I am very pleased to introduce this consultation from the Regulatory Board of the Institute and Faculty of Actuaries (IFoA) on a proposal to amend the current regulatory requirements within the Actuaries’ Code, related to Diversity, Equity and Inclusion (DEI).
DEI considerations are important to actuarial work and the diversity of views and approaches contribute to ensuring high standards of conduct and output.
The IFoA is a global and diverse organisation and our aim is to ensure that the standards we set for IFoA Members support this and protect the public as well as the reputation of the profession. The IFoA’s DEI Strategy demonstrates that the IFoA is taking forward a range of measures to support DEI and the Regulatory Board considers progress in this area to be central to our Royal Charter commitment to regulate the profession, in the public interest.
The IFoA has always had a requirement that Members must show respect for others. These changes would amplify these requirements in relation to DEI. The Regulatory Board is seeking to ensure the regulatory expectations of Members are clear in this area.
In developing these proposals, the Regulatory Board has been mindful of the need to develop requirements that do not place unrealistic or unreasonable obligations on Members. We have tried to address some likely areas of concern in the Q&A section of this paper. However, the consultation provides further opportunity for members to tell us about any areas where they continue to have concerns, or where they have questions about how the requirements will be met in practice.
Our aim is to ensure that DEI is appropriately reflected, in a proportionate, targeted and clear manner.
I would ask as many of you as possible to take part in this important consultation and look forward to hearing your views on this proposal. We are ready to listen to your feedback.
Neil Buckley
Chair of Regulatory Board
In this document, we have used the following interpretations of ‘Diversity’, ‘Equity’ and ‘Inclusion’:
As an international, multicultural professional membership body and regulator, the Institute and Faculty of Actuaries (IFoA) recognises, values, and embraces the benefits of diversity.
In 2022, the IFoA launched a new 5-year strategy on Diversity, Equity and Inclusion which set out the steps it is taking to ensure that current and future Members feel they work in an environment where they belong, can make an impact, and succeed. Core to that is the belief that DEI can help to support financial stability by increasing diversity of thought and supporting better decision-making and that it can lead to better outcomes of work for users.
The IFoA has a specific duty under its Royal Charter to regulate the actuarial profession, in the public interest, and we have set out in our Regulatory Policy Statement a commitment that:
‘The IFoA’s regulatory role will be carried out in a way that promotes diversity, equity and inclusion’.
As part of the work to deliver the IFoA’s DEI strategy, as well as to meet that commitment in the Regulatory Policy Statement, the Regulatory Board has been reviewing the regulatory requirements for Members in relation to DEI to ensure we are setting appropriate standards of professional expectations of Members in this area which protect the public, and the reputation of the profession.
The IFoA has also taken several steps to embed DEI principles within our regulatory processes, including:
It is important for all IFoA Members, and the public, that the actuarial profession is a diverse one that attracts contributions from the broadest spectrum of views and backgrounds. This diversity is necessary to ensure the highest standards of both conduct and output.
The IFoA is committed to ensuring that the regulatory requirements reflect these aims whilst also setting DEI requirements that are proportionate, consistent, targeted, accountable, and transparent.
The current Actuaries’ Code, which applies to all IFoA Members, wherever they are based, contains a number of high-level principles, all of which have relevance to DEI.
In particular, the current Code sets out under Principle 1 (Integrity) that ‘Members must act honestly and with integrity’, and ‘Members must show respect for others in the way they conduct themselves’.
The Guide to the Code further provides some guidance on Principle 1 related to DEI which states:
‘IFoA promotes equality and diversity and the development of an inclusive profession that incorporates people from a range of backgrounds. Members are encouraged to behave in a way that recognises and respects diversity and different cultures.’
During our review, we considered whether anything additional was required to be added to the high-level Code requirements, in line with our regulatory policy and to reflect the IFoA DEI strategy, benchmarked against comparable bodies and recommendations from key stakeholders including the IFoA’s Diversity Action Group.
It was agreed that the Code would benefit from specific provisions that made expectations around DEI clearer and more explicit. Therefore, changes are proposed to some of the amplifications sitting under the existing headline principles of the Code - in particular, around discriminatory behaviour and speaking up on DEI matters.
