I am very pleased to introduce this consultation from the Regulatory Board of the Institute and Faculty of Actuaries (IFoA) on a proposal to publish non-mandatory guidance to support Members in understanding their regulatory requirements, relating to Diversity, Equity and Inclusion (DEI).
When we consulted last year on introducing specific DEI obligations into the Actuaries’ Code, we explained our aim of ensuring that the standards we set for IFoA Members reflect the diversity of our membership and serve to protect the public as well as the reputation of the profession.
Your responses to last year’s consultation provided the Board with valuable insight into the considerations and concerns of some Members regarding the proposed amendments to the Code.
It was clear to the Board that, in respect of many comments, supporting guidance would alleviate uncertainty and provide necessary support for members. Many of your responses highlighted specific areas on which Members would wish the guidance to focus, and we have aimed to include practical examples in the guidance of how the requirements would apply in practice.
However, the Board also heard from you that elements of the initial proposals were problematic and we agreed to amend our proposals to remedy those issues. We hope that Members consider the amended proposals, together with the guidance, to be clear and reasonable. However, this consultation is your opportunity to tell us about any parts of the draft guidance that you think are unclear, or if there are any areas where you continue to be unsure of the IFoA’s professional expectations.
The Board anticipates that some of your comments on the draft guidance may relate to the planned amendments to the Code and I assure you that the Board will consider all comments in detail. The Board is committed to ensuring that any changes made to the regulation of Members is proportionate, consistent, transparent and targeted. This means that the Board will give full consideration of all views received before finalising any Code changes or introducing any guidance in respect of DEI.
I would ask as many of you as possible to take part in this important consultation and look forward to hearing your views on this proposal.
Neil Buckley
Chair of Regulatory Board
As an international, multicultural professional membership body and regulator, the Institute and Faculty of Actuaries (IFoA) recognises, values, and embraces the benefits of diversity.
In 2022, the IFoA launched a new 5-year strategy on Diversity, Equity and Inclusion (updated in August 2024 as part of a mid-point review) which set out the steps it is taking to ensure that current and future Members feel they work in an environment where they belong, can make an impact, and succeed. Core to that is the belief that DEI can help to support financial stability by increasing diversity of thought and supporting better decision-making and that it can lead to better outcomes of work for users.
As part of the work to deliver the IFoA’s DEI strategy, the Regulatory Board reviewed the regulatory requirements of Members in relation to DEI and published a consultation on this review in February 2023. The Board has considered the outcome of the recent mid-point review of the IFoA DEI Strategy, and has agreed that the Board’s consideration of the regulatory requirements of Members in relation to DEI remains aligned with the IFoA’s updated strategy.
The 2023 consultation sought views on proposed amendments to the Actuaries’ Code which were designed to make explicit the IFoA’s expectations of Members in relation to DEI.
The 2023 consultation received 198 responses, which comprised responses from 179 individuals and 19 organisations. The responses to the proposals were polarised, with a significant proportion of respondents supporting the amendments and a similar proportion disagreeing with them.
The responses included a wealth of comments which allowed the Board to identify key themes of concern with the proposed amendments. These themes included:
The Board considered the consultation responses in May 2023 and discussed how to address the issues flagged by Members. The Board agreed to amend the proposals to address some concerns, such as the removal of the phrase ‘behaviour that may amount to’ and removal of the obligation to ‘treat others fairly’. View the agreed changes to the Code, shown in mark-up (PDF, 450 KB).
The Board had explained in its initial proposal document that guidance would be produced to complement any agreed Code changes. In its discussions in May 2023, the Board agreed that the consultation feedback provided valuable direction as to the areas on which that guidance should focus.
A wealth of comments were received from respondents to the 2023 consultation. Both supporters and critics of the proposed amendments made suggestions as to the content of complementary guidance. These comments, and the questions contained within the consultation responses, provided an initial basis for the draft guidance.
Once a first draft was prepared by the IFoA executive and the Regulatory Board, the Board sought input from IFoA Council and the IFoA’s Diversity Action Group (DAG). Members of both Council and DAG had expressed some concern with certain of the proposed amendments to the Code. The Board therefore placed great value in the insight of these groups, and whether they felt that the guidance adequately addressed the questions raised in the 2023 consultation.
It is important for all IFoA Members, and the public, that the actuarial profession is a diverse one which attracts contribution from the broadest spectrum of views and backgrounds. This diversity is necessary to ensure the highest standards of both conduct and output.
The Regulatory Board, in agreeing DEI-specific amendments to the Actuaries’ Code, aimed to ensure that the regulatory requirements of members reflect these aims, whilst maintaining a proportionate, consistent, targeted, accountable, and transparent approach to regulation.
