Skip to content

IAI Actuarial Core Principles · Business Management · Professional negligence

Anita, an actuary, signs a report for a pension fund trustee. The report states clearly that it is for the trustee's use only and that no responsibility is accepted to any other party. A bank, without Anita's knowledge, uses the report to grant a loan to the fund's sponsor and suffers a loss. What is the most likely legal position on Anita's liability to the bank?

Anita probably owes the bank no duty of care. She restricted the report to the trustee, did not know of the bank's use, and so did not assume responsibility to it; reliance by the bank was therefore unreasonable.

  1. AShe owes the bank the same duty as the trustee because any reader of a report is a client
  2. BShe is automatically liable because actuaries cannot limit responsibility to third parties
  3. CShe is liable only if the bank is a member of her professional body
  4. DShe is liable only if she was paid more than a fixed minimum fee
  5. She probably owes the bank no duty, as she did not assume responsibility to it and a clear disclaimer makes its reliance unreasonableCorrect

Explanation

Duty to third parties depends on assumed responsibility and reasonable reliance. A clear, reasonable statement limiting the audience, together with lack of knowledge of the bank's use, makes a duty unlikely. Readers do not automatically become clients.

Did you get it right without looking?

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

Practise Professional negligenceFree diagnostic mock

More Professional negligence questions