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From “storm in a tea cup” to blatant scare mongering

11 April 2011 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

Thursday morning I penned a newsletter titled The Anti-Regulatory Exam Movement Gains Impetus. I wrote the article to raise awareness about a section of the financial advisor community that is unhappy with the way in which the Financial Services Board (FS

Although their debate is slightly after the fact – because the RE exams were widely discussed pre-implementation – some of the flaws they have identified are certainly serious enough to prompt a post-implementation rethink. I’m talking here about the English-only language issue and the appropriateness of a “one size fits all” RE I exam among others. But the way they’re getting their message across leaves much to be desired.

Using any trick to get on the soap box

Last week NAIFA leapt at the opportunity to disseminate information about an apparent “spat” between the FSB and the Insurance Sector Training and Education Authority (INSETA). “Look,” they ranted, “INSETA is withdrawing its study material because the FSB has found fault with it!". This was more ammunition in support of their call to halt an industry-wide process aimed at improving financial services sector knowledge and the level of service to local consumers. To be honest I wasn’t keen to distribute Thursday’s newsletter because I thought the guys at the new broker representative body were latching on to a non-event to further their cause. “The INSETA study material recall debacle appears to be little more than a “storm in a teacup”, I said – an opinion subsequently confirmed. INSETA CEO Sandra Dunn advises “We will continue to make the material available to industry free of charge to assist industry to meet the regulatory examinations deadlines. INSETA has, since the inception of FAIS, supported industry in meeting FAIS requirements through discretionary grant funding. INSETA regularly consults with industry associations like IISA and FIA in order to keep abreast with the skills needs and priorities of the insurance industry. Feedback received nationally, is that the FAIS RE material is of a good quality and many people have made use of the material in their preparations and have passed the examinations” – and based on numerous FAnews Online readers accounts the material is useful in obtaining a passing RE I grade.

But NAIFA didn’t draw the line there. Imagine my horror when I read Thursday evening’s Fin24.co.za article titled Exams Threaten Financial Sector Jobs... This article wasn’t journalism. It wasn’t even an opinion piece… It was pure and simple scare mongering orchestrated by a broker body on a mission. I cannot believe that the editor of Fin24 published such garbage! “An estimated 300 000 people in the financial service sector may lose their jobs before the end of the year because of regulatory exams, according to an industry organization,” wrote Helena Wasserman. Her source for this ridiculous allegation was none other than Chris van der Walt of NAIFA. The broker organisation launched a ridiculous public sympathy campaign using the online media as their puppet in an attempt to further their “scrap RE” call. Effectively they used the Internet news service to show disrespect to both the FSB and the industry as a whole.

Rumours abound that big business is wavering too…

There’s another rumour bubbling as I write this piece. It seems some of the large financial services providers are getting cold feet where RE is concerned. The same companies who welcome every compliance requirement foisted on the independent distribution force are suddenly not sure these exams should apply to their largely “tied” sales force. They want to shelve the move to a more professional financial services industry because they’ve suddenly realised their employees are not up to the task of “passing” a simple multiple choice exam on the industry legislation. Instead of questioning their hiring policies they’re now rumbling about the appropriateness of knowledge of the Act for certain categories of employee.

According to Wasserman: “Phillip Matlakala, chief executive of Metropolitan Retail, weighed in on the matter this week, saying it would have a negative impact on life assurers like Metropolitan operating in the low- and middle-income market, and on the industry’s ability to create jobs.” I’ve heard there are a number of other companies thinking along similar lines.

Time to get together and thrash this “thing” out

My advice to big business, the regulator and broker bodies such as NAIFA is simple. Fix it like civilised people. If RE doesn’t work in its current shape and form then sit around a table and negotiate a sensible way forward. The regulator – as keen as they are to push RE through by their “cast in iron” deadlines – will see the light if the pass rate is as low as the claimed 25%.

I think “halting” the exam process is the worst possible solution. The best answer will be to extend the deadline and allow people to continue sitting the exam. This will give all stakeholders the opportunity to thrash out the remaining issues without the pressure of solving everything by Christmas 2011!

FSB listens

The FSB are willing to listen. On Friday afternoon they alerted the media with regards to the language issue: “ As far as the vexed question of the language is concerned, the FSB, in collaboration with the FIA, decided that candidates who wish to enroll for the examination in Afrikaans, should be afforded the opportunity to do so. Cost implications arising from this decision are being investigated and may prove to be substantial.

