The anti regulatory exam movement gains impetus

07 April 2011 | Compliance - Regulatory | General | Gareth Stokes

Late last year a section 21 company was established by a group of concerned independent financial advisors. The National Association of Independent Financial Advisors (NAIFA) kicked off with an initial subscriber base of well known financial industry stalwarts such as Mark Galbraith, Norman Isaacs, Tracey Davenport, Abdul Carrim and Malcolm Warner, Chris van der Walt, Mike Beder, Len Goldman and Greg Meadon. NAIFA says they will work towards furthering the interests of independent advisors across the financial services industry.

As Q1 2011 draws to a close it seems the major target on NAIFA’s firing range is the requirement for financial advisors to sit regulatory examinations. They are unhappy with the rush implementation of the examinations and the undue pressure placed on the industry by the Financial Services Board’s (FSB) “set in stone” timeframes. Yesterday (6 April 2011) the organisation issued a press release in which they welcomed the Insurance Sector Training and Education Authority (INSETA) decision to withdraw from its website any study materials aimed at assisting financial advisors in preparing for the regulatory exams. INSETA made this announcement on Monday, 4 April, after receiving a letter of complaint from the FSB regarding the accuracy of certain sections of the material.

Making mountains out of molehills – or genuine concerns?

NAIFA believes that INSETA’s decision vindicates their “call for the suspension of the exams until the format of the exam, the issue regarding language and the objectives to be achieved [by the exam] have been thoroughly revisited and agreed to by all affected parties.” Chris van der Walt, director of NAIFA comments, “In the short time since NAIFA has been established we have seen an overwhelming response from independent financial advisors across the country. We feel that it is imperative that the FSB re-look the entire process – and with the position now taken by INSETA on the exam materials – it would be absurd for the FSB to push forward with the current framework and exam process.”

But the INSETA study material recall debacle appears to be little more than a “storm in the teacup”. FAnews Online confirmed that INSETA had been approached by the FSB regarding certain errors in the material. But the withdrawal of the material was a temporary measure to provide INSETA, with input from the FSB, time to remedy the situation. Justus van Pletzen, chief operating officer of the Financial Intermediaries Association (FIA) observes: “We have received many emails from our members saying they have passed the regulatory exams using only the material supplied by INSETA. At this stage the regulatory exams are current and ongoing.”

The latest information, supplied by Lerato Mpatane, a member of INSETA’s FAIS Project team is that the INSETA study material is still available online with the FSB’s knowledge and approval. One of the changes requested by the regulator was for the study guides to include their “how to prepare for the regulatory exam” guidelines.

Study material not the focus of the exam

The FSB has been firm in its guidance to financial advisors preparing for the regulatory exams. Their advice is to “stick to the source material” including the FAIS Act and its subordinate legislation. Financial advisers who follow this advice while preparing for the exam should have no difficult in passing.

Editor’s thoughts: I’m probably going to pick up a lot of flack for my unsympathetic view; but mistakes in study guides and text books aren’t uncommon. Although I am not yet privy to the nature or extent of the “mistakes” in the INSETA study material it certainly appears these “mistakes” weren’t serious enough to totally invalidate the coursework… Is my “storm in a teacup” response fair, or have I missed something? Please add your comment below, or send it to [email protected]

Comments

Added by Billy Bruwer, 06 May 2011

There is alot of speculation that the regulatory examinations is a money making racket. I do not agree with all of the processes followed by the FSB but as a formar educator I do not think everybody is considering the costs involved in developing and delivering an examination, especially examinations that has to be made available nationwide. An examination cost of R900 compare very well to the cost of other occopational examinations.
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Added by Peter, 08 Apr 2011

I am of the opinion that the RE exams are no more that another way to decimate the ranks of the independent financial advisor. I have written before and objected to this on the basis that this is the domain of the Compliance officers. They are the experts in this field. The only exception is that in a FSP does not have an Compliance Officer (CO) and acts as his/her own CO, then these exams should be applicable to that FSP. I have also raised the example of Attorneys. Do they all have to write exams and have their license to practice held at ransom whenever new legislation is introduced?
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Added by Annie, 08 Apr 2011

I agree with Bill on his views of the RE's. if anything, write an exam on the industry you are in i.e. Medical Aid, Investments, but why the whole bit? we have to be Fit and Proper, licensed and compliant, so why is this necessary? just a money making scheme from the FSB and state? how many people are not Fit and Proper but still practice?
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Added by LFS, 08 Apr 2011

I strongly agree that this should be voluntary for the FSP's who are stringently practising the current compliance FAIS and FICA legislation requirements -- those who have a compliance officer especially one who spends one half to two hours in the practice every single month - with a totally hands on approach to what and how we should be doing to be compliant -- its an ongoing learning curve, and at a cost of R1200 each month to the compl;iant company. I also agree that for thos FSPs who do not have an "official" complaince officer that these exams be made compulsory -- who knows just HOW compliant their prractices are....
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Added by Denham Uys, 08 Apr 2011

I think that you are correct. Those looking to hamper the exams are only saying they are not prepared to be professional in advising people about there money affairs. I have passed the exam and i have been in the industry since 1969. (72 years old)
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Added by Reg Pitcher, 07 Apr 2011

I passed the reps exam with 80% and the KI with 68% using only Inseta material.I didnt find the questions difficult but tricky.I studied for about 20 hours.It is important for advisors to be familiar with legislation and I guess the only way to make sure is to test the knowledge.The language debate will go on and if Afrikaans is introduced what about the other nine languages.The majority of South Africans have neither English or Afrikaans as a home language and these are the people that should be encouraged into the industry.
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Added by GregS, 07 Apr 2011

