In our profession, we are often looking at risk profiles of other businesses and our current structure sits outside of the desired risk profile. It is essential that we at the IFoA are consistent with best practice, and this will mean the creation of a new Unitary Board with an independent Chair. The IFoA is at risk of legal challenge, lines of accountability are unclear and the roles of individuals within the governance structure are poorly defined.
These weaknesses are not theoretical. They have been highlighted by governance ‘near misses’ in recent years, the departure of two CEOs and an independent grievance report which included a Council-endorsed recommendation to conduct a full governance review.
Governance issues have already imposed a human cost on IFoA members and staff and have caused reputational damage to the organisation. As evidenced by organisations that have experienced similar governance issues, the risks and potential consequences of not acting swiftly and thoroughly are significant and potentially existential.
This is clearly not sustainable if the IFoA is to retain credibility in the eyes of our employers and clients, the FRC, policymakers, media and the general public.
Specifically for the IFoA, there are increased expectations from our oversight body, the Financial Reporting Council, in relation to the governance of the areas we regulate, including the need for strong independent (non-member) input in these areas – namely, education and regulation/discipline. This is reflected in the Corporate Governance Code. Our members tell us that the ability to self-regulate is essential, and meeting FRC’s and other stakeholder expectations of good governance is required to ensure the IFoA continues to command the confidence of its stakeholders.
As such, the need for reform is essential and urgent.