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

Rahul, a member of the IAI, is appointed as scheme actuary by a company's pension trust. He later learns that his firm is also advising the sponsoring company on a deal that would weaken the trust's funding position. What should Rahul do first?

Rahul should identify the conflict, disclose it to both the trust and the sponsor, and manage it, withdrawing from a role if it cannot be managed. Transparency to those affected is the Code's expected response. Silence, internal barriers alone or fee levels do not resolve a conflict.

  1. AContinue both roles, as a Chinese wall removes any need for disclosure
  2. BResign from the trust immediately and say nothing about the reason
  3. CIdentify the conflict, disclose it to both clients and take steps to manage it or withdraw if it cannot be managedCorrect
  4. DAdvise the sponsor and trust to settle the matter themselves without involving him
  5. Continue only if the trust fees are higher than the sponsor fees

Explanation

Conflicts of interest must be identified, disclosed to those affected and managed, with withdrawal if management is not possible. Silent resignation or reliance on internal barriers alone does not meet that standard, and fees are irrelevant to the ethical test.

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