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

A working group is comparing two bodies. Body P requires a recognised exam route, ongoing continuing professional development (CPD), a published code with disciplinary powers, and members who advise on matters the public cannot easily judge. Body Q is a trade association with voluntary membership, no entry exams and no disciplinary powers. Which conclusion is best supported?

Body P displays core profession features: controlled entry, CPD, a code and discipline, and it serves clients who cannot easily judge its advice. Body Q lacks these safeguards, so it is merely a trade association. Information asymmetry is a reason for professions, not an argument against them.

  1. ABoth are professions because both have members who work in finance
  2. BNeither is a profession because professions cannot have codes
  3. CQ is a profession because voluntary membership shows independence
  4. DP shows key profession features, including regulation of competence and conduct and information asymmetry with the public, while Q lacks the controls that give assurance to the publicCorrect
  5. P is not a profession because the public cannot judge its advice

Explanation

Information asymmetry is a reason professions exist: the public relies on trusted standards because it cannot assess the advice. P has entry control, CPD, code and discipline. Q lacks all of these, so it is a trade association rather than a profession.

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