This post is an open letter to members of the Council of the Institute and Faculty of Actuaries. This separate (but related) post is a letter to the Discipline Investigation Team making a complaint about the professional behaviour of two anonymous actuaries who sat on an Adjudication Panel that decided on the only professional complaint I have ever brought before. (I hope this second complaint is the last one I shall ever have to bring, but as you will see from the evidence below, I had little choice but to make it).
Open letter to members of the Council of the Institute and Faculty of Actuaries
Date: 22 Dec 2011
Open letter to: all members of the Council of the Institute and Faculty of Actuaries
Has the Institute & Faculty of Actuaries been breaking (on repeated occasions over the last 4 years) the standards it sets for its members? I think so
First of all to avoid confusion, I ought to clearly define what I mean when I use certain phrases in what follows.
By the shorthand the I&F I mean one or more individuals who, whether actuaries or not, are authorised in specific communications they make to speak on behalf of the Institute and Faculty of Actuaries (for communications from 1 Aug 2010 onwards when the merger came into effect). For communications before that I mean individuals who were authorised to speak on behalf of one or more of the two separate bodies, the Institute of Actuaries, and the Faculty of Actuaries.
In some cases the identities of those who authorised the communications are known to me but in several cases they are not, either because they were anonymous, or because the communications were written by non actuaries and it was not clear whether the communication was directly authorised by senior actuaries, or written by staff under delegated authority from senior actuaries, or under their own authority due to their remit.
But in most of the instances when I say “the I&F” below, particularly when I am critical of a particular communication or behaviour I am not being critical of the whole of the Institute and Faculty (i.e. the Councils and all the staff and committees and subcommittees), nor do I mean the members of the Institute and Faculty, but merely of those who had direct responsibility for issuing a particular communication or performing a particular action.
By censorship, I mean either the prevention or non trivial delaying of information from being passed on.
Body of the letter
Dear Council members
I apologise for writing to you directly (apart from 4 members -out of 31 – for whom I have been unable, despite request to the Chief Executive’s office to obtain an email address – please pass this on to them) as opposed to via the Secretary to the Council. My reason for doing this is simple: I have clear evidence that in the past information which I requested the Secretariat forward to you promptly was either significantly delayed or in some cases not even sent on. This is an example of censorship within the I&F. You may prefer to use another word, but please consider whether the use of another word really is for greater accuracy, or simply a euphemism.
I recognise the high standards embraced (in my experience) by the vast majority of members (including volunteer actuaries serving the Institute and Faculty) and the quality and usefulness of the work performed by the professional body’s staff. This letter is about a minority of occasions when I think things have gone significantly wrong. Whilst the number of occasions is small as a proportion of the totality of the work carried out by the professional body, it would be wrong to ignore them, particularly as (in my view), they had (and may continue to have) a significant effect on member communications, involve important points of principle and professional ethics, and therefore impact on our public interest duty. They also appear to be at odds with, and likely to put at risk, the new strategy that the Institute and Faculty formally adopted six months ago.
After nearly 4 years of trying to sort the problems out via internal procedures and discussion, I have come to the conclusion that it looks very unlikely (because the I&F seems to be in denial about continuing sub-standard behaviour) that the issues will be taken seriously (and hence resolved) by the Institute and Faculty unless discussed openly and transparently, hence this open letter to Council. If I am right, then anyone else involved in (or contemplating) Disciplinary matters needs to be alerted so that they can try and avoid similar problems in other cases, and again this open letter achieves that goal.
The Institute and Faculty has also emphasised the importance of whistle blowing in its professionalism courses, and there is a requirement under the Actuaries’ Code to speak out (first internally, then externally if the problems remain) so what better demonstration of our commitment to maintaining and improving professional standards than to put that into practice when addressing our own professional body. In this way, the Institute and Faculty can demonstrate that all its emphasis on whistle blowing was not just lip service. In doing this, I am also showing that one of the criticisms in the Morris Review (“There is reluctance to challenge fellow actuarial professionals”) is (at least in this case!) no longer true.
I have been threatened with disciplinary action if I reveal “details” of a disciplinary case I brought in July 2009 “inappropriately” (and indeed, in one email, even the existence of the case or its outcome). As mentioned above, I believe I have a public interest duty to draw attention of Councils, members and the public to the problems, and also a duty not to accept behaviour which I think falls below the standards required of us as professionals. Both those duties override the threat of disciplinary action (or indeed of legal action).
