By Albert J. Beer
“Oh Lord, please don’t let me be misunderstood!” While young readers might not recognize the musical reference, I believe all readers can relate to the disappointment of having an intended audience not understand a particular role you play.
Having served a number of years on the Actuarial Board for Counseling and Discipline (ABCD), I want to share my perception that a significant proportion of our profession remains uncertain about key aspects of the ABCD and its process. Bearing much of the responsibility for ensuring that every actuary understands its role in our professional lives, the ABCD has recently spent considerable time discussing ways in which we can increase its transparency and allow all actuaries to improve their knowledge and appreciation of the importance of professionalism.
It is reasonable to assume that every actuary has been exposed in some way or other to the general concept behind the ABCD. Professionalism modules, regional meetings, and various articles in periodicals such as Contingencies have presented “overviews” of the ABCD structure and processes. However, based on our recent experience in both counseling and discipline matters, it is clear that there are still some fundamental issues that need to be clarified.
This article, along with an increased presence at meetings and in webinars, is an effort to provide clarity regarding what we percieve to be common misunderstandings concerning the ABCD and its role in fostering a vibrant spirit of professionalism among actuaries.
Although not exhaustive, we’ve identified the following common issues that seem to have created confusion or uncertainty:
“Is the ABCD’s primary focus on the discipline of actuaries?”
Most actuaries would be surprised to know that the very first responsibility on the list of “Primary Functions” of the ABCD is the charge: “Respond to requests from members of the five participating U.S.-based organizations for guidance regarding professionalism.”
Even the most experienced and skilled actuary encounters sensitive and complex situations that require a significant amount of judgment to understand the nuances of the Code of Professional Conduct (Code), actuarial standards of practice (ASOPs) and U.S. Qualification Standards (USQS). Recognizing this, the ABCD has created a Request for Guidance (RFG) process specifically designed to give actuaries an opportunity to have an informal, confidential conversation with a peer to help think through some of these often-subtle issues.
Despite a general lack of awareness of this valuable resource among actuaries, the ABCD regularly handles over 100 RFGs a year, with requests coming from actuaries representing a wide variety of practice areas, experience, and employment types.
Therefore, while the ABCD is indeed responsible for considering discipline complaints about possible violations of the Code, it has an equally critical role in standing as a valuable counseling resource for actuaries.
If you would like to know more about the RFG process, you may find the article “A Little Help From My Friends” from the January/February 2021 issue of Contingencies of interest, as well as the “Guidance” section of the ABCD website.
“Does the Code of Professional Conduct only apply when I am providing actuarial services?”
This question has recently been asked numerous times in light of the significantly increased access to social media around the world. The answer will always depend on a variety of individual circumstances, but the critical consideration is within the very first Precept of the Code:
Professional Integrity
PRECEPT 1. An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession’s responsibility to the public and to uphold the reputation of the actuarial profession.
Particularly relevant to this question is the associated statement:
ANNOTATION 1-4. An Actuary shall not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that reflects adversely on the actuarial profession. (Emphasis added)
Widespread public awareness of real and alleged inappropriate, and sometimes criminal, behavior may represent potential damage to the reputaion of the actuarial profession. When considering complaints of alleged “unprofessional” behavior, the ABCD assumes that every actuary has the very important responsibility to act in a manner that reinforces the confidence that the public has in our profession. Public trust in the professionalism of all actuaries can easily be undermined by the poor behavior of any individual actuary, whether or not that behavior occurs in the course of providing actuarial services. Obviously, broad awareness of crimes such as insider trading and sexual assault may have a detrimental effect on the public’s perception of actuaries and the actuarial profession. However, it is important to recognize that criminal behavior alone is not the benchmark. For example, disrespectful treatment of clients, colleagues, and members of the general public easily creates the false impression that our profession tolerates inappropriate behavior from our members. While such behavior may not rise to the level of criminal or civil offenses, our behavior in both professional or personal settings may impact how the world perceives our profession.
It is interesting to note other actuarial organizations around the world have adopted a similar perspective:
The Actuaries’ Code of the Institute and Faculty of Actuaries in the U.K. contains the following:
Scope: The Code applies at all times to all Members’ conduct in relation to an actuarial role.
The Code also applies to all Members’ other conduct if that conduct could reasonably be considered to reflect upon the profession.
The latter comment is further discussed in their Guidance to the Code:
“This means that conduct outside of a Member’s actuarial professional life that demonstrates a lack of respect towards others will be caught by the Code, but only to the extent that it may have an impact upon the reputation of the actuarial profession as a whole.”
The Explanatory Memorandum to Code of Conduct (March 2020) of the Actuaries Institute of Australia includes the comment:
The Code covers all conduct that might reflect poorly on the profession and not just professional conduct.
“Does the ABCD have the power to expel, suspend, or otherwise discipline actuaries?”
