Skip to content

IAI Actuarial Core Principles · Business Management · Trusts and agency

A trustee of a private trust in Chennai is also an actuary advising on the trust's annuity purchase. She proposes that the trust buy an annuity from an insurer in which she holds a significant shareholding, without telling the beneficiaries. Which statement is correct?

She must not let her personal interest conflict with her trustee duty and should disclose it and obtain proper authority before acting. Trust law forbids unauthorised profit or conflicted dealing, and the Actuaries' Code requires conflicts to be managed openly. Market pricing or secrecy does not make the proposal acceptable.

  1. AShe may proceed, since the annuity is priced at market rates
  2. BShe may proceed if she keeps any commission she receives
  3. CShe should avoid putting her personal interest in conflict with her duty, and disclose and seek proper authority, as both trust law and the Actuaries' Code requireCorrect
  4. DShe may proceed because actuaries are exempt from trustee duties
  5. She may proceed provided the other trustees are not told, to prevent delay

Explanation

A trustee must not place herself where interest conflicts with duty and must not profit from the position without authority. The Actuaries' Code also requires managing conflicts through disclosure. Market pricing does not remove the conflict, and concealment makes it worse.

Did you get it right without looking?

One question tells you little. A timed set on Trusts and agency shows your real accuracy, how long you take and where you lose marks.

Practise Trusts and agencyFree diagnostic mock

More Trusts and agency questions