"The FSB will, as soon as practicable, announce a registration process for those persons that wish to take the examination in Afrikaans in order also to determine the scope of the preparation required to set and roll out the examinations in Afrikaans. A deadline for candidates to indicate their desire in this regard will be decided upon. Thereafter the deadline for the writing of the Afrikaans RE will be determined and publicised.” Well there you have it – Afrikaans will now be made available but that opens a whole new can of worms – should the exam not be then made available in all the official languages...

Editor’s thoughts: I think this is my first ever financial services industry diatribe – and I apologise if my opinion has offended anyone. I believe that without debating the correctness of the arguments offered by the RE detractors I have offered a simple solution which should put a lid on all this “back and forth” in the media… The lesson here is that the industry stakeholders can get around discussion tables like civilised people and the rest of us can get on with the work of servicing our customers. I’d love to hear your views and comments on NAIFA’s decision to use public platforms to “engage” the regulator. Add your comment below, or send it to gareth@fanews.co.za

Comments

Added by BBee, 06 May 2011
AnHa ek stem met jou saam. My moeder taal is Afrikaans maar ek glo nie ek sal die eksamen deurkom in Afrikaans nie want ons werk daagliks met die tegniese terme in Engels. Dit is kommerwekkend dat so baie van die industrie teen eksamens gekant is, om van die wet kennis te dra kan net jouself en jou besigheid goed doen - hoe anders sal jy 'n "compliance officer" monitor? NAIFA moet versigtig wees dat die publiek (ons kliente) nie begin vrae hoekom die industrie nie wil bewys dat hul genoegsame kennis dra om finansiele advies en dienste te verskaf nie. Die fooi van R900 vergelyk ook baie goed met die koste van soortgelyke eksamens. Ek dink nie almal neem in ag die prosesse wat gepaardgaan met die ontwikkeling en beskikbaar stelling van 'n eksamen nie.
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Added by John Smith, 21 Apr 2011
Since the FSB and the National Treasury and the Life Assurance companies for which we work for are on constant bitch mode, I thought that it maybe time that us, the advisor/broker/tied agent also be given an opportunity to bitch. We are also human, we must also eat, sleep and would also enjoy having a better life, just like every other human being on God's green planet. This however is clearly not the case when I look at this industry, on 01 May I will have actively been involved in this line of work for 5 years now, and to be honest I still do not see light at the end of the tunnel. I have been jumping through the hoops ever since I have started with this career, whether it be the FSB or the assurer I work for. I have done the 120 credits and still this is not good enough. Also the FSB and the assurer wants to protect the consumer, this is noble, but what about us? Do we not enjoy any form of protection against unforseen circumstances that affect our clients? Must I be penalised each and every time a client or their spouse loses their job or some other disaster befalls them? You scream "cut their remuneration" each and every chance you get, but do our operating costs e.g. petrol, toll gates or even our living costs such as groceries, power costs etc decrease in line with commission cuts? Wake up and smell the excrement, before too long you will be sitting with impotent field staff as they either will be scared witless to advise on anything lest they fall foul of the powers that be or they will be bankrupt.
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Added by thomas, 13 Apr 2011
Gareth, My perception is that you are a reasonable person. However, ; the FSB did not plan and evaluate the consequences of the RE exams and there execution were to say the least pathetic. 1)Study materials overall are a mess.every tom dick and harry jumped on the wagon and we are still not sure what from who to use.FSB should have prescribed one book for all and finish. 2)Afrikaans are a reality and this should have been done right form the beginning-did they think we are mindless idiots?. 3)I know that other people will fight for there lanuages as well so this whole thing is one big mess .Everything will be postponed. 4)The exams will not make one difference to anything whatsoever in the industry-load of crap. 5)We will write the exams eventually ,will pass and we pray to forget everything we wrote about an hour after exam .I have a top notch compliance officer and have already been through everything surrounding/ concerning these exams and believe it or not my compliance officer led us through the maze and victorious i may add.No need for this nonsense.
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Added by Rob, 12 Apr 2011
A particularly well written article - balanced and well considered. Something needed in times when hot heads rule by virtue of the amount of noise they generate.
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Added by Tommy, 12 Apr 2011
This is a money making racket, And as a proud new member of N.A.I.F.A we as independent brokers at last have a voice that is prepared to be heard, My duaghter in the UK recently bought life insurance, She could not get an agent to assist her she had to go online and down load her application herself from the internet. I think this is the true agenda hence the silence from the large companies. could it be they have there direct line operators and software in place for next year. MONEY ! MONEY ! and for those who have passed 2013 is close by MONEY! MONEY ! MONEY ! My total costs on compilance this year is over R48.000 tFEES, Compliance fees, exam costs and counting time lost studing, Mr independent broker , join N.A.I.F.A and get a voice.