The answer is categorically, “no.” Perhaps a bit of history may help here.
In 1992, in order to create an efficient process to handle the initial consideration of any alleged violations of the Code of Professional Conduct, the American Academy of Actuaries (Academy), the American Society of Pension Professionals and Actuaries (ASPPA), the Casualty Actuarial Society (CAS), the Conference of Consulting Actuaries (CCA), and the Society of Actuaries (SOA) established the ABCD and delegated to the ABCD the power to investigate and evaluate possible action.
As the ABCD Rules of Procedure state:
The ABCD within its jurisdiction has authority to:
1. Consider all complaints concerning alleged violations or information suggesting possible violations of the applicable Code(s) of Professional Conduct. The Codes, in turn, incorporate by reference applicable qualification standards and applicable standards of practice. The ABCD may also consider questions that arise as to the conduct of a member of a participating organization in the member’s relationship to that organization or its members, in the member’s professional practice, or otherwise affecting the interests of the actuarial profession. Although investigations of possible violations of the Code(s) will usually be initiated based on complaints, the ABCD may also initiate such investigations based on information available to it suggesting possible violations of the Code(s) of Professional Conduct;
… [and]
3. Recommend disciplinary action against an actuary to any participating organization of which the actuary is a member, recognizing that authority to discipline members rests exclusively in the participating organizations; (Emphasis added)
It is important to recognize that the ABCD has no authority to directly discipline any actuary. It can only provide a report of its investigation and deliberations to the organization(s) of which the accused actuary is a member. Ultimately, recognizing that the sole authority for membership rests with an actuary’s own organization(s), any disciplinary action can only be taken against an actuary as a result of a determination made by the member’s organization(s). While it is true that, in practice, the member’s organization may come to the same conclusion as the ABCD, that organization is under no obligation to adopt the ABCD’s recommendation.
This point is emphasized in the “Primary Functions of the ABCD” by the responsibility:
Recommend discipline, when appropriate, to membership organizations. (Membership organizations determine whether to impose discipline, using their own procedures.)
“Actuary X is all over the news. Why hasn’t the ABCD done anything about it?”
There could be a number of reasons why the questioner is not aware of ABCD activity.
First of all, the ABCD may be in the process of reviewing a complaint but, at that time, the accused actuary may be involved in criminal prosecution and/or civil litigation. Like most professional organizations, the ABCD adopted a policy, under legal advice, to wait until any criminal or civil action is completed before commencing with disciplinary deliberations.
Another possibility is that the ABCD has acted, but in a way that protects the confidentiality of the accused actuary. While a detailed description of the process is available in the ABCD Rules of Procedure, an abbreviated summary of these alternatives is as follows:
- If the matter under consideration appears not to involve a possible violation of the Code, the matter may be dismissed.
- If the matter under consideration appears to involve a possible violation of the Code but not a material violation, the matter may be dismissed, possibly with private guidance provided.
- If the matter under consideration appears to involve a possible material violation of the Code, but it is impossible to make a decision with any certainty—e.g., insufficent evidence, no other witnesses besides the accused and the complainant, etc.—the matter may be dismissed, possibly with private guidance provided.
One of the most important aspects of any ABCD process is confidentiality. In all of the previous examples, the disposition of the complaint would not be made public. This is especially important in an era where it is easy to “convict” someone in the media or the court of public opinion without having an understanding of all the facts involved.
Yet another possibility is that upon receipt of a complaint, an investigator is appointed to provide a more thorough analysis of the issues involved and a hearing of the full ABCD is subsequently held. The hearing could yield a number of outcomes:
ABCD action without notifying any actuarial organizations:
- Dismiss the matter if the complaint/information appears not to involve a material violation of the Code or there is insufficient evidence available to reach a decision.
- Counsel the subject actuary.
- Reopen the hearing and seek additional information before reaching a decision.
ABCD action by sending a report to the appropriate actuarial organizations:
- Recommending discipline in the form of
- Private reprimand;
- Public reprimand;
- Suspension; or
- Expulsion.
In all these cases, the confidentiality of the parties involved is strictly maintained. The only time the member’s name is made public is if/when the member’s organization chooses to announce its decision to publicly reprimand, suspend or expel the member.
This is why, in a given circumstance, it may appear as if the ABCD has not acted.
Conclusion
Hopefully, this discussion has shed some light on the ABCD and its relevance in your day-to-day activities. In particular, I would hope that you will leave with two helpful thoughts:
- The RFG process is a valuable, confidential, and readily accessable resource; and
- The discipline process is a laborious one, but it is carefully designed to protect all actuaries by assuring that any decision that is ultimately made by the member’s organization is a deliberate and informed one.
Understood?
ALBERT J. BEER, MAAA, FCAS, is vice chairperson of the Actuarial Board for Counseling and Discipline.
