Advisers at risk of losing businesses by failing to take re exam

29 February 2012: The extended deadline for the FSB’s Level 1 Regulatory Examination is now just four months away, yet according to recent reports the majority of financial advisers are yet to take the exam, placing them at risk of losing their licence if

This is according to Clint Harker, Managing Director of Genesis Capital’s short term insurance subsidiary Gen-Assist Insurance Brokers, who says a statement released by the Insurance Sector Education and Training Authority (INSETA) suggests that while approximately 140 000 representatives and key individuals must write the exams, so far only 44 000 delegates have done so.

“This is an alarming figure as it suggests that as many as 69% of financial advisers have not yet taken the exam. The deadline has already been extended by the FSB once and it is highly unlikely that the regulatory body will do so again.”

Harker says that for those advisers who have taken but not passed the examination, they will have a three month extension until the end of September 2012 to retake the test; but for those who have not yet registered, the deadline remains the end of June 2012.

He says the principle behind the exams is to create a professional industry where consumers benefit from the best possible financial advice. “We fully support the FSB’s objectives where regulatory exams are concerned, as it is part of a global effort on the part of regulators to professionalise the financial intermediation industry. However, there are a number of industry members, particularly those over the age of 55, who have not had to study since matric and see these exams as a nuisance. For them, this could be the final straw that sees them exit the industry.”

“We have already noticed a general reluctance on the part of a number of older, established brokers and advisors to write the new regulatory exams. However, regardless of their disinclination to take the test, the reality is that they must write and pass this exam in order to continuing operating.”

“The South African financial services industry – and the short term insurance space in particular – is rapidly evolving to one of stricter compliance and enforcement, with those operators who are unable or unwilling to adapt to this changing environment likely to exit the industry.

“As a result, we are set to see an increased trend of consolidation among brokerages over the next twelve months with larger, more established brokerages growing both organically and through targeted, select acquisitions.”