Severe consequences for missing the regulatory examination deadline

19 April 2012 | | Gareth Stokes

Within hours of our newsletter titled The Regulatory Examination deadline is set in stone – in which we questioned the lack of up-to-date Regulatory Examination (RE) statistics – the Financial Services Board (FSB) responded with RE1 and RE5 details correc

RE 1 (Key individual for category I, II, IIA, III and IV)		Percentages for RE 1
Total number that must write the regulatory examinations	13 839	N/A
Total number of candidates that have written the regulatory examinations	9 150	66.12%
Total number of candidates that have passed the regulatory examinations	6 734	73.60%
Total number of candidates that must still write the regulatory examinations in order to meet the 30 June 2012 deadline	4 689	33.88%

RE 5 (Representatives of Categories I, II, IIA, III and IV excluding representatives for subcategories 1.1 and 1.19)		Percentages for RE 5
Total number that must write the regulatory examinations	107 428	N/A
Total number of candidates that have written the regulatory examinations	63 368	58.98%
Total number of candidates that have passed the regulatory examinations	41 318	65.20%
Total number of candidates that must still write the regulatory examinations in order to meet the 30 June 2012 deadline	44 060	41.02%

An unimpressive performance to date

I struggled with the layout of the FSB tables. They report “the total number of candidates [RE1] that have passed the regulatory examination” as 73.60%... If you’re not paying close attention you would think the industry is on track to easily meet the examination deadline and that the bulk of the 13839 licensed key individuals have complied with the RE1 requirement. But this figure reflects only those candidates that have thus far sat the exam. In other words – 73.6% of the 9150 candidates who have attempted the exam have thus far passed!

Further confusion stems from the FSB preference to exclude those candidates who failed the exam on their first attempt from the “candidates who must still write the [RE1] examination by the 30 June 2012 deadline.” They are thus able to claim that just 33.88% (or 4689) of key individuals still have to comply with the RE1 requirement by sitting the exam. But when you include the number of failed candidates – 2416 individuals – then 7105 candidates have yet to pass RE1.

This shoddy representation repeats in the RE5 table. Due to the rather disappointing pass rate (reported at just 65.2%) we calculate that an alarming 66110 representatives have yet to pass this exam. So while the number of candidates that must sit RE5 for the first time can be reported at 41.02%, a more accurate reflection of the situation is that 61.53% of representatives have not yet passed RE5. In summary: With just 10 weeks to go before the 30 June 2012 deadline a staggering 51.34% of key individuals and 61.53% of representatives have yet to pass the examinations!

It seems South Africa’s financial intermediaries will be hard-pressed to comply with the FSB RE requirement. Candidates that have failed have an opportunity to rewrite before 30 September 2012, but the rest – some 4689 key individuals and 44060 representatives – have to find an exam seat in the next two months.

The consequences will be severe

In a press release issued 17 April 2012 the Financial Intermediaries Association of South Africa (FIA) warns that intermediaries who fail to sit the appropriate RE by the deadline will place their careers at risk! Joe Kotzé, National Manager: Compliance at the FIA, says providers who do not pass the relevant exams will have their licences withdrawn and will not be able to practise until they successfully sit the exam. “There will be no further extensions to the deadline so financial intermediaries must register for and pass the exams [they qualify for a rewrite if they fail] or lose the ability to continue operating as intermediaries,” he said.

The consequences of having a license withdrawn are dire. “Financial intermediaries that have their licences withdrawn will have to reapply to become an authorised financial services provider,” said Kotzé. “Key individuals, sole proprietors and representatives who do not pass the exam will not be able to give advice or render intermediary services until they successfully complete it!” In the six weeks it takes for a new licence application to be authorised the intermediary or provider will be unable to generate cash flow. FSPs could suffer severe financial losses, lose clients and in the worst case leave representatives and staff without a job and income as a result.

