Letters: David Purchase (merger)

When I was on Institute Council, 20 years ago, I favoured a merger. However, I recognised that it could not happen then, and so strongly supported the trend towards joint activities.

And now? Pretty well everything that can be ‘joint’ is so, and the additional benefits from a merger seem to be rather minor. Strangely enough, there is less need now than there was then, and also a good reason not to merge now. There are still issues of governance — a Joint Council of 57 is absurd — but these could easily be addressed within current structures.

If there are genuine benefits to be gained — benefits that outweighed the disadvantages — then I would support it, but in my view the argument ‘for’ a merger, as set out on page 12 of The Actuary March 2008 edition, contains not a single identifiable and clear-cut benefit. (Oh, perhaps just one. “There might even be some cost savings.” Not enough, I suspect, to justify the capital cost of the merger.) Instead, it is full of the sort of business-speak beloved of company chairmen and chief executives — emotive words and phrases like ‘dynamic’, ‘positive’, ‘reposition’, ‘fresh, modern and clear view’, ‘driving forward our new strategy’, and (worst of all) ‘exciting’. All words which may look good at first glance but are essentially meaningless. It may be true that ‘our brand is devalued’, but are the proponents of a merger suggesting that pension scheme deficits, Equitable Life and so on would not have occurred had there been a merged profession? In the public perception, the new body would just inherit the baggage from its predecessors.

Perhaps there are some hidden reasons for the merger. Maybe the likely loss of new South African students would make the Faculty financially unviable but, if this is so, we should at least be told.

One clear problem we have at present is the name we use. ‘The Actuarial Profession’ feels weak, and it does not actually represent a legal entity. To suggest an alternative is both difficult and risky but I will stick my neck out and suggest ‘Chartered Actuaries in the United Kingdom’. My own preference would be for a new body (perhaps ‘The Society of …’) of which all FFAs and FIAs (but only fellows) would automatically be fellows too. The presumption would be that all interaction with the outside world would be through the Society unless there was a specific reason for it to come from only the Faculty or the Institute. However, I can well see that there might be ways of achieving the same end without having to create a new body.

The name is just one of several reasons why it seems wrong to me to have an ‘in principle’ vote (rather pointless in the Institute anyway — the result is a foregone conclusion) followed by a formal vote on firm plans. As so often, the ‘devil is in the detail’ and fellows of both bodies may find it difficult to reject an unsatisfactory package that they have accepted ‘in principle’.

Why is this such a bad time to merge the Faculty and Institute? Well, the ‘elephant in the room’ (to use another awful modern cliché) is the Scottish Parliament. Holyrood is mentioned rather dismissively in the papers proposing the merger, with the view that all the matters on which actuaries advise are still controlled from Westminster. However, even ignoring the possibility (perhaps still remote) of Scottish independence, it is very likely that greater fiscal autonomy will be granted to the Scottish Parliament, and it may well need to seek professional actuarial input. This might not be too well received if it emanates from a body based at Staple Inn!

David Purchase
24 March 2008