New regulatory examinations vital in professionalising SA's financial services industry

24 March 2011 Financial Intermediaries Association of Southern Africa (FIA)
Manie Booysen, CEO of the Financial Intermediaries Association of Southern Africa (FIA)

Manie Booysen, CEO of the Financial Intermediaries Association of Southern Africa (FIA)

Criticism concerning the regulatory examinations that are being introduced by the Financial Services Board (FSB) to test intermediaries’ knowledge of the regulations governing the financial services industry is understandable, but these exams are a positive move in order to professionalise the role of the financial adviser.

According to Manie Booysen, CEO of the Financial Intermediaries Association of Southern Africa (FIA), the exams are also necessary to safeguard the interests of consumers. “The FAIS Act and other relevant legislation have been around for 6 years and it is this that governs our industry, so it is essential for anyone who is offering financial advice to both know and understand applicable legislation and how it affects their clients.”

“The vast majority of financial advisers are highly competent individuals with a thorough knowledge of the industry who have the interests of their clients at heart. These exams are being introduced not to catch advisers out but to ensure that everybody is operating with the same level of knowledge and competence.”

He says the FIA has been regularly engaging the FSB on various matters pertaining to the exams. “The regulator has made it clear it will not consider scrapping or readily postponing the exams. In a meeting with the FIA, the FSB said it was closely monitoring the current roll out of the exams and that it may make appropriate recommendations if the roll out cannot accommodate all affected persons.

“The FSB also confirmed it was aware of movements by new and unrecognised bodies in the industry trying to undermine the spirit of the FAIS Act and is ready to react to any challenge that comes its way by means of legal processes.”

“The FSB also reiterated that it is willing to assist with translation of the regulatory material into any or all of the official languages but has warned that costs to the industry would be astronomical. The FIA is still canvassing legal opinion on this matter as well as the consequence for those advisers who do not pass the exams before the expiry of the deadline. These are both important issues that the FIA is taking seriously and we will continue to engage with the regulator once we have a legal opinion on the matter.”

The deadline for the compulsory Level 1 regulatory examination, which tests an adviser’s knowledge of the regulations governing the industry, is December 2011, while Level 2 exams, which test specific product knowledge and application is December 2013. Some advisers can be exempted from the level 2 exams based on their qualifications.

Seamus Casserly, president of the FIA, says it is important to realise the regulator has no intention of deviating from the current regime which they believe is in the interests of the consumer. Referring to the spirit of the law he adds “We cannot defend intermediaries who consider their commission income to be more important than the interests of their clients. Neither can we excuse those intermediaries who deliberately fail to exercise the necessary degree of care by not researching the appropriateness of their advice. The FAIS Act and the subsequent examinations are an attempt to prevent such practices and it cannot be disputed that an informed, experienced intermediary adds immeasurable value to the process.”

“Continuing education is a requirement of many vocations and given the importance of a financial adviser’s role to consumers, it is a reality that intermediaries will always need to learn and adapt. Advisers have one position only, which is to represent clients in a fair and honourable manner and should this require further effort, we must act accordingly.

He says the FIA does not take the impact of the regulatory examinations lightly and is working with a number of organisations to offer workshops and assistance to all advisers to enable them to navigate their way through the examination process as smoothly and painlessly as possible.

Feedback received from members who attended the Anton Swanepoel workshops has been extremely positive. “A noteworthy comment is that now that they have a better understanding of how to prepare for the exams in a structured manner, the fear for these exams has disappeared. Many advisers who have already passed these exams, irrespective of their age or home language, confirm that the exams are not the obstacle some people would now want to make others believe,” says Casserly.

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