INSETA optimistic as FAIS compliance deadline approaches

12 February 2013 INSETA

Insurance Sector Education and Training Authority prepares for final FAIS compliance deadline.

As the final, March 2013, deadline for regulatory compliance approaches, the insurance industry is preparing for the effects that failure to obtain compliance could have on the finance and insurance sector.

Loss of employment and skills are at the top of this list; recently the FSB reaffirmed its intention to proceed with regulatory action against FSPs that are no longer compliant with the fit and proper requirements, the repercussions of which may be the debarment of key individuals or representatives from practising.

“The consequences of failing to comply are obviously dire – as the deadline approaches, it is easy to see the pressure this is adding to those who have yet to pass the exams,” says Sandra Dunn, CEO of the Insurance Sector Education and Training Authority (INSETA). “Many of those who still need to pass are SMME owners; and any job losses and thus loss of skills that occur from failure to pass the exam are a blow to the industry,” she says.

Failure to comply is also impacting on larger firms as people resign - INSETA’s research involving over 927 small, medium and large insurance employers in 2011 and 2012 shows that of the 14 276 employees that resigned from the companies surveyed, resignations were mostly a result of dissatisfaction with the FAIS legislation, and compliance requirements. “A majority of the resignations came from employees who were simply fed up with having to take exams at this stage of their lives and were unable to meet the compliance requirements in passing exams,” says Adeline Singh, manager of the Skills Planning, Research and Development division at INSETA, who co-ordinated the research.

But Dunn says that despite the difficulties, the sector is in good shape – with the majority of advisors having passed the exams. “Compared to the same time last year, when large numbers of the advisor population still had to sit the regulatory exams the industry is now in a better position,” she said.

To assist those who still need to sit the exam, in the short time remaining INSETA and the FSB are running a third set of free seminars country-wide to equip them with the techniques needed to successfully complete the multiple-choice questions in the exam paper.

The focus of the seminars is primarily on problem areas that have been identified from an analysis of candidates who have been unsuccessful in the exam multiple times or passed after a few attempts. As a result of the lessons learnt, the seminars deal with the issues and exam techniques including: the structure of the questions; how to analyse each question; selecting the correct answer; using the time available wisely; and learning for the exam.

Earle Drury, Managing Director of Faisit, FAIS seminar training provider, says that the sessions break down one of the major problems facing examinees – the fact that the exams cover a wide area of work, while broker knowledge is generally very specific. “Many said that the seminars helped bridge the gap between knowledge and understanding; most of those still struggling to pass the exams know their study material, but in many cases they are simply lacking proper exam techniques, or understanding of what a question requires,” says Drury.

Brenda Green of Peter Dirksen Insurance Brokers said that attending one of the workshops enabled her to pass her exams. “It was a fantastic workshop; I found the INSETA books so much easier to understand and to follow than all the others that are available in the market. I am now going to attempt the exam for Key Individuals and will definitely be using the INSETA material,” she said.

All of the seminars held so far have met with great success. The feedback also shows that people recognise the legislation is vital for the industry’s continued success. “While obtaining compliance may be stressful, those surveyed see the necessity of it in order for the industry to thrive,” says Dunn.

Dunn adds that although the pressure is on, passing the regulatory exams is a necessity for the sector to continue to thrive. “The fact is that come regulatory compliance cut-off, the industry will be left as a more accountable body, meeting securities market regulation, attesting to its commitment and professionalism as a responsible sector which is able to promote growth in the insurance, finance and wider economy,” she says.

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