The aim of the agreed Code changes was to ensure that we are continuing to hold Members to high standards of conduct, in the public interest, and that Members are clear of our expectations in this area, while ensuring the Code remains principles- based.
Whilst the Board is satisfied that the agreed changes to the Code are proportionate, consistent, targeted, accountable, and transparent, it is clear from the responses to the 2023 consultation that Members are not wholly clear on what behaviour is expected of them in terms of the DEI Code provisions.
The proposed guidance seeks therefore to ensure that when the DEI Code provisions come into effect, Members are clear about the IFoA’s expectations and their individual obligations. The proposed guidance aims to do this by:
The term “Diversity, Equity and Inclusion” is widely used. However, it is important that Members understand what these terms mean in relation their regulatory obligations. The guidance therefore sets out how the IFoA interprets the terms Diversity, Equity and Inclusion and how this phrase should be considered by Members when applying the terms of the Code.
The existing, unamended, Code provides that “Members must show respect for others in the way they conduct themselves.”
The intention of the simplified phrase in the amended Code was to demonstrate that this show of respect is required whomever Members may interact with (in their professional lives, or where their conduct might reflect on the profession).
The existing Code guidance remains relevant to the amended Code provisions and has been replicated, and expanded upon in the new draft. The guidance explains that the requirement to ‘show respect’ does not require Members to agree with everyone, nor does it seek to interfere with Members’ rights to free speech and expression.
The draft guidance provides examples of situations in which Members may wish to express their disagreement with the views of others, and how to do this whilst showing respect.
Understandably, respondents to the 2023 consultation sought guidance on the meaning of this new obligation. The draft guidance explains the reasoning for this being a ‘should’ obligation rather than a ‘must’ obligation and describes what is meant by ‘encourage’ in the context of DEI.
The draft guidance provides examples of ways in which Members can encourage DEI, and addresses many of the questions that Members have raised about the application of this provision, including regarding the global impact of the provision and the interaction between this provision and Members’ rights to their own beliefs.
The guidance also addresses the question of whether a failure to actively encourage DEI could amount to professional misconduct.
The new provisions of the Code introduce for the first time the phrases ‘bullying, victimisation and harassment’ to the IFoA’s regulatory framework. The draft guidance explains the meaning of these terms and the relevance to Members’ working lives. The draft also answers the questions which arose in the 2023 consultation, which were mainly concerned with whether ordinary business behaviours might be considered bullying and therefore in breach of the new Code provisions.
The agreed changes to the Code expand upon the existing Speaking Up requirements by introducing an obligation that “Members should speak up if they believe that others are being treated unfairly or excluded unreasonably.” The current Speaking Up guidance provides support for Members who might be unsure as to when or how they should ‘speak up’ and the proposed DEI guidance provides examples as to how the obligation to Speak up about the unfair treatment or unjustified exclusion of others might arise in practice.
In response to the 2023 DEI consultation, some Members expressed concern that the proposed amendments to the Code would increase the likelihood of Members being subjected to spurious complaints.
There were also comments received during the 2023 consultation that expressed concern as to the possible conflict between new Code provisions and Members’ rights to express themselves, particularly in their private lives.
The guidance seeks to allay these concerns by explaining how the Code applies to Members, both within their working and non-working lives, how the provisions will be applied by the IFoA, and how the IFoA deals with disciplinary matters.
The proposed guidance would apply to all Members of the IFoA, as DEI is a cross-practice, international issue, and the Code applies to all Members.
The aim of the proposals is to ensure that current and future IFoA Members have appropriate awareness, knowledge and skills relating to DEI and that this is embedded into their actuarial work, thereby providing more value and benefit to users.
The aim is to ensure proportionate, consistent, transparent and targeted regulation, in a way that is principles-based and outcomes focused.
Non-mandatory guidance will help members with their understanding of DEI and provide suggestions for Members on how they can ensure they comply with the Code, as well as directing them to further helpful IFoA resources. The expectation is that this would have little direct impact on Members, as guidance is non-mandatory. However, it would provide a useful resource tool for Members.
You can respond on behalf of an organisation or provide a personal response. To provide your response please (one of the following):
The deadline for responses is 29 October 2024.
Neil Buckley, Regulatory Board Chair, and Hannah MacLeod, Interim Head of Legal Services, are hosting webinars about this consultation on 19 September and 8 October, where you can learn more and ask questions about the draft guidance.
• register for 19 September at 08.30-09.30 (BST)
• register for 8 October at 16.30-17.30 (BST)
Once the consultation has closed, the IFoA will reflect upon the feedback and publish more specific details of any changes. There will also be a period allowed before the changes come into effect so that those affected can take steps to ensure they are able to comply with the new requirements.