SUP 4.2 Purpose

Section 340 of the Act gives the PRA6 power to make rules requiring an authorised person, or an authorised person falling into a specified class, to appoint an actuary3. Section 340 further empowers the PRA6 to make rules governing the manner, timing and notification of such an appointment and, where an appointment is not made, for the PRA6 to make an appointment on the firm's behalf. The rule-making powers of the PRA and FCA6 under section 340 of the Act also extend to an actuary's3 duties.

This chapter defines the relationship between firms and their actuaries3 and clarifies the role which actuaries3 play in the appropriate regulator's monitoring of firms' compliance with the requirements and standards under the regulatory system. The chapter sets out rules and guidance on the appointment of actuaries3, and the termination of their3 term of office, as well as setting out their respective rights and duties. The purpose of the chapter is to ensure that:

1. (1)

   long-term insurers (other than certain friendly societies) have access to adequate actuarial advice, both in valuing their liabilities to policyholders and in exercising discretion affecting the interests of their with-profits policyholders3; and

2. (2)

   other friendly societies carrying on insurance business (and which have traditionally relied upon actuarial expertise) employ or use an actuary of appropriate seniority and experience to evaluate the liabilities of that business; and2

   2
3. (3)

   managing agents of Lloyd's syndicates employ or use an actuary of appropriate seniority and experience to evaluate the liabilities associated with insurance business carried on at Lloyd's.2

The functions3 described by SUP 4.2.2 G (1) are performed by one or more actuaries who are3 required to hold office continuously and must be approved persons3. The principal duty of an actuary appointed to perform these functions3 is to advise the firm (see SUP 4.3.13 R to SUP 4.3.18 G3 for the rights and duties of such an actuary3).

The function described by SUP 4.2.2 G (2) is performed by an 3appropriate actuary who is appointed to prepare the triennial investigation and interim certificate or statement required by IPRU(FSOC) 5.2(1) (see SUP 4.4.6 R and SUP 4.5.12 G to SUP 4.5.14 G3 for the rights and duties of an appropriate actuary).1

Actuaries3 act as a valuable source of information to the appropriate regulator in carrying out its functions. For example, in determining whether a firm satisfies the threshold conditions, the appropriate regulator has regard to whether the firm has appointed an actuary3 with sufficient experience in the areas of business to be conducted by the firm.

3In making appointments under this chapter and in allocating duties to actuaries, firms are reminded of their obligation under SYSC 2.1.1 R to maintain a clear and appropriate apportionment of significant responsibilities so that it is clear who has which of those responsibilities and that the business and affairs of the firm can be adequately monitored and controlled by the directors, relevant senior managers and governing body of the firm.