Consumers to reap benefits of new regulatory exams for brokers

Nivesh Maharaj, Manager: Legal and Compliance at Lion of Africa Insurance

South African consumers will benefit from the impending introduction of regulatory examinations for brokers - which are set to test brokers’ professional conduct, financial and regulatory knowledge - and will ensure that clients and potential clients receive sound financial advice and service.

This is according to Nivesh Maharaj, Manager: Legal and Compliance at Lion of Africa Insurance, who says that the regulatory exams will not only succeed in professionalising the industry, but will also protect the interests of consumers from various forms of improper conduct.

“The exams will effectively regulate financial service providers in the way they provide advice, as well as related intermediary services such as processing long or short-term insurance claims, or investment deposits and other financial products.”

The deadline for brokers to complete the Financial Services Board’s (FSB) compulsory Level 1 regulatory examination, which tests an adviser’s knowledge of the regulations governing the industry, is now extended to 30 June 2012 for RE 1 key individuals and RE 5 representatives, with a deadline for rewrite exams- 30 September 2012, while RE 2 Level 1 exams, is December 2013. Further RE 3 and RE 4 exams for Key Individuals have also been extended to 30 June 2012, but the deadline to rewrite exams is 31 December 2012.

Maharaj says that the regulatory exams will also promote and ensure that financial advisors take suitable precaution to make sure that their clients or potential clients understand the products they are being offered and that the products are deemed suitable to meet clients' requirements and needs.

According to Maharaj, the introduction of the exams will also augur well with regards to the General Code of Conduct for Authorised Financial Services Providers and their Representatives, in terms of amendments regarding conflict of interest between providers, representatives and clients.

“The primary purpose of the code is to ensure that providers and their representatives, render financial services honestly, fairly with due care, skill and diligence, and in the interests of the clients and the integrity of the financial services industry. Every provider must adopt, maintain and implement a Conflict of Interest Management Policy.

“Further if the client has a complaint about the advice given or a service rendered, they are to contact the FAIS Ombudsman”, concludes Maharaj.