I also think that it is inappropriate, and another instance of censorship, for the Institute and Faculty to try to unilaterally impose confidentiality on an actuary who brings a professional complaint when a member of the public is under no such constraint, when the Disciplinary Scheme makes no mention at all of the words confidential or confidentiality, and when the professional body itself has on occasion publicised that it was bringing a complaint and why (against the Equitable directors). I hope you will agree that it would be particularly inappropriate for the Institute and Faculty to try and impose confidentiality on a member who felt a professional and public duty to expose poor or sub standard behaviour within the I&F.
I should add at this point that the disciplinary case in question concluded in April 2011, with an Independent Examiner affirming the original determination made by an Adjudication Panel (in September 2010) that no misconduct had occurred, with the Respondent(s) being entirely exonerated. Whilst I don’t agree with the reasoning and dispute the accuracy or completeness of some of the evidence relied upon to arrive at the Panel’s determination (indeed I claimed that the Panel had produced no evidence to support several of their statements, and this was not addressed by the Independent Examiner), I understand that the existing processes have come to an end and I accept that there is no scope under the Disciplinary Scheme to overturn the Adjudication Panel’s decision.
Instead, I am concerned a) with ensuring that significant problems encountered during this case don’t happen again, and b) at the behaviour of the anonymous members of the Adjudication Panel, who not only applied standards of reasoning which I believe do not stand up to public scrutiny but went further than was called for and made offensive comments which they refused to support with any evidence, and which they refused to withdraw despite a request from the Independent Examiner that they do so.
However, I believe in this instance that I can achieve my aim of complying with the public interest duty that I feel strongly bound by, by simply sharing key parts of the correspondence but without naming any individual or individuals and that is what I intend to do in this post. The key arguments can all be discussed entirely separately from the identity of the individuals involved, and resolved on the basis of evidence and logic. I hope that I am correct in this belief. (NB For consistency I ask that no attempt be made to identify or name any individual in any comments added to this post – or elsewhere.)
I claim that on several occasions during the last four years (2008-2011 inclusive) representatives of the I&F (i.e. individuals, whether actuaries or others, entitled -within the context of a particular communication -to write or speak on behalf of the I&F) have failed to uphold the standards that the I&F expects of its own members, by:
- censoring material (by which I mean either preventing or delaying relevant information from being supplied to members)
- refusing to answer reasonable and important questions (another form of censorship: withholding necessary information)
- ignoring the spirit of the professional conduct standards/Actuaries’ Code by ignoring requirements held out to the public to “uphold the highest possible standards of conduct”, “communicate effectively”, “… ensure that any communication … is accurate and not misleading, and contains sufficient information to enable its subject matter to be put in proper context”, and instead applying only a much weaker standard in its interpretation of “standards of behaviour, integrity and competence or professional judgement which other members or the public might reasonably expect”
- of claiming publicly that it will act “impartially, reasonably, ethically and with a sense of justice” whilst in practice thinking there was nothing wrong with providing members with one-sided information during the 2009 merger proposal
- ignoring values it claims publicly to uphold (and set out most recently in the I&F’s Strategy document) of being “open-minded, transparent, accessible, confident and robust”, “evidence-based” but instead operating on several occasions in a secretive, defensive, censoring, closed-minded, and unresponsive manner
- far from being proactive in resolving problems, until very recently (and apparently largely as a result of my persistence - despite repeated requests to stop writing to the I&F on this subject - in requesting clarification as to the meaning of the key clause about the Disciplinary Board’s responsibilities in the Disciplinary Scheme) it was unresponsive and dismissive, showing little concern about investigating my allegations of serious failings in the current operation of the Disciplinary Scheme, with a view to learning any lessons for the future
- until I (and subsequently the Independent Examiner) complained about this, the I&F failed to see any problems in allowing Adjudication Panel members to make controversial remarks shielded by anonymity
- other serious concerns about the operation of the Disciplinary Scheme that I had raised and that until very recently the I&F had given no indication that they would investigate in detail (if only to improve future processes) include that only part of the complaint was considered, that the Determinations appeared to contain several material mistakes of fact, that several statements were made without any supporting evidence, and other indications that the standard of reasoning employed appeared to be low
- in my view, problems have arisen on several occasions (including over the last 6 months in replies to my questions about the operation of the Disciplinary Scheme) where a non actuary issues a communication on behalf of the I&F which appears to be in contravention of the Actuaries’ Code (or its predecessor, the PCS) and actuaries at the I&F then either attempt to defend the communication or remain silent, rather than requesting that the communication be corrected to comply with the Actuaries’ Code /PCS
- on some occasions, accountability at the I&F broke down completely (and this could easily happen again): non actuaries were able to claim that they were only following the orders of Council, and an Adjudication Panel held that actuaries had no responsibility because they weren’t involved in the day to day operation.