At the moment I am not only preparing for both the Rep and KI reg exams but have also embarked on six week study and weekly revision sessions for my +- 20 representatives.Yes,this is a time consuming and expensive exercise.If however this achieves the goal of not only professionalizing our industry but also protecting our clients ,then I am all for it.The long term gains definitely outweigh the short term financial and production losses.Despite using an external compliance company I have found the time spent drilling down into the detail of the acts to be extremely beneficial for both our clients and my FSP.Have not written the exams as yet but remain resolute in ensuring the future of my FSP,my representatives and our clients.Thanks to the FIA for their support to date.
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Added by jo, 07 Apr 2011

I passed both exams with a 70% pass, but that doesnt mean that I agree with the type of questions asked, the lumping together of different categories of insurance and the high pass mark. Why should we have to be tested on legislation? What other industry is forced to be tested on their knowledge of the legislation applicable to their industry? This type of thoughtless legislation will do nothing to bring new blood into the industry.
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Added by Robin van den Berg, 07 Apr 2011

I have just written the RE Rep exams and have not yet recieved my results. Not withstanding the results, I found that the Inseta material was a good reflection of what was needed, with the exception of only one question that was not covered in their study material. However I can say that I found the style that the questions were asked can only be called "TRICKERY". They have gone out of their way to take, what should be a simple question and made it confusing and tricky. I am also a proud new NAIFA member and agree with what they are trying to achieve.
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Added by Priscilla, 07 Apr 2011

I wrote the exam and passed with 82% it was really not a difficult exam. If you study you will pass. I think people are afraid of nothing. I do agree that if English is not your first language the way in which questions are asked will definitely not be easy. That needs to be looked at.
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Added by Zwelihle, 07 Apr 2011

I've written a pilot exam and I must say that it is possible to pass if that is the format to be followed. I studied using the material, the Juta pocket statute and the QC. I actually felt the material made it easier to make decode the "legalese" in the act. In my opinion, people are making lots of noise because they're taking this for granted and going in horribly underprepared. Phambili with RE's phambili!!
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Added by Taal probleem, 07 Apr 2011

Ja ek stem saam dat dit onregverdig is die eksamens nie in Afrikaans geskryf kan word nie. Dit beteken dat 'n makelaar of adviseur wat al vir 30 jaar sy kliënte, wat net Afrikaans is, diens en glad nie Engels magtig is nie, aan die einde van die jaar uit diens gaan wees. Dit is bietjie belaglik..dink ek.
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Added by Grumpy, 07 Apr 2011

To tell you the truth, I regard this whole issue as a money making racket. Added to that the fees we have to pay to the FSB - for what? I get nothing in return. But that is how it goes and I'll have live with it - in protest
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Added by Bushy, 07 Apr 2011

I have been in the industry since 1972 (almost 40 years) and am distinctly grey haired! However, I welcome the Level 1 exams as they will force people who are serious about their professionalism to understand FAIS and FICA and through that to ensure that they align with the standards that informed consumers are demanding these days. Only a dinosaur will see these as a threat. The INSETA study material is in fact a bonus - you really only need to study the FAIS Act and FIC Act to have the answers at your finger tips. Come on, people, surely we as a proud industry will not run for cover but will grasp this opportunity to become even prouder of the work that we do!
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Added by Sakkie, 07 Apr 2011

Ek is baie lief vir my taal en bevorder Afrikaans waar ek kan. Wat ek nie verstaan nie is hoe enigiemand wat nie Engels magtig is nie, in hierdie bedryf kan wees. Daar is soveel inligting wat jy MOET he wat net in Engels beskikbaar is. Al ooit n oorsese belegging gedoen? Kan iemand verduidelik.
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Added by Bushy, 07 Apr 2011

I'm back again! Just wanted to record that I am surprised that people of the calibre of Tracy Devenport, Mark Galbraith, Norman Isaacs, Mike Beder and Chris van der Walt are objecting to the exams. These are great people who have done the industry proud over the years, and were always leading lights in LUASA and other organisations. They are knowledgable, professional people whom I would have expected would be encouraging the industry to upgrade skills and technical know-how.
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Added by Wynand, 07 Apr 2011

In general I believe the level 1 exams is needed, people do not understand the basic principals of the act. I am 25 years in the industry, was retrenched from corporate environment in 2008 and have to fend for myself now. The really independent broker seems to become a dieing breed. It is expensive, time consuming especially if you have to start a business in the current economic climate. I have studied through the Insurance college, and now after years of studying only get generic recognition. Still have to write the RE2. How many brokers or company consultants are there who are able to give a client holistic advise. They are far and few between. There is no encouragement to work for yourself, you are now force to become a tied agent or work for a corporate firm. I believe very few people will be able to write the RE2 exams if they battle like this with RE1' two exams.
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Added by Bill Watkins, 07 Apr 2011

These Exams should be voluntary, with the successful candidates perhaps being awarded an additional Title of sorts. This will ensure that all presently FSB certified Advisors will be able to continue in this industry without the threat of being deprived of their livelyhood. It is already a Legal requirement that all Regulations and any Amendments thereto are to be adhered to, failing which certain penalties may be imposed. Using the FSB argument that the Exams are necessary to prove that Advisors do know the Regulations that govern the industry, it is a given that the FSB will demand that all Advisors will have to continually write more Exams, as and when NEW Regulations or Amendments come into force!
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The anti regulatory exam movement gains impetus

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The anti regulatory exam movement gains impetus

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