It appears as if the announcement of the compulsory regulatory examinations did not exactly lead to the hills reverberating to the sound of music for some sections of the financial services industry.
Hopefully a balanced overview of the whole process will help the medicine go down, if not in a delightful way, then at least not tasting as bitter as some expect it to be.
It is difficult to believe that the regulatory examinations were already introduced via Board Notice 105 published on 15 October 2008. Since then, a tremendous amount of work has gone into the process of establishing the infrastructure to present a highly professional examination which aims to ensure that those who pass it, will know that they are well and truly qualified professional financial advisors.
Many have questioned why it was not rolled out earlier than 1 November 2010, especially in view of the fact that the deadline for completing these examinations is 31 December 2011.
The simple answer to this is that everything had to be built from scratch, which proved to be quite a cumbersome process.
Let’s start at the very beginning…
After the announcement of the amended Fit and Proper requirements in 2008, the Financial Services Board’s FAIS division met with industry representatives across the full spectrum to determine what qualifying criteria needed to be tested. This was to ensure that successful candidates would indeed have the required knowledge and skills to deliver a professional service to consumers of financial products.
The agreed upon criteria were then given to four approved examination bodies to draw up the questions which would test the ability of candidates.
These questions comprise of four levels:
•Knowledge: testing the recall of factual knowledge.
•Comprehension: testing the understanding and interpretation of factual knowledge and concepts.
•Application: testing the ability to apply factual knowledge to real life situations.
•Analysis: testing the ability to analyse factual knowledge presented in a situation and to decide on the best action to take.
The format of the examinations was determined in consultation with an independent examination body to ensure the professional nature thereof. It was decided that the multiple choice model was best suited to this type of examination, and the various approved examination bodies were given specific sections of the examinations for which to develop questions, based on their respective fields of expertise. Compliance service specialist Moonstone, for example, was tasked with developing the questions concerning the regulatory environment which is covered in the level 1 regulatory examination.
Climb every mountain…
Once the questions were developed, each and every one underwent a stringent quality test in the form of a trial. The results were monitored by the FSB and the independent examination body and, only once approved, added to the data bank of questions from which the questions for the examinations would eventually be drawn.
The next step in the process was to test the actual examination processes and systems developed by the examination bodies and its ability to interact seamlessly with those of the FSB.
After several pilot examinations, the FSB expressed its satisfaction with the outcome and 1 November 2010 was announced as the day from when the regulatory examinations could be written.
Do – Re – Me
As in the popular song from the musical, a logical approach to an apparently complicated issue can help one tackle it with confidence.
As with any important event, rumours were rife regarding the complexity of the examinations, based on grapevine versions of the results of the pilot examinations. The reality that very little preparation was done for these initial examinations was overshadowed by prophecies of damnation by skeptics. Subsequent results from the first real-life examinations dispelled the fear instilled by the rumours, proving that proper preparation makes a huge difference in the results.
Since then, a number of publications have appeared to assist candidates, including a preparation guide by the FSB, revised study material published by Inseta and study material written by a number of training service providers, to complement their classroom interventions.
The single biggest threat to passing the regulatory examinations is inertia caused by fear of the unknown. Perhaps the old Chinese saying should be heeded here: “A journey of a thousand miles starts with the first step”.
The first step is simply finding out what you have to do, and then planning accordingly, taking into account that more than 100 000 regulatory examinations will have to be written before the end of 2011.
If you want to avoid being part of the scramble at the end of the year, now is a good time to start doing what is unavoidable. Who knows? You may just find yourself humming “The hills are alive…” while watching the procrastinators try to fit in the examinations between their normal year-end obligations.
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