The Financial Services Board (FSB) announced its decision last week to postpone the level 2 regulatory examinations (REs) until a date yet to be determined. The reasons, provided in Circular 6 of 2013, are twofold. The qualifying criteria on which the examinations are based were determined in 2008, and some of the criteria are no longer adequate and relevant and need to be reviewed. Secondly, the Regulator intends investigating alternative delivery models for the regulatory examinations. This should please many who did not agree with how the level 1 examinations were presented. These processes will include proper consultation with all relevant stakeholders, which is a time consuming process. A number of parties will be affected by this postponement.
Training services providers
When recognised qualifications were announced, it was also stated that intermediaries who obtained such qualifications would be exempt from certain level 2 REs. This also applied to people who had obtained certain qualifications in the past, e.g. a CFP or a FETC – Short-term Insurance qualification. Depending on the qualification, and the licence categories which one is accredited for, it could exempt you from one or more level 2 REs. It was also announced that training service providers would have to rewrite the content of their courses so that there was a 100% match with the qualifying criteria. After this was done, they could apply to the FSB for accreditation of the new course at a cost of R25 000 per qualification. Whilst the FSB did not provide more information on the specific criteria which would no longer be relevant, the consequences will be that such changes will result in the affected qualifications no longer meet the SP standard, and hence not appear on the list of approved qualifications. Learners Those who attended training courses to obtain a full qualification may again find themselves on the wrong side of the fence, should the applicable qualifying criteria change. It would mean that they will have to write the Level 2 REs, after all, despite having obtained an approved qualification. We do not foresee a before-and-after scenario regarding qualifications, where some are recognised, while new ones are based on different criteria. This possibly explains why so many people procrastinate – they want to be sure that there will be no last minute changes.
Regulatory Exam Bodies
At the outset of the exams, in November 2010, the four recognised bodies were approved, based on their ability to conform to the stringent requirements laid down by the FSB. This included setting up the prescribed infrastructure and logistics to conform to the demands of a professional examination. It is impossible to conclude what the FSB means by “alternative delivery models”, but what one can assume is that there will be substantial changes to the current way the exams are presented. Until there is clarity on this, the examination bodies have to carry the cost of infrastructure for the level 2 REs which was based on the original planning of the roll-out of level 1, 2 and continuous professional development. Two examination bodies have already withdrawn.
Consumers
In the announcement of the postponement, the FSB provided this rationale for the decision: The FSB remains committed to ensure that only competent persons render financial services to clients in order to ultimately create a safer environment for the consumer of financial services. The challenge for the Regulator is that every delay of the professionalization of the industry is to the detriment of the consumer, which defeats the purpose of the exercise.
The industry
Consultation with the industry is a time consuming exercise, as we know from the first round which commenced in October 2006 and continued until September 2008, and culminated in the current qualifying criteria. “The consultation was open to any provider, individual, industry association, professional body etc. Participants were mostly product experts, professional bodies, industry associations, providers, representatives from larger corporate companies, and even training providers that specialised within the financial services industry.” It is likely that the new exercise will be on a smaller scale than the first. The industry, however, remains in a continuous state of flux. Delays add to the cost of delivery, and ultimately the price of the product to the consumer.