Register today

Those who have not yet registered must ensure they do so before 8th June 2012 in order to give the examination bodies 15 working days to prepare. (Remember, the last day you can sit the exam will be Friday 28th June 2012). “We urge everyone who must still complete these exams to become part of the positive trend towards professionalism in the industry. Register today and put your study plan into action,” concludes Kotzé.

Editor’s thoughts: After studying the up-to-date RE statistics it appears that key individuals are in a reasonable position to meet the 30 June 2012 deadline. The same cannot be said for representatives. Do the statistics point to failure on the part of the larger product providers to get their sales force compliant? Add your comment below, or send it to gareth@fanews.co.za

Comments

Added by miemsie, 05 Apr 2017

Please help me I have failed 2 my RE5 exams and I need to passed it otherwise I am out of a job

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Added by Edward, 29 Feb 2016

Hi

Anyone looking for assistance with RE1 (Key Individuals) / RE5 (Representatives), please send an email to eddishabangu@gmail.com and we will communicate from there.

Regards.
Edward
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Added by Esthia Botha, 11 Dec 2014

HI , How long after you have done the exam do you get your results? I completed mine yesterday and until I took the test was positive that I knew the Fais and Fica act , not so sure anymore
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Added by Thembeni, 01 Aug 2014

Hi

I wrote the RE1 on the 31/01/2014 on paper and got 55%
I wrote the RE1 on the 31/07/2014 on the Computer and got 44%.

I was very shocked as I STRONGLY believe I studied hard, I knew when I was doing the exam that I have passed and to my shock I got 44%
I seriously believe that I've been sabotaged.
how can I know for sure that I didn't pass,
1st time I didn't get my paper back I don't know what was the right answer and the wrong answer, same as the 31/07/2014 exam I don't know what was the right and the wrong answer.

How does 1 know or sure that they have failed or pass.
I strongly feel that the FPI is stealing people's monies.
I have written a complaint to them but no response.
I wasnt both my exam results so I can know for sure what was the correct answers that I got and what was wrong and what is the right answers from their side on the Exams.

the study material is the same.
I have studied hard I know the FAIS, FICA, Notices that you must study.

I can even take an oral exam and I am sure I would pass.
the FPI does these exams, they mark them and then all we get as candidates is a message that you have failed.
DDoes it even make sense that people fail this exam 7 to 8 times?
How can this be?
Candidates gets trained for this.
I want to know if anything can be done, can I get my exams back.

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Added by Advisor1, 21 Apr 2012

The FSB cannot lose face by either extending the deadline or by having a big failure rate as either of these scenarios would cause them to be seen in bad light. The obvious route to go is to dumb down the questions to the point that anyone who writes will pass. The reason the marks are going up on average isn't because people are preparing better, it is because all the difficult questions we, the early writers, had to endure have been sifted out, leaving a pool of very easy questions.This is just so typical of this industry ! Regarding the product specific exams, has anyone downloaded and looked at these ? (from Inseta) I downloaded the collective investment scheme notes and was quite shocked. I thought the regulatory exams were justifiably "technical" and assumed the product specific exams would be a cinch. Not so, the notes are highly technical. If people think they are hard done by doing the 2 exams now, they are in for a rude awakening when they have to write the many more product exams. It's going to get fun ! Thank goodness we get credits for most exams as CFP's. I pity the poor sods who have to write 6 or more exams. Ka-Ching, the sound of tills ringing is loud and clear.
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Added by JOHAN, 20 Apr 2012

T0 all Colleages. I wrote and pass both exams . After telephoning the FSB. a thousand times I discoverd by accident that examination bodies (FPI) do not inform the FSB. ..about passes, ARE YOU SURE THE FSB. KNOW THAT YOU HAVE PASSED?
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Added by Theresa, 19 Apr 2012

On top of everything else that has been discussed recentlyI. It will be interesting to see statistics on how many of those that has passed, has passed on their first attempt. , Taking the cost of the excam into account, I believe this is a number that we will never see.
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Added by MichaelK, 19 Apr 2012

