Actuaries as experts: consultation on principles

The Institute and Faculty of Actuaries (IFoA) has published a consultation paper on introducing an Actuarial Profession Standard (APS) for actuaries to follow when instructed as an expert in relation to existing or contemplated legal proceedings. This will replace the current information and assistance note. The APS’s mandatory general principles are to be supplemented by advisory guidance on UK civil court proceedings. IFoA members will have to apply the APS principles to all UK assignments. For overseas assignments, they must consider to what extent the principles are relevant to the instruction in question and apply them as appropriate.

The proposed APS principles themselves are divided into four groups. The first relates to initial instructions. The actuary is to establish clearly the nature and scope of the instruction and be satisfied that he or she has the necessary level of relevant knowledge and skill in order to fulfil all of its requirements. Secondly, actuaries should ensure that their advice is, and can reasonably be seen to be, independent and objective, and they must disqualify themselves from acting if they are unable to ensure that is the case. In a section on compliance with rules and procedures, actuaries are told that they must ensure that they familiarise themselves with and adhere to the rules and procedures applying in the jurisdiction of their instruction and act in accordance with their obligations to the applicable Court or tribunal. Finally, IFoA members must not agree to be remunerated under any arrangement whereby their fee is linked to the outcome of the proceedings in relation to which they are instructed.

The associated Guidance paper deals with, for example, differences in the role of an expert witness and an expert advisor. Answers are provided to questions that may arise during the course of an instruction or court hearing, such as the level of detail to include in the expert report, what to do if the expert changes his mind or how to respond to an instructing solicitor who puts pressure on the actuary to tailor his opinion to support a particular argument. Advice is offered on preparing for the hearing and on being aware of the potential tactics of barristers undertaking cross-examination, such as an attempt to manoeuvre the expert into taking an extreme position that undermines the credibility of his evidence. Potential pitfalls are addressed, in particular the dangers of civil action or disciplinary proceedings against an actuary who accepts an instruction or provides evidence outside his area of expertise or whose evidence falls below required standards. Appendices summarise differences between court procedures in England, Scotland and Northern Ireland. This useful Guidance would be equally applicable to accountants and other expert witnesses and advisors.

In addition to ensuring that the expert actuary is complying with the standards expected by IFoA and meeting his or her obligations to the Court, adherence to the APS is likely to provide protection against professional negligence claims. As with comparable industry standards, courts are likely to take the view that whilst adherence to the standard is not proof that the expert acted reasonably, it is very strong evidence that he or she did.

This new approach of imposing principles-based rules on actuaries undertaking expert assignments differs to that of the ICAEW. ICAEW members are provided with Helpsheets, Checklists and Guidance, and the Forensic and Expert Witness Group is active in promoting quality work by accountants acting as experts, but there are no mandatory rules covering this area specifically. Perhaps that may come.

The deadline for responses to the consultation paper is 9 December 2013.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, click here.