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Added by Bidnis Man, 12 Apr 2011
They may or may not be over reacting about the RE exams - but the problem is a bigger one. The problem is the regulation itself and how it can simply load requirement after requirement as licensing conditions - in other words - you are a one man broker and you write RE1 and you get a migraine during the exam - once the results are released you cannot practice - you must contact all your clients and tell them you can no longer service them - after which you had better phone your bank manger and tell him you won't be paying the bond - phone the wife and kids and tell them you are moving back to your parents. Just for a second imagine yourself in this situation. Also consider - what will be next - capital adequacy requirements for intermediaries? Lie detector tests? Permant FSB inspectors on the premisis paid for by the broker? Sounds ridiculous but if you that is what they want and you don't comply you lose your livelyhood.
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Added by Tommy, 12 Apr 2011
Gareth I dont like your storm in the tea cup story, I wonder what my old freind the Late Mr Tienie Van der Berg would have thought about your tea cup???
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Added by Bushy, 12 Apr 2011
I continue to be amazed at all the noise around this. Firstly, I think that Gareth's article is reasoned and sensible. Secondly, after 39 years in the industry I cannot believe that intelligent, respected people like Chris van der Walt, Mark Galbraith, Tracey Devonport and the others from NAIFA are frightened of what is really a very straightforward exam. The questions are all about the way we should be functioning, simply as best practice. The criteria for the product exams (of which I imagine most financial planners will have to do 4 exams at most!) make it clear that people who understand the industry should pass without any trouble. Incidentally, the 140 000 people who apparently will have to write the exams INCLUDE motor dealers, furniture salespeople, call centre agents, bank clerks who handle fixed deposits, and many other categories. So don't be misled into thinking that we are dealing with the sort of numbers being quoted by NAIFA.
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Added by AnHa, 12 Apr 2011
Baie mense is bang om nie te slaag nie. Werk is skaars en geen persoon kan met 'n skoon gewete se hy het nie die werk nodig nie, veral nie op die platteland nie. Die RE eksamens is net tot voordeel van die bedryf en ultimately tot voordeel van die kliente. Dit bemagtig net die Makelaar en werk die kaf uit. Wat die taal kwessie aanbetref. Die meeste mense in SA wat werk en in 'n posisie is om te lees en skryf kan of Engels of Afrikaans lees en skryf. Die persone wat dit kan bekostig om enige finansiele produk te koop is een van die tale magtig. Ek het nog nie van een Makelary gehoor wat in 'n ander taal sy besigheid bedryf nie. Ek dink nie daar is werklik 'n kwessie rondom die twee tale nie, behalwe natuurlik vir die wat WIL hare kloof en 'n "issue" daarvan maak net vir lekker daarvan of om moeilik te wees.
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Added by FinallyFinished, 11 Apr 2011
I have literally just written the exam this morning and the questions and possible answers could be better phrased but personally, I believe that the RE exams do have their purpose. By taking the time out to actually go through the Act and all the relevant provisions has been extremely helpful in my position as there were areas that I did not cover in my reports / recommendations to clients. The FAIS Act reinforces my belief that no "unethical" broker can ever go unpunished again. The repercussions are far to severe to ignore and a broker can no longer hide behind the fact he/she did not know what the expectations are from them.
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Added by CB, 11 Apr 2011
Dear Editor, are you a broker? Are you sitting with the volumes of administration now required of a broker that he/she can dedicate between 10% and 20% of his "Servicing our customers" time to actually service the customers. Britain lost 80% of its marketing corps due to the very same legislation. Wake up! It's also not just the present RE1 & RE5 exams that are an issue. During 2012 & 2013 brokers will have to do the product exams which can amount upto 27 exams in 2 years, depending upon what they are licenced for and what they wish to continue being licenced for. Are YOU ready for them? Will YOU need to write them? Get some experience of being an independant broker then you can talk!
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Added by Mike S, 11 Apr 2011
Quite frankly I think it is time we all stopped bitching and moaning and got on with studying and writing the exams. The FSB is not going to budge on certain issues so arguing is pointless. One issue that has been raised is if we have Compliance Officers who look after this stuff for us - why do we have to write the exams? The FSB responded in no uncertain terms that it was a lack of knowledge of FAIS amongst the advisors that they were concerned about. A couple of months ago the concern was that we had to go through boring Acts word for word and there seemed to be no decent study notes that summarised the issues. This is no longer the case. I recently completed a two day course that summarised it very nicely. What is more I learn't a lot of stuff about my own business that was very useful in improving our complaince procedures.
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Added by Priscilla, 11 Apr 2011
