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

Vikram, an Indian actuary, advises a pension fund trustee board. He learns that his firm also advises the sponsoring employer in a negotiation where the interests of the two clients conflict on contribution rates. Which response best reflects professional requirements?

Vikram should identify the conflict, disclose it openly to both clients, and either proceed only with informed consent and adequate safeguards or decline to act for one of them. Hiding it, favouring the bigger fee, or disclosing only after a complaint would breach the Actuaries' Code.

  1. AContinue with both clients because the firm's Chinese walls make the issue irrelevant by default
  2. BAct for the employer, since it pays the larger fee
  3. CIdentify the conflict, disclose it to both clients and either obtain informed consent with safeguards or decline to act for oneCorrect
  4. DWithhold the information from the trustees to protect the employer's confidentiality
  5. Complete the work and disclose the conflict only if a complaint arises

Explanation

Conflicts of interest must be identified and managed through disclosure, consent and safeguards, or by declining to act. Assuming internal barriers solve everything is wrong, as is concealing the conflict. Favouring the larger fee-payer breaches integrity and duty to each client.

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