To anyone who has never understood Mark Twain's expression "lies, damned lies, and statistics" the FSB's statistics presentation is a perfect example of the presentation and manipulation of facts and figures to support a weak arguement.
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Added by Pete, 19 Apr 2012

Come on people - if we want to be seen to be professionals - that is, having made the transition from a bunch of sales people chasing sales targets, to professional advisers building an income stream into the future, one should at least be able to pass the "board exam" that aims to professionalise our industry. Gone are the days of appointing anything that moves as an insurance salesman (and if it did not move, it was kicked until it moved, and then appointed!) Granted, some guestions needs a bit of thought, but is that not exactly what a client's situation requires?
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Added by jenny, 19 Apr 2012

I have been in the industry as an adminstrator for 15+ years and sat my RE5 exam today for the first time. After preparing for 9 weeks felt confident and ready to write this. I was astounded by they length of the questions I received, and even though I finished the exam (only just) am definately NOT confident that I passed. I feel that the questions are set to confuse one and in the real world life is not like that. There is no point in complaining about the numbers and people not passing if the powers that be dont make the questions logical and possible to pass. I do agree that work has to be done and one must prepare oneself for the exams but my paper was just riduculous. Is this a money making racquet?
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Added by Louis, 19 Apr 2012

Well, I knew that the pass rate was low and that people are reluctant to write the exams, but I am really surprised by the outcome! I understand that people are attending workshops on these matters in masses, the question remain how many will pass and if the FSB will stand firm not to extent once more. That bring me to the new product type exams that will follow soon. Someone has already mentioned the money spinner these exams resulted into. I really am of the opinion that the industry must start to stand firm on this and refuse to pay costs for the exams, why are we paying levies!
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Added by Craig A, 19 Apr 2012

@ Pete, i agree with you but the exam papers were hardly professional. Some of the questions were so simple that my dog could have answered them but some of them were so stupid that you would never, ever have a situation in like that in real life. I am convinced that my paper had two questions that did not have a correct answer. I passed both exams, first time, so i didnt complain, but you have no recourse. Let's hope the other exams are more productive.
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Added by AndreK, 19 Apr 2012

And the fat cats are smiling, they are making a killing on this one. Eventually there would be nobody left to milk because of greed. These exams should have been open book, its the only way it could work. In the meanwhile, intermediaries are losing income like it is going out of fashion because of the time they have to allocate to pass this unconstitutional exams. When you completed your degree, did you have to hand in your handbooks and do the work without any reference material? Unconstitutional, if you ask me! The figures the FSB supplied borders on misrepresentation...... let one of us just try a stunt like that..!!!!
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Added by AlanH, 19 Apr 2012

If I do my sums, there are 48 749 reps and key individuals who must write before 30 June 2012. There are only 49 days left - that means as from today - 19 April - 1 000 people must write each day if the deadline is to be met. It won't happen - and the tsunami is building.
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Added by Dee, 19 Apr 2012

I agree with Jenny. Many of the questions were ambiguous and designed to confuse. The paper was not to determine what you knew but to see if you were alert and can be caught out. I sympathise with people who do not speak English or Afrikaans as their home language. The nuances in some of the questions will have left many a Zulu or Sotho speaking candidate floundering. Also, there was a huge overlap between the RE 1 and RE 5 material and questions in the exams. This again raises the question why there could not have been one exam to cover the lot. The only logical answer is that this is another money making racket.
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Added by AK47, 19 Apr 2012