Personally I found the aritcle on News 24 offensive, what are we saying to the General public! "That we are a bunch of jahoo's who are not cabale of passing a simple multiple choose paper" It did nothing to help the Industries already bad name. I heard comments like "what kind of people are selling us financila products if they failing so badly". Come on people study and you will pass, if not then m,aybe you should not be in the industry!
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Added by Positivity, 11 Apr 2011
Negativity attracts negativity. Those who did not pass obviously did not put in enough effort. All this complaining does not help anyone. If you are selling financial services your level of acuman should be of a certain standard. If you are not cabable of sitting and passing a multible choose paper maybe you do not have the cut to be in this industry. Some argue that legislation does not have anything to do with the product that they are selling. The comparison they use is that accountants or doctors do not have to memories legislation to perform their day to day duties.If required they can refer to a text book or a legislative document. My response is that people in the financial services industry are usually working with other peoples money. Their are many fly by nights who are not registred, or compliant, who are giving people wrong advise and in the process loosing or stealing peoples hard earned cash. By registering, writing and passing the exams in effect will get rid of the bad lazy apples. Positivity attracts Positivity.
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Added by Tim Jones, 11 Apr 2011
Apart from the language issue our main concern is the standard of the exam - it is not just a "simple" test but rather it is a test equal to third year university standards which smacks of overkill. Virtually every player in the industry had agreed to having these exams but perhaps they should have stipulated the academic level of them first!
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Added by Robin from PE, 11 Apr 2011
I sat for the RE5 exams some 10 days ago, As I looked around the venue I noticed that the 9 participants were all well respected, well educated and long standing dedicated persons, mostly in management positions.My sub group consisted of 3 of my staff members that are persons who had put in many months of intense studies. I together with only 3 other participants passed (that out of 9), thus indicating the nature of these exams, the questions were asked in a style that I can only label as "Trickery". So Garth, it is certainly NOT a "Simple Multiple choice Exam on industry legislation". I agree with NAIFA and Chris van der Walt and co. I call on the regulators and all concerned bodies to tidy up these questions, delay or extend the cut-off-dates and consider reducing the pass rate to say 50%. And with regards to "JOB loss", yes ..., if these exams problems and deadlines are not given the due consideration that they deserve, we will see many 1000's of FSP's and Reps leave the industry. And what a shame that will be!!
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Added by Ayanda, 11 Apr 2011
I have written (and passed!) RE5. Please be assured that it will not make you more "professional" nor will it make you better at giving advice. All you will learn is the extent to which Big Government is now able to intrude upon the affairs of private peiople and the rate at which they are attempting to interfere with and micro-manage the business affairs of intermediaries. You will learn very little else!
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Added by MR, 11 Apr 2011
Although I see the purpose of the exams and the level that is trying to be achieved, I personally have a few gripes. In my case I am a qualified BCom CA(SA) of just about 40 years. There are and have always been a difference between the thoughts of a qualified person against a non qualified person. In my case there is a difficulty in studying and remembering the exact word required as stated in the multiple answers situation and the ability to get through the "syllabus" (not clearly defined) as I was involved in a car accident in Nov 2007 and have not fully recovered. About 90% of my clients stayed with me waiting for my recovery. However, if there was a query or problem it was handled timeously. I understand the world goes on nd no-one can wait. But none of my clients have been neglected and where I knew I was not going to continue e.g. Medical Health, all the clients were given an option to go on their own or someone of their choice or go according to my recommendation. The Insurance Companies cannot wait either. You either get new business or you go to the non service department even though the clients are happy and understand what they have. No-one knows when a person will come 100% right, but by closing the account and not paying the on going commission is more detrimental to the injured person than the insurance company/ies. Who got the business in the beginning anyway? Thanks.
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Added by Craig A, 11 Apr 2011
I read last week that there are 140,000 people who will have to write these exams. In a lot of cases we'll have to do RE1 and RE5. Let's say that in total, 175,000 exams are written @ R 900 per exam. That's R 157 million! I would suggst that this should cover the costs of interpreting the exams and question papers into Afrikaans. Like Ayanda says, passing these exams wont make a difference to the 'crooks' that want to rip off the client. The assurers need to take a more proactive approach to their agents and brokers.
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Added by Pam, 11 Apr 2011
I laughed out loud at Tim Jone's comment "equal to 3rd year university". Come on this is redicolous! It was extremely easy and I hardly put in an effort and acheived over 80%. Clearly Tim has never stat a nui exam! PS I only used the inseta material.
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