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Regulatory Exams Addressing high failure rates

01 June 2011 Craig Reid, EquityOnline

Inadequate preparation is the main reason why many candidates are not succeeding in the Level 1 regulatory examination, placing many FSPs in jeopardy of losing their licences.

Representatives of financial services providers (FSPs) who are required to pass the ‘Fit and Proper’ Level 1 regulatory examination by the end of this year may be in for a nasty surprise. Testing centres are reporting a high failure rate among the thousands of candidates sitting the Level 1 exams in order to meet the rigorous requirements of the Financial Advisory and Intermediary Services Act (FAIS).

Training solutions fall short

Founder of online training company EquityOnline, Craig Reid, believes that comprehensive training and continual assessment are critical for financial advisors preparing for the FAIS regulatory exams. “Many companies are investing enormous resources in in-house trainers to ensure their representatives get through the exams, but there is a shortage of qualified financial trainers to meet the pressing demand of the estimated 140 000 individuals who need to undergo training before 31 December.”

Reid points out that the retention of information relayed in live training sessions is often disappointing. This renders the expense and time invested by the company a waste, unless they supplement in-house training with tools for individual learning and self-evaluation, for example, through the support of an online training system. “For live training sessions to be most effective, students need adequate preparation beforehand, and the information taught during the live training intervention needs to be reinforced and re-tested later,” he says.

Bolstering training results

Reid believes that online training can work in conjunction with live financial advisory training to complement and bolster the effectiveness of an in-house training programme. “Online training systems can be used as a cost-effective stand-alone training tool, offering numerous advantages – such as the convenience of 24-hour access a day. Or, they can be used to enhance a live training programme. Either way, it can really help users prepare for their exams with confidence.”

Making the right choice

Based on EquityOnline’s proven ten-year track record and its experience in implementing online training for a number of multi-national and listed companies operating in South Africa, Reid suggests that the issues listed below are considered before an online compliance training portal is selected.

• Look for a training portal that delivers regularly updated, comprehensive content for both the FAIS Level 1 and Level 2 regulatory exams.
• Look for solutions that engage the learner by pre-testing the content of each module before presenting the information in detail.
• An online training solution should allow the learner to go through the content at their own pace, test for understanding and areas of difficulty, and ensure retention.
• Give preference to a system that also provides continuous professional development (CPD) content and records training hours to meet the more stringent requirements FAIS now places on all financial advisors.
• Give preference to a system that also addresses a host of FSP compliance officers’ reporting requirements. Real time reporting functionality will allow the FSP to set up customised intervention alerts to assist with the proactive management of a large number of representatives.

Deadline looms

The 31 December deadline looms. Exam failure could leave an FSP unable to operate, simply because he or she cannot rewrite the exam before the deadline, due to the sheer number of people and the limited venues and dates. Immediate and highly effective action is urgently required – and online training, in conjunction with live financial advisory training, may well be the most efficient solution.

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