FRC publishes Actuarial Quality Framework

FRC PN 253 - 8 January 2009

The Financial Reporting Council (the FRC) has today published its Actuarial Quality Framework. The Framework has been prepared following consultation on the FRC’s discussion paper, ‘Promoting Actuarial Quality’, issued in May 2008, and the Professional Oversight Board’s accompanying paper, ‘Monitoring and scrutiny of actuarial work’.

The FRC discussion paper suggested that actuarial work was characterised by the development, use and interpretation of models in a range of financial work. It proposed six factors, or drivers, which promote actuarial quality, and these form the basis of the Framework as follows:

• Reliability and usefulness of actuarial methods
• Technical skills of actuaries
• Communication of actuarial information and advice
• Ethics and professionalism of actuaries
• Working environment for actuaries
• Other factors outside the control of actuaries

The FRC recognises that actuarial quality is a dynamic concept and that the drivers and indicators of actuarial quality may change over time. It will therefore periodically review the Framework in light of comments received. We would be particularly interested in feedback from non-executive directors, pension trustees and members of with-profits committees, who we hope will find the Framework helpful when assessing the quality of actuarial information and advice for the purposes of meeting their corporate and regulatory responsibilities. The first such review will take place in spring 2010.

The Framework can be viewed at: http://www.frc.org.uk/about/actuarialregulation.cfm, together with the Feedback statement to the FRC discussion paper and links to the feedback on the Oversight Board discussion paper on monitoring and scrutiny. The Oversight Board will consult on proposals for enhancing monitoring and scrutiny of actuarial work later in 2009.

Oversight Board Chair, Dame Barbara Mills said:

“It is important for all of us to have a shared understanding of what actuarial work is and the factors which can make it of high quality. We hope this Framework will assist all stakeholders but particularly non-executive directors, pension trustees and their advisers in their communication and assessment of actuarial quality.”

Related Document: Actuarial Quality Framework