certain criminal findings.
6.10 The first part of the amplification requires Members to disclose to the IFoA if they become subject to an adverse final determination, judgement or disqualification by a regulatory body acting in the exercise of its statutory or regulatory function. Many Members will be subject to regulation by multiple regulators, sometimes across different jurisdictions. This requirement means that a decision against a Member by a body such as (but not limited to), a financial conduct regulator, a pensions regulator, or a companies registry must be reported to the IFoA.
6.11 The requirement is to disclose ‘an adverse final determination, judgement or disqualification’. This means that the duty to disclose arises once the regulatory process is complete, and not when an investigation or tribunal is ongoing. There is no duty on Members to disclose a hearing or investigation which results in the acquittal of the Member. However, the duty requires any warning, disciplinary action, or upheld complaint to be disclosed, even where this does not result in penalty or disqualification.
6.12 Members may become subject to an adverse professional or regulatory finding in a non-personal capacity. For example, a company of which a Member is a director, a firm of which a Member is a principal, or a trust of which a Member is a trustee may become subject to penalty or regulatory action. In these circumstances, if the Member is in a position of control within that entity, the determination, judgement or disqualification of that entity should be reported to the IFoA, in the same manner as if the Member had been individually responsible.
6.13 The second part of the amplification requires Members to disclose to the IFoA if they become subject to a court finding of fraud or dishonesty. A court ‘finding’ is a decision by any level of public court in any jurisdiction, and includes a decision of a tribunal, or other lower level court. A court finding does not include the decision of an adjudicator or the determination of any other alternative dispute resolution.
6.14 The requirement to disclose a court finding of fraud or dishonesty arises from the IFoA’s duty to ensure the integrity of the profession and its Members. The requirement includes civil and criminal matters but it only applies to Members where a decision is made against a Member. Any judgement, decree or disposal which finds that the Member has acted fraudulently or dishonestly must be disclosed. This amplification does not include a requirement to report a negative comment made about a Member in their capacity as litigator or witness in a court process.
6.15 The third part of the amplification requires Members to disclose to the IFoA a conviction of a criminal offence. This requirement applies to a conviction in any jurisdiction (not just the jurisdiction in which the Member is resident) and applies to a conviction by any level of court.
6.16 The requirement to disclose a criminal conviction applies to a Member’s professional and personal life, and it is required to ensure that the IFoA is aware of any matter that may cause detriment to the reputation of the profession.
6.17 In some jurisdictions, minor criminal offences, such as some road traffic offences, littering, evasion of parking fares, and other minor infringements can be dealt with by police, regulator or government agency without referral to the criminal prosecution system. Typically in those situations, the enforcement body would have the power to dispose of the matter without prosecution by offering the offender an alternative remedy. The alternative remedy may be a warning, penalty or fine, which if accepted by the offender (and assuming any fine is paid timeously) means that no prosecution follows and the matter is not referred to court. The acceptance of an alternative penalty means that no criminal conviction results. Accordingly, these matters do not require to be reported to the IFoA, provided that the alternative penalty is accepted and any resultant fine is paid.
6.18 By contrast, a matter which does result in prosecution (even if the Member views it as a minor or traffic related offence) must be disclosed to the IFoA if the Member is found guilty of the offence through a judicial process. A conviction by a court (of any level) requires to be disclosed regardless of the weight or severity of the subsequent punishment for that offence.
6.19 The amplification provides that the disclosure should be made ‘as soon as reasonably possible’. The duty to disclose does not arise until the final disposal of the matter, after which, the Member is expected to report to the IFoA without delay. Even if a Member realises that they did not report the matter as soon as reasonably possible they should still report the matter at the time of realisation and explain why it was not reported earlier.
6.20 Disclosures to the IFoA under Principle 4 should be made by using the self-referral form, which can be found on the IFoA’s raising a concern webpage.
6.21 The requirements to disclose are mandatory within the Code because the circumstances giving rise to the finding or conviction may be relevant to the Member’s professionalism. In some circumstances, the finding or conviction will not be materially relevant to the individual’s membership of the IFoA. However, this is a matter for the consideration of the Disciplinary Investigations team.
6.22 If the IFoA considers that the disclosure is potentially relevant, the Member may become subject to an investigation under the Disciplinary Scheme. The IFoA does not hold a prescribed list of situations which will or will not result in investigation. Each disclosure will be considered on the basis of its own facts.
6.23 As the disclosure of the stated events is mandatory, failure to disclose these matters as soon as reasonably possible may amount to a breach of the Code, and may amount to Misconduct. Members who are unsure about whether they must disclose a finding to the IFoA should discuss the matter with the Disciplinary Investigations Team at disciplinary.enquiries@actuaries.org.uk.