It was also agreed that there should be a new requirement proposed, setting an expectation that Members will encourage DEI, reflecting the IFoA’s clear view that more is required of Members than simply not acting in a discriminatory way.
However, it was also recognised that there may be situations where Members are not reasonably able to meet a requirement to encourage DEI. This might be because the Member is very new to the profession or the place of work, or the Member may be undertaking a period of leave or absence. It is important to recognise that in circumstances such as these, inaction should not amount to a breach of the Code.
The proposal is therefore framed as a ‘should’ requirement, recognising that Members, in some circumstances, may be able to justify non-compliance.
The aim of these proposals is to ensure that we are continuing to hold Members to high standards of conduct, in the public interest, and that Members are clear of our expectations in this area while ensuring the Code remains principles-based.
We recognise that this may be a new area for some Members who will be seeking further learning materials to increase their knowledge on the topic.
We believe it is important for us to provide further support and guidance for Members on their professional requirements. We are therefore planning to produce additional non-mandatory regulatory guidance for Members to assist them with navigating their professional responsibilities in relation to DEI.
We are proposing to amend the amplifications sitting under existing Principle 1 on Integrity as follows (changes are underlined):
Integrity
We are proposing to amend the amplifications sitting under existing Principle 5 on Speaking Up as follows (changes are underlined):
The aim of these changes is to make the requirements around DEI clear and more explicit and to help Members understand their obligations on DEI and what is expected of them. The Code is very high-level and principles-based, therefore we have not sought to define the DEI terms themselves within it.
Rather, the proposal provides clear and transparent language to explain what we mean by Members’ duty to act honestly and with integrity, in the context of DEI.
Further guidance on the requirements will, however, be provided in non-mandatory guidance.
We recognise that it is essential for any additional wording to the Code to be supplemented by additional guidance for Members to help them understand its application. Therefore, we are also proposing to issue additional non-mandatory guidance to help Members understand their professional obligations in respect of DEI under the Code, and what these mean in practice. This will cover for example, further information on what kind of behaviour is expected under Principles 1 and 5, as well as some practical case study examples.
This consultation asks for Members’ views on what further support they would like to see on DEI issues, either in the non-mandatory regulatory guidance or more generally, such as learning materials.
The proposed changes impact all Members of the IFoA, as DEI is a cross-practice, international issue, and the Code applies to all Members.
The aim of the proposals is to ensure that current and future IFoA Members have appropriate awareness, knowledge and skills relating to DEI and that this is embedded into their actuarial work, thereby providing more value and benefit to users.
The aim is to ensure proportionate, consistent, transparent and targeted regulation, in a way that is principles-based and outcomes focused.
The proposals provide further clarification and explanation of the behaviour expected of Members under Principles 1 and 5.
It is anticipated that the proposed new wording in relation to discrimination and speaking up will apply broadly the same requirements as the existing Principles 1 and 5, but with further clarity and specificity around the behaviour expected.
The additions relate primarily to the requirement to ‘encourage’ DEI and are seen as core values and behaviours that the IFoA expects most members will already be meeting. It is not therefore anticipated that the changes will require significant changes to the everyday actions of members.
It does, however, anticipate that they will ensure there is a degree of recognition of the importance of those values.
The introduction of further guidance on Principle 4.2 will provide additional support and guidance for Members.
To provide your response please use one of the following links:
The deadline for responses is 15 April 2023.
Once the consultation has closed, the IFoA will reflect upon the feedback and publish more specific details of any changes. There will also be a period allowed before the changes come into effect so that those affected can take steps to ensure they are able to comply with the new requirements.
Neil Buckley, Regulatory Board Chair, and Hannah MacLeod, Senior Regulatory Lawyer, are hosting webinars about this consultation on 6 February and 29 March. At these webinars, we explain the detail of the Board’s proposals and allow members to provide feedback.
On the IFoA’s Virtual Learning Environment (VLE), you can:
If you have any queries please contact
Regulation, Level 2, Exchange Crescent · 7 Conference Square · Edinburgh · EH3 8RA