I had to spend time last year to do an Estate Agency qualification and dropped doing the CFP exam of which i had already passed two of the Four Subjects through the Unversity of the Freestate due to this all these exams being too much to handle and run a business effectively at the same time. I passed the RE5 exam with ease ( 83 %)but failed the RE1 exam by two percent.I am still not sure what the difference in the two is ? I am not much wiser and do not think these exams will benefit me in any way as i have been in the Financial Services industry for the last thirty years. The way this was all done an enforced upon us is the main reason why so many advisors are reluctant to do the exam. Why could they have not come up with the issue of one book and one institution through which we could have studied through uusing the same guideline than what is being used by the UF for the CFP post Graduate diploma. Keep the study material it simple and in plain language so that all can understand what is needed to understand Fias Fica the genereal code of conduct etc. Despite having matric and a Three year diploma with Economics and Law as the main subject i still found it difficult to understand some of the questions that were asked . I would not have done better even if it was an open book exam. My home language is Afrikaans . I will pass my RE 1 exam by September 2012,but i feel it is unfair to enforce this type of exam where i would have preffered to have finished doing my CFP exam at my own leisure and not have to have had to worry about all these deadlines that are going to be postponed in any event ,the same that was done with the Estate Agents exams. Die FSB het al hierdie Eksamens "n Berg van 'n Miershoop gemaak en skep onnodig paniek onder almal. When i was issued an FSB licence i was found to have been fit and proper now suddenly i am no longer fit and proper until i have passed all these regulatory exams . I had the same problem with my gun licence.The reissue of the of the gun licence has not made me a better marksman as before. Despite all these regulations and acts in place you will still have the Sharemaxe's, Blue Zone's, Pickvest's, Dynamic Wealth's and other scams where the bosses getting away with it all and certain agents must payup for the ineffective managements of these schemes.
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Added by Miffed, 19 Apr 2012

Some here have alluded to the killing being made by Moonstone, the FPI and the FSB (the examiners) and of course the training bodies that have sprung like mushrooms from the dark to cash in on this bonanza. Thanks to Gareth we now have some numbers to work with. The following is I believe a conservative estimation of the windfall arising from level 1. I made the following assumptions : (a) Exam cost is R900 (b) Each person writing expends about R1000 on training/training aids, The KI figure is subtracted from the Rep number in order to avoid double counting on training as most are dual sessions. (c) The rewrites are conservatively calculated as being the difference between total number who have passed and the total number who have written. Of course this could be massively understated as perhaps many of those who passed were in fact re-writes. (d) I do not have information on Cat II III & IV as to their training costs. This could add to the figure. The results : Exam Income from KI's = R14,629500 Training KI's brings in R13,839,000. Exam Income from Reps R116,530 200. Training reps R93,589,000. Total Exam Income going to FPI and Moonstone (bit to FSB) a whopping R131,159,700 whilst the trainers jumping on the FSB gravy train get R107,428,000. Not bad and this assumes no one else fails from now on. OK then the real money gets made with the Level 2 exams. How many exams will people write? How many re-writes? How much training? Now we are looking at a minimum of R1,5billion. Someone else can do the figures. Did the FPI disclose this when they stuck their hand up and sold out their constituency ? No wonder these guys are all for us writing this most absurd exam that some think are professionalising the industry. If you want to be a professional then go the AFP/CFP route. This farce can in no way can be considered a 'board exam' that's a whole different animal for a completely different constituency who by the way are not only regulated by their Board but also have their interests PROMOTED and PROTECTED by their Board, unlike the bunch we have at the FSB who are contunally berating, threatening and publically deriding the very consituency who pays their salaries.
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Added by Perseverance, 19 Apr 2012

It seems all the people that are whining about these exams are the ones who did not get this exam under the belt at the outset and were/are probably procrastinating in the hope that the deadline will just be extended ad infinitum. I have also been in the Industry for almost 30 yrs and run a brokerage single-handed, yet I made the time and effort to write these exams whilst trying to run my business at the same time which was very difficult. At that stage the exams were not made any easier nor were some of the ambiguous or double negative questions elimintated, yet I passed both exams first time after not having studied since 1994. So I feel strongly that everyone must get with the program and do what has to be done as ultimately this will only result in a more professionalised industry.
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Severe consequences for missing the regulatory examination deadline

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Severe consequences for missing the regulatory examination deadline

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