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IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code

A government considers allowing a profession to regulate itself through its own institute instead of direct state control. Which argument is the strongest in favour of professional self-regulation, and is correct as a statement of its recognised rationale?

The strongest recognised argument is that practitioners have the technical expertise to set and enforce suitable standards, and self-regulation costs the state less. It does not remove conflicts of interest, guarantee low fees, override the law or make members' judgements identical.

  1. APractitioners have the technical expertise needed to set and enforce relevant standards, and it reduces cost to the stateCorrect
  2. BSelf-regulation removes any possible conflict of interest between members and the public
  3. CSelf-regulation guarantees lower fees for clients
  4. DSelf-regulation makes external law irrelevant to members
  5. Self-regulation ensures that every member holds identical views on technical judgement

Explanation

The recognised case is expertise and lower state cost. A known weakness is potential conflict of interest, so it does not remove it. It does not guarantee fees, override external law or standardise judgement.

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