Clarification required in publicity on standards v actual standards: “Not unreasonable”, “High” or “Highest”: which is it?
The Professional Conduct Standards referred to the duty to uphold “highest possible” and “highest” standards. Our publicity (including recent press releases, e.g. this one, and the I&F website) generally refers to “highest” or “high” standards. Paragraph 1.6 of the Disciplinary Scheme does not refer to “highest” or “high” standards, but defines misconduct as a failure to comply with standards that members or the public “might reasonably expect”. The Adjudication Panel seemed to ignore any requirement to maintain high standards and instead seemed to accept conduct as long as it was “not unreasonable” (not their words, but I believe a fair description of their approach). Given that the public (and to a lesser extent members) are much more likely to have read (or in the case of members, have in the forefront of their mind) the I&F’s publicity material (with the references to “highest” or “high” standards) than they are to have read paragraph 1.6 of the Disciplinary Scheme, it could be argued that the reasonable expectation of members and the public is that actuaries will behave with high standards as opposed to just “not unreasonable” ones, could it not?
At present there therefore seem to be significant disparities between the standards that the I&F claims (using phrases such as “highest possible”, ”highest” and ”high”) to the public as being upheld and the standards required in practice in disciplinary cases (if the July 2009 case is representative), which seem to have been conduct which is “not unreasonable”. I recommend that Council clarify as a matter of urgency what the standard is intended to be and take steps to amend documents as necessary so that the Actuaries’ Code and the Disciplinary Scheme are in line with publicity material to members and the public.
What level of standards do other professions claim to uphold? Solicitors = “high”, Chartered Accountants = “highest”
By comparison, solicitors in the UK (who are regulated by the Solicitors Regulation Authority, the SRA) are held out (in a page on the SRA website dated June 2011, which appears to be out of date because it refers to the old – 2007 – code of conduct rather than the latest one dated 6 Oct 2011) are stated to uphold “high standards of professional behaviour” (the bold emphasis is mine):
Those regulated by the SRA have a duty to uphold high standards of professional behaviour and to comply with regulatory requirements.
In the limited time I have been able to spend on looking at other professions, I have been unable so far to find out whether their definition of misconduct is consistent with this.
Chartered Accountants in England and Wales at the moment claim (on this page on their website) to adopt “the highest ethical and technical standards” (again the bold emphasis is mine):
We provide our members with knowledge and guidance based on the highest ethical and technical standards.
Again, I have not had time so far to find out whether their definition of misconduct is consistent with this.
Thorough review of past (post Morris Review) disciplinary cases recommended (not to change the past, but to improve the future)
Given that disciplinary cases rarely receive any scrutiny – very few are referred to an Independent Examiner for review – and the clear reluctance displayed by the Disciplinary Board – until 3 days ago – to examine past cases in detail for future management purposes, how can anyone within Disciplinary Board, let alone Council (who rely on Disciplinary Board), possibly know how representative the July 2009 case is, and whether there is any consistency in the standards applied across cases? I also recommend that Council ask the Disciplinary Board to conduct a thorough and urgent review of as many non trivial cases as possible since the current structure came into place in response to the Morris Review.
What precisely such a review should focus on requires more thought and time than I have been able to devote to it so far, but my preliminary suggestions to Council are that it should examine amongst others the following questions (including in each case the consistency across cases):
- what level of standards was applied (e.g. “high”, “highest”, or “not unreasonable”)
- was the totality of the Complainant’s complaint actually considered and addressed in the document setting out the final outcome of the case, or (as I claim happened in the July 2009 case) only a subset
- was the totality of the evidence presented by the Complainant (and the Case Manager/Investigation Actuary) considered, or only a subset (I claim that some of the statements made by the Adjudication Panel seem to make little sense unless somehow they were either unaware of, or ignored, some of the evidence I had presented)
- how good was the reasoning employed and documentation of supporting reasons for decisions and statements made
- how consistent were the outcomes for similar cases.
