Customer Interests, Shareholder Interests, and Community Expectations

Financial institutions live and die by the support and confidence of their customers.

COVID-19 may have a direct consequence for customers e.g. because of loss of work and income, and this may flow through to their relationship with financial institutions. 

For example, they may struggle to pay mortgages or insurance premiums; in time they may find that certain insurance cover is no longer available or exclusions are applied.

We have seen many banks, insurance companies and super funds respond with helpful changes to requirements to lessen the burden on their customers. Many of these changes are temporary and will be unwound; in this sense, some of the customer impacts have been deferred rather than permanently mitigated.

Notwithstanding this renewed focus on the interests of the customers, for many institutions COVID-19 will have significantly adverse consequences for shareholders.  So inevitably, and indeed appropriately, there will be much attention paid to the interests of shareholders, and this will flow through to the actuary’s work.

There may be tensions between the interests of the various parties, and the balance needs careful attention.

There are legal and regulatory requirements with respect to customers that need to be carefully considered also. Much of APRA’s regulation and supervision is focused on protection of customer interests; the law requires life policyholder interests to be given priority over those of shareholders; in superannuation, the law requires that  priority be given to the duties to and interests of the beneficiaries over the duties to and interests of other persons – and so on.

How an institution works its way through this may well determine the community’s perception of it for years to come, and actuaries have a critical role to play in helping with this.

While they were always there, and evolving over time, the Hayne Royal Commission put community expectations in the spotlight.  It showed how poorly those expectations had been met in many instances.  Institutions have responded in a considered and substantial manner, and the concept of community expectations is now much more consciously and deliberately factored into thinking.

One of Hayne’s principles was this: When acting for another, act in the best interests of that other.

It may pay an actuary to reflect on this in developing and delivering advice.  Who is the ultimate recipient of the advice? In whose interests is the advice being provided? In these considerations, it pays to reflect also on the obligations (including legal requirements – see above) of senior management and the Board, as they often will take decisions on the actuary’s advice.

Our Code of Conduct and Professional Standards can provide useful guidance in any such deliberations.


In this Pandemic Resource Centre:



7 May 2020: IAIS media release - IAIS facilitates global coordination on financial stability and policyholder protection during COVID-19 crisis

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