Select Committee on Treasury Fourth Special Report



(a)  We appreciate the high regard in which GAD is held by those who deal with it (paragraph 7).

The Government is grateful for the appreciation of the high regard in which GAD is held by those with whom it deals.

(b)  GAD should continue to play a role in the supervision of life insurance firms even after the end of its contractual relationship with the regulator (paragraph 13).

The Government notes this recommendation, but responsibility for the supervision of life insurance firms is with the Financial Services Authority. It is for the Financial Services Authority to decide how best to secure actuarial advice.

(c)  We consider it important that Parliament should be regularly informed about the condition of the life insurance industry, particularly in light of the recent problems affecting Equitable Life. GAD is well placed to provide such information, even after the FSA takes over responsibility for actuarial advice on life insurance firms, by developing its relationship with firms' appointed actuaries. We recommend that GAD be given statutory responsibility for publishing a regular report on the life insurance industry (paragraph 14).

The Government notes this recommendation. Under the Financial Services and Markets Act 2000, one of the responsibilities of the FSA is to make reports to the Treasury at least once a year on the discharge of its functions. These reports will cover the FSA's responsibilities in connection with the life insurance industry and will be laid before Parliament.

(d)  We consider it vital that the independence of GAD should continue to be upheld (paragraph 15).

The Government accepts this recommendation and values the impartial and independent advice that the GAD is able to provide.

(e)  We have received the impression that GAD is a rather under utilised resource which the Government could make more use of in the future (paragraph 16).

GAD has been operating under a "net control" regime since 1989. This flexibility enables the Department to balance resources in line with demand on a cost recovery basis. The extent to which Government Departments make use of the GAD's services is a matter for them.

(f)  We recommend that the Government review GAD's activities with a view to identifying areas where the Department could usefully make regular reports to Parliament (paragraph 17).

The Government has recently reviewed the activities of GAD and has no plans to review them further.

(g)  We recommend that the Government consider giving GAD a budget for carrying out work on matters of public interest, for example when commissioned by select committees (paragraph 18).

If any select committee wished to procure actuarial advice from the GAD, in principle it is able to do so, on a repayment basis.

(h)  We recommend that the Government review the scope for GAD to be given more commercial freedom to pursue work overseas (paragraph 21).

Provided there is no conflict of interest, there is no constraint on GAD's ability to pursue work for overseas governments.

(i)  There may be merit in re-examining GAD's status to ensure that the Government continues to get the best value actuarial advice (paragraph 22).

The Government has just completed a review of the status of GAD, which has confirmed that the present arrangements provide a sound basis for the Department to continue to provide cost effective and impartial actuarial advice to Government. The present arrangements do not constrain the GAD's ability to seek additional work from other public sector organisations.

(j)  We look to the Government to ensure that GAD's expertise is fully exploited in future: this will help it continue to attract high quality actuarial staff (paragraph 24).

As referred to above, the extent to which Departments draw on the expertise of GAD is a matter for them.

HM Treasury
September 2001

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