I’m afraid that the clear reluctance displayed by the Disciplinary Board to get involved in a detailed review of past cases (until very recently, and only as it became clear - because I informed the person[s] concerned -that I was not going to obey I&F instructions to let the matter drop and to stop writing to them about it, and instead was going to write to Council) is, not surprisingly, a matter of concern to me which I hope can be dispelled.
Response requested at or soon after your March 2012 meeting please
I would like to ask you as Council for an official response to this post, after you have had time to consider it. I had originally intended to send this to you about a month before the next Council meeting of 9 Jan 2011, but delayed it to receive further relevant information from the I&F, which was eventually conveyed to me on 19 December. So apologies if, as I suspect, this is now too late to receive proper consideration at your 9 Jan 2012 meeting.
Perhaps you could provide a response before the Council meeting after that (12 Mar 2012) by coordinating your discussions via telephone or email/other electronic means, or, if you think it can wait (there is less urgency given that this open letter should have alerted all involved in disciplinary procedures to the issues I have raised, so that hopefully the same problems are less likely to be repeated) shortly after your March meeting. I shall of course publish your reply here, and in the spirit of transparency and openness, I promise to do nothing to hinder the I&F’s right of reply either to this post or to any comments that may appear here.
For details, see the Appendix
The details follow below in the Appendix. I have deliberately not named any individual in this post (or in my professional complaint against the anonymous Adjudication Panel members). I had hoped to be able to send you (and you alone, as the highest management body of the I&F) full copies of the papers in my possession, but the Respondent(s) in the July 2009 case refused his/her/their permission for me to do so (despite being entirely exonerated by both the Adjudication Panel’s Determination(s) and the Independent Examiner). I was also threatened by the I&F with disciplinary action if I sent copies to you, and told that it was now too late to send anything to you, and that I had missed my chance by not taking up an offer to submit something (but with very stringent conditions attached) a month before your November meeting. I’m afraid I fail to see either the logic or the professionalism in being told it was too late to write to Council.
The clear reluctance of the I&F (until a few days ago) to provide information about the responsibilities and powers of the Disciplinary Board meant in any case that I didn’t have some of the necessary background for a private paper to Council, and further convinced me that it was time to alert members and the public via an open letter – hence this post, with no individuals identified.
We are not alone and some other professions currently face bigger questions
I should also add that whilst I am here reporting significant concerns I have with some I&F actions, I do not believe that the Institute and Faculty are alone in facing a situation where the approach taken in practice to professional standards could be clarified and improved. I think it is fair to say that at the moment, as well as an economic crisis due to excessive borrowing and leverage, some of the professions also face (to varying degrees) a crisis of confidence. To give just two examples of other matters, arguably much more serious than the ones I have referred to for the I&F:
- the accountancy profession has yet to deal with the paradox that many of the banks that failed received a clean bill of health from their auditors shortly before their collapse. How did the professional codes of conduct that the auditors were subject to fail to prevent such a situation and what changes should the accountancy bodies introduce to remedy this?
- the legal profession in the UK has yet to deal with the continuing fallout from the Leveson inquiry: evidence seems to be emerging that illegal invasions of privacy occurred over many years on a large scale at several newspapers, despite those newspapers employing legal departments. Similarly, a Select Committee representing Parliament was misled by a media company, despite lawyers knowing about this. How did failures (in this case to prevent criminal acts from being committed) occur on such a scale despite the professional codes of conduct that the lawyers were subject to? (I mentioned above that the Solicitors Regulation Authority introduced a new ["outcomes-focused"] code of conduct from 6 Oct 2011 – whether this will address the problems or will need further revision is yet to be seen).
But of course there is no room for complacency: that should not be an excuse for us not to put our own house in order. (I’m also aware of concerns in several quarters that UK defined benefit pension funds should be hedging their liabilities as much as possible, despite either zero or negative yields on inflation-linked gilts, and historically low yields on fixed income gilts, which in any case are not “risk-free”. But that is a separate issue, which I believe is less clear cut than the above issues faced by the accountancy and legal professions – but again, I’m not suggesting we can be complacent about this).
Instead, I hope we can be proactive and use the opportunity of this open letter (and your response to it) to publicly demonstrate – in line with the new strategy that I agree with and support – that our culture is indeed strong and confident, and transparent enough to accept criticism where it is valid and make the necessary changes/improvements.
Patrick Lee, FIA