In 2008 the Financial Services Board (FSB) increased the Fit and Proper requirements in the FAIS Act with regards competency. All key individuals and representatives in the financial services industry now HAVE TO complete regulatory examinations (RE) based on their roles and the product sub-categories they are responsible for. There are two levels of RE – Level I and Level II – which we briefly discuss below...
RE Level 1: If you are already active in the financial services industry (appointed or approved between 2004 and 2009) you must complete the RE Level I exam successfully by 31 December 2011! If you are entering the industry from 2010 you must complete this exam successfully within two years of your appointment or approval. The RE Level I exam is based on the regulatory framework and the regulatory role of the individual, more specifically the FAIS Act, Code of Conduct and Board Notices, as well as FICA.
RE Level 2: The second level exams are product specific, and will focus on testing your applied knowledge in relation to the specific products that you provide financial services for. If you are a key individual acting as a representative then you will have to complete the applicable exams as well! You can gain exemption from writing the RE Level II exams provided you have completed a recognised qualification approved by the FSB as “specific” to the particular product subcategory. The FSB have published a list of recognised qualifications.
How tough are the regulatory exams?
The RE could prove tougher than you think – if you fail to prepare. As we pen this newsletter a number of financial services professionals have already sat the exam. A regular FAnews Online reader recently sent some advice for those of you preparing to write the exams. And this – in a nutshell – is what he said.
Financial services providers, key individuals and representatives – stop what you are busy with immediately! Book an exam date at one of the many organisations that offer RE at your earliest convenience, purchase the required learning material from Inseta (the Insurance Sector Education and Training Authority) and begin studying! Memorise the material and then memorise it again! Depending on your learning style and existing knowledge of the FAIS Act you should be able to cover and review the study material with 12 to 24 hours of work. Spread that over a period of 1 day (not recommended) to 30 days and you won’t even lose valuable work time! Don’t view the studies as a chore, because we as responsible financial advisers are required to know the Act anyway!
The exam is a tough session to sit through. We felt that a third of the paper was exceptionally easy, with direct questions. A third of the paper was more difficult and the questions required a fair amount of lateral thinking. And the rest of the questions were the worst questions you could expect to experience – especially if your mother language is Afrikaans! But you’ll make it, don’t worry.
A thorough knowledge of the FAIS Act is essential
The questions are based on the learning material provided by Inseta (and others) with the FAIS Act and the accompanying Code of Conduct as the underlying knowledge base. And provided you are familiar with every line of the Act you’ll make it! I am talking from experience. The first item on my New Year list was RE. I booked the earliest possible exam date and arranged my study material through Inseta. Four representatives from our brokerage saw fit to write the first exam in the morning session and tackle the “key persons” exam on the same afternoon. After that we simply had to wait for our results. Each of us passed at the first attempt with scores of between 66% and 72%.
It is so frustrating to read all the e-mails and articles by people who obviously haven’t done the exams yet, or by people who have written the exams but haven’t studied for them, preferring instead to rely on general knowledge. All that we can say now is we cannot wait for RE 2! Good luck with your exams!
Where to source your exam material
Study material for RE may be sourced from the following websites:
http://www.fsb.co.za/
http://www.moonstone.co.za/
http://www.inseta.org.za/
http://www.fpi.co.za/
The approved examination bodies include:
The Financial Planning Institute (FPI)
Leselo (Institute of Bankers)
Moonstone Information Refinery
The South African Institute for Financial Markets (SAIFM)
Editor’s thoughts: We would love to hear your experiences when sitting the regulatory exams… Please add your comment below, or send it to gareth@fanews.co.za
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