Conflicts of interest

Independence is the service. An actuarial opinion is only worth something if the person giving it has no stake in the answer. This page sets out the structural reasons we have no such stake, and what we do when a conflict arises in spite of them.

1. Our structural position

Most conflicts in actuarial and financial work come from the business model rather than from individual bad judgement. We have removed the usual sources:

• Fee only. We are paid by the client, for the work, on a fee basis agreed in writing before the work starts. Our fee does not depend on the conclusion we reach.
• No product commissions. We receive no commission, override, placement fee or other payment from any insurer, reinsurer, administrator, asset manager or product provider.
• No referral fees. We neither receive nor pay a fee, commission or benefit for a referral. If we suggest another firm, it is because we think they are right for the work, and we have no financial interest in whether you appoint them.
• No investment, administration or audit services. We do not manage or advise on investments, we do not administer policies, funds or schemes, and we do not perform audits. So there is no related business for an actuarial opinion to lead into.
• Not a licensed financial services provider. We do not advise on or intermediate financial products under the Financial Advisory and Intermediary Services Act, and we earn nothing from the sale of any product.

We have no shareholding in any client, and no client has a shareholding in us. The company is wholly owned by its sole director.

2. Identifying a conflict before we accept work

Every enquiry is checked before we accept it. The check asks:

• whether we hold, or have recently held, an engagement for another party with an interest adverse to the prospective client in the same matter;
• whether we hold confidential information from another client that is relevant to the proposed work;
• whether the director has a personal, family, financial or directorship interest in the prospective client, in its competitors, or in the outcome of the matter;
• whether the work involves reviewing, validating or opining on work that we previously carried out ourselves; and
• whether anything in the proposed scope, fee basis or reporting line would make it difficult to express an unwelcome conclusion.

Where the answer to any of these is unclear, we treat it as a conflict until it is resolved. We would rather decline work than accept it and compromise it.

3. The register

We maintain a register of engagements and relationships. For each engagement it records the client, the matter, the period, the parties with an interest in the outcome, and the conclusion of the conflict check, including any safeguard applied. It also records the director's outside interests, directorships and significant relationships. The register is updated when an engagement is accepted, when its scope changes materially, and when an outside interest is taken on.

The register is what makes the conflict check at section 2 possible: it is checked against every new enquiry. A client may ask us to confirm, in writing, that we have carried out the check and what it found.

4. What happens when we find one

There are three outcomes. We start by asking whether the work can properly be done at all.

• Decline. Where a conflict goes to the heart of the work, we decline it. No safeguard makes an opinion credible if we have an interest in its conclusion.
• Disclose. Where the conflict is real but does not compromise our judgement, we disclose it in writing to every affected client, in enough detail for them to decide for themselves, before the work begins.
• Safeguard. Where disclosure alone is not enough but the work can still be done properly, we put safeguards in place — separating information, restricting who works on the matter, bringing in an independent actuary to review a conclusion, or narrowing the scope — and we proceed only with the written agreement of each affected client.

If a conflict emerges after an engagement has started, we tell the client promptly, stop work on the affected part if it is necessary to do so, and agree the way forward before continuing.

5. Review and second-opinion work

Independent review is a substantial part of what we do, and it carries its own conflict. Our position is explicit:

• We will not review, validate or give a second opinion on work that we carried out ourselves. If you ask us to check our own model, calculation or assumption set, we will say so and help you find someone else.
• When we review another actuary's work, we report what we find. We do not soften a conclusion to preserve a relationship, and we have no commercial interest in the reviewed party.
• We will not accept a review engagement where the fee, the scope or the reporting line is structured so that a particular conclusion is expected.
• Where a review may be followed by remediation work, we say at the outset whether we would be available for that work, so that the client can judge our incentive and, if it prefers, exclude us from it.

6. Confidentiality between clients

We may act for organisations that compete with each other. Information received from one client is never used for the benefit of another, and is never disclosed to another, whatever the commercial value of doing so. Client data is kept separately, access is restricted to the people working on that engagement, and confidentiality obligations continue after the engagement ends. Where we hold confidential information that would be material to a prospective engagement for a competing party, we decline that engagement.

Methods, general market understanding and professional experience are ours to carry from one engagement to the next. Client data, client positions and client intentions are not.

7. The overriding standard

This policy sits beneath the Actuarial Society of South Africa's Code of Professional Conduct, which binds the director as a Fellow of the Society. The Code requires integrity, competence, impartiality and the disclosure of conflicts, and it applies to all actuarial work regardless of what this policy or any engagement letter says. Where this policy and the Code differ, the Code governs. Applicable Standards of Actuarial Practice apply in the same way.

8. Raising a concern

If you believe we have a conflict we have not disclosed, or that an opinion we have given was influenced by an interest of ours, write to info@bonoactuaries.co.za and set out the concern. It goes to the director. We will respond in writing, and where the concern is well founded we will say what we are doing about it and, if the work is affected, tell every client who relied on it. A concern about the professional conduct of a Fellow may also be taken to the Actuarial Society of South Africa.