Statutory Roles and Part VII Flashcards
Unit 6 Page 9+
What are the main statutory actuarial roles as set out in SUP?
AFH
WPA
Appropriate Actuary
Reviewing Actuary
What can a WPA be and not be in relation to his roles?
- Can be an AFH
2. Can’t be a member of board of directors
What roles aren’t controlled function holders allowed to do?
Other roles that could cause a conflict of interest
What is included in SUP4?
Roles and responsibilities of AFH and WPA
Main responsibilities of an AFH?
- Advise management on risks of firm that may affect long term liabilities relating to policyholders and capital required to support ongoing business
- Monitor risks and inform management of any concerns that company will fail to meet liabilities, including terms of NB
- Advice firms governing body on methods and assumptions for actuarial investigations, perform investigations and report to firm’s governing body. Investigations include solvency related ones.
Main responsibilities of WPA?
- Advise management on key aspects of discretion exercises in affecting WP business and products report on this advice at least annually
- Advise management whether assumptions to calculate WPICC are consistent with PPFM
- Products publicly available annual report to policyholders. Must confirm whether or not, in WPA opinion, firm has taken polcyhodler interests into account in exercising discretion and has treated customers fairly.
Where does an Appropriate Actuary work? What are his responsibilities?
Appointed by a friendly society
Responsibilities:
1. Carry out actuarial investigations in accordance with rules in IPRU-FSOC and professional guidance
2. Report on the investigations
3. Prepare report abstract for publication
4. Provide certificate or statement required
Where does a reviewing actuary work? What are his responsibilities?
Independent actuary (of firm and AFH) appointed by auditor
Responsibilities:
1. Produce report on balance sheet including policy liabilities
2. Report scope to be agreed with auditor
What are the firms responsibility to the AFH and WPA?
- Keep actuary informed of business plans and seek their advice on implications to policyholders
- Pay due regard to advice of them
- Provide them adequate resource and data and systems as required
Which act is relevant for Part VII transfers?
FSMA
Explain Part VII transfers in 5 (+6) points
- Must obtain sanction from high court (court of session in Scotland)
- Only allowed within EEA states
- Any person, including employees/PRA/FCA can be heard by court
- Court petition must include report on scheme of transfer, in PRA approved form. Report to be from independent expert approved/nominated by PRA.
- Court must be satisfied both companies have:
a. Adequately publicised scheme
b. Sent all policyholders involved a short formal notice, in a form approved by PRA.
Including:
c. Statement setting out terms of scheme and
d. Summary of expert’s report including opinion on effect on interests of policyholders
e. Confirm new company allowed to carry out transfer
f. Able to cover reg cap req after transfer.
What are APS L1 and 2
APS L1 = Duties and responsibilities of life assurance actuaries - mandatory for all IFOA appointed actuaries
L2 = FSMA 2000 (communications by actuaries) Regulations 2003 - guidance on whistleblowng to AFH/WPA/AA but not Review Actuary, to communicate matters to Regulator
10 key principles of APS L1
- Conditions for appointment for roles
- Need to ensure sufficient info/resource available to carry out investigations
- Relationship between AFH and WPA regarding descretion
- Ensure management aware of AFH interpretation of PRE and TCF
- Need for AFH to inform management of implication of changes in business plans on TCF and PRE
6, AFH must be satisfied control systems in place to ensure policyholder not misled on expectations - Ensure timely access to reports/papers relevant to actuary’s areas of responsibility
- Details of when WPA must give advice to company on discretion on WP business
- Relationships:
a. RA and auditor
b. RA and AFH (inappropriate for AFH to rely on checks/opinions of RA) - Procedures on possible conflicts of interest e.g. AFH and WPA
In the APS L2 rules, make 5 points on what it says about whistleblowing
If aware of bad situation:
- Verify matter comes under scope of regs and take initial steps
- Communicate matters urgently when belief contravention occures/that matter may be materially significant to regulator/significant risk may be present
- Must communicate issues when they first come to actuary’s attention, even if satisfactorily address by firm
- Whistleblowing obligation over-rides any legal duty of confidentiality
What rules affect AFH/WPA?
APS L1 and L2 TCF PRE FSMA SUP TAS's
