The Actuaries' Code

Actuarial Sep 10, 2023

The TV-series "The Wire" has a character called Omar Little .  He is a sort of Robin Hood in the series exclusively stealing from those that sell drugs and is one of the show's most memorable characters for many, and was President Obama's favourite character.  

He has a principle of only targeting people in "the game" and not harming bystanders that are not involved with the drug-trade.  Some say this "integrity" is part of what makes him such a memorable character in the series.  Omar describes it as follows:

A man gotta have a code

More on Omar below including snippets from the scene where he declares his code and challenges a police detective to follow their code (big spoiler alert if you still want to watch the series).   If you are undecided, the video is quite good and I would argue you could count it as professional CPD!

Many professions want to ensure their members behave well and with integrity and thus professional bodies tend to have codes. Like Omar, actuaries have a code although it's somewhat less violent.

As a Fellow of the Institute of Actuaries I need to follow the Actuaries' Code.  I'm also a Fellow of the Actuarial Society of South Africa (The Society) so have to follow their Code of Conduct as well.

So I have two Codes. I have spent time comparing them with a view to identifying potential areas for improvement in both.

IFoA's Actuaries' Code

The Actuaries’ Code | Institute and Faculty of Actuaries
The Actuaries’ Code (the Code) applies to all members of the Institute and Faculty of Actuaries (IFoA)

The IFoA's Code applies to members in their actuarial roles but also applies to other conduct if that conduct could reflect upon the profession.

The Code has six principles:

  1. Integrity – Members must act honestly and with integrity.
  2. Competence and care – Members must carry out work competently and with care.
  3. Impartiality – Members must ensure that their professional judgement is not compromised, and cannot reasonably be seen to be compromised, by bias, conflict of interest, or the undue influence of others.
  4. Compliance – Members must comply with all relevant legal, regulatory and professional requirements.
  5. Speaking up - Members should speak up if they believe, or have reasonable cause to believe, that a course of action is unethical or is unlawful.
  6. Communication – Members must communicate appropriately.

The Code is simple (only 3 pages of text) and relatively straightforward and, in reality, could be applicable to any profession.  Any professional would do well to follow this code, noting that the details of competence and care for, say, an architect would be very different to those for an actuary.

The Society's Code of Conduct

PROFESSIONAL CONDUCT - The Actuarial Society of South Africa

The Society's Code covers both the work and the conduct of members towards their clients, their employers, regulators, the Society and its members, and includes the rendering of actuarial services.

The Society's Code can be summarised in the "Professional Promise":

  1. Members are expected to render quality services to their clients through:
    a. The application of specialist and up-to-date actuarial knowledge and expertise;
    b. The demonstration of ethical behaviour, especially in doing actuarial work; and
    c. The member’s accountability to the Society for professional oversight.
  2. The principles of professional conduct therefore include:
    a. Knowledge and expertise: A member shall perform only those professional services for which the member is competent and appropriately experienced.
    b. Values and behaviour: A member shall act honestly, with integrity, competence and due care, and in a manner that fulfils the profession’s responsibility to the public.
    c. Professional accountability: A member is subject to the professional requirements and oversight of the Society, and shall do nothing that brings the actuarial profession into disrepute.

This summary is repetitive, with the points in section 2 restating the points in section 1. There are fewer explicit requirements under the Society’s code – there are 3 points under the Society’s code compared with 6 under the IFoA’s code. I prefer the IFoA’s layout as the full document is briefer, clearer and more structured.


What is in the IFoA's Code but not in the Society's Code?

  • The IFoA Code applies when an actuary's conduct be expected to reflect upon the profession.  The Society's Code is less clear but it does speak to upholding the reputation of the profession.
  • IFoA members "must show respect for others in the way they conduct themselves". The Society's Code does not mention respect to others.  Respect is mentioned where the work of another actuary is reviewed or where a difference of opinion with another actuary is encountered.  It does not extend outside the profession.  This is a weakness in my view.  Lack of respect towards people outside the profession is inappropriate.  I believe the code should be widened to include respecting colleagues and the general public, which is expressed in this way under the IFoA’s code’s integrity section.
  • IFoA members "must ensure their work is appropriate to the needs and, where applicable, instructions of user(s)".  There doesn’t appear to be a similar requirement in the Society’s code.
  • IFoA members must consider whether other professional/specialist advice is needed and seek this out.  The Society mentions other professions less explicitly but does encourage actuaries work with other professions for an appropriate period.
  • IFoA members are encouraged to speak up to and challenge others when they are non-compliant and also report any misconduct as soon as possible.  Society members must first discuss this with the member involved to obtain clarity.  They can skip this if they do not consider such a discussion constructive, but would then need to seek further guidance.  Only if the issue persists after these steps, should a Society member report this to the Society.  Because there are more hoops to jump through as part of the Society's process, this could lead to matters not being raised soon enough or at all.
  • IFoA has more details on communication in their Code compared to the Society.  For example actuaries are required to be clear when potential misunderstandings are likely to occur and to point it out in their communication.

What does the Society's Code have that's not in the IFoA's Code?

  • The Society's members are encouraged to assist in and engage in public debate for the public good.
  • The IFoA does not mention standards directly in the Code (though members are expected to follow them).  The Society states that standards must be met and/or deviations from standards must be documented.
  • In the absence of standards the Society encourages it's members to still have the required competence but members are also encouraged to innovate.
  • The Society's Code focusses more directly on the reputation of the profession.   IFoA does state that the code applies when actions may reflect on the profession but does not speak about the reputation of the profession directly.
  • The Society has a clause on actuaries being able to justify content of publicity for their services.
  • Society members are encouraged to be involved in the structures of the society.
  • The Society has a number of detailed points that could be considered sub-points of the headings provided by the IFoA.

What can we learn?

A few important weaknesses of the Society's Code to me are:

  • The IFoA approach is more generic and more principles based while the Society's Code is a collection of detailed, specific points not necessarily well structured.
  • The lack of an explicit requirement to acting with respect to others in a wider sense (regardless of if they are a member of the Society or not) is problematic. This is especially problematic in the context of South Africa's history.
  • There are instances where the IFoA’s code applies but where it is unclear whether the Society’s code applies. In particular this arises in situations where the conduct is not "towards" clients, employers, regulators, the Society or its members, and does not include the rendering of actuarial services. The IFoA's code applies when you are doing an actuarial role, or when conduct could be reasonably considered to reflect upon the profession.
  • I believe focussing directly on the reputation of the profession is not the right way.  I would argue focussing on actions (or inactions) of actuaries is better.  In my view the profession's reputation should primarily be based on the quality of actions taken by its members.  
  • I believe the requirements around reporting contraventions of the Society's Code puts a few too many hurdles in front of members.  The IFoA's principles based approach seems better as it encourages members to speakup broadly, but also compells reporting to the profession and any other relevant regulatory bodies.

The Society does encourage involvement of members in public interest as well as the Society itself which I think is a good thing.  This is missing from the IFoA's Code.

These are my views and keen to engage on others' views on this topic.  I do feel a good code is critical.  Omar Little says it best:

A man gotta have a code


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