FAIS regulatory exams: are financial services providers failing their representatives?
By Tamara Jacobsen, Director, Applied Learning Academy
As a regulatory training provider, Applied Learning Academy is continually approached by individual representatives who need to write the exams but have not been given any assistance or support by their employers in their endeavours. In many cases, these representatives have attempted but failed the exam multiple times and for some, their jobs are under threat because they have not been successful in the exam. While we are willing and able to assist in providing a range of suitable training and support solutions for these representatives, the failure to provide training assistance by so many FSPs raises several concerns, some of which are addressed in this article.
The biggest concern is that FSPs who fail to provide any training support to representatives for the regulatory exams are in fact not complying with several legal provisions.
Board Notice 106 of 2008
Board Notice 106 of 2008 under FAIS addresses various Fit and Proper requirements. The following is stated in Part VIII on operational requirements:
“An FSP must ensure that control structures, procedures and controls are in place which include at least the following-
(h) appropriate training for all key individuals/representatives regarding the requirements of the Act.
(i) training for all key individuals and/or representatives regarding the giving of advice/rendering of intermediary services by the provider.”
Part IX of the General Code of conduct: Risk Management
This section of the code relating to risk management states that the provider (FSP) must “structure the internal control procedures concerned so as to provide reasonable assurance that, among other objectives, all applicable laws are complied with.”
The FAIS regulatory exams serve as proof of knowledge of the requirements of the Act. If a representative has been unsuccessful in writing the regulatory exam without receiving any training or support, or has not even attempted the exam within the required time frame, what proof exists that the FSP has met its various operational duties?
In the event of non-compliance, penalties may apply – fines imposed by the FSB’s Enforcement Committee for more minor offences start at R10 000 but are typically set at R100 000. In material cases of non-compliance, the FSPs licence may be withdrawn or suspended on the grounds of failure to comply with provisions of the FAIS Act.
Opportunities and benefits to business
The FAIS requirements, in particular a proper analysis and recommendation process together with adequate disclosures under the General Code of Conduct provide opportunities and benefits to an FSP when properly applied:
- The strength of the relationship built with clients is improved as the client recognises the need for a particular product as well as the benefits of the product solution;
- The chance of repeat business from the same client is higher;
- The rate of early termination of products is reduced as clients understand and appreciate the purpose and terms of a product;
- Up selling opportunities are increased as FAIS is the best excuse for revisiting a client and up selling where through an analysis is it can be shown that cover requirements have increased;
- New financial needs can be identified when a review is conducted, increasing new business opportunities as well as closing the door for the client to contact an alternative representative and FSP for their financial needs;
- Client acquisition costs are reduced – it costs a business more to acquire a new client than to build additional business with an existing client;
- In the event of an error, a stronger client relationship helps to preserve the business;
- Levels of complaints received are reduced, especially in relation to product terms and conditions.
Help your representatives to meet the regulatory exam requirements thereby meeting legal requirements, reducing risks and increasing business income.
We acknowledge that the number of representatives who need to write the exam within your organisation may not be enough to warrant the cost of a workshop, but there are other training support options that can and should be considered.
Alternative training support options
Applied Learning Academy offers a wide range of services to help representatives and key individuals to successfully complete the level 1 regulatory exam including:
- Provision of an exam support pack;
- Mock exams; and
- Private tuition for representatives who have had multiple attempts at the exams without success.
Where a workshop cost is not affordable, the most cost effective and holistic support solution available in the market is Applied Learning’s regulatory exam support pack. The support pack includes:
- Summary of the material: all key information has been included in this summary for ease of study including the legal provisions and additional explanations to help with understanding;
- Summary of time periods: this document summarises the multiple time lines found in the legislation and notices. These are important to learn as questions on these arise in the exam;
- Exam tips and techniques: this provides detailed information on the exam and questions that will be asked so that study efforts are focused in the right areas. Tips and techniques on tackling the different types of multiple choice questions have also been included.
- Mock exams: two mock exams are provided on the same basis as the actual exam in terms of content, number of questions and style of questions. An answer sheet and explanations of the answers is also provided to enable the representative to use the results as a development tool to strengthen knowledge and/or exam technique.
Note: Similar support is provided for the key individual level 1 regulatory exam.
Contact Tamara Jacobsen CFP® on 011 452 8829/082 459 0993 or visit us at www.appliedlearning.co.za for more information.
Applied Learning Academy
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