Reps who Fail to pass RE 5 by 30 September

We received a number of enquiries from readers following Monday’s article which touched on interim measures one can take when candidates do not pass the regulatory exams by the end of September.

Q: “Can we ‘fire’ a representative who fails to pass, and then reappoint him to work under supervision?”

A: The short and sweet answer is “NO”. The first determinant is the rep’s FIRST date of appointment in the industry. Those appointed during 2010, and working under supervision, have until December 2012 to complete the RE 5 exam. If your rep’s register does not show such a rep as working under supervision, then the two year stipulation applies. If the date of appointment was, say, 18 October 2010, then such an appointee has to complete the RE 5 by 18 October 2012. Although a rep can work under supervision for up to 6 years, he is obliged to complete the level 1 RE within 2 years if not working under supervision. If he is working under supervision, then he has to pass RE 5 by the end of the year in which the second year falls.

Secondly, please note that dismissal is a two pronged process, involving both labour law and a FAIS process (debarment), which entails informing the regulator of the reason for the debarment. If the grounds were that such a rep did not comply with the competency requirements, you cannot re-appoint him the next day under supervision. That would obviously be against the spirit of the “working under supervision” exemption, which is to allow people to gain experience and skills. Without this allowance, appointing new entrants would have been extremely difficult.

The solution is actually very simple. Remove such a rep from the rep’s register, get him to study full time to pass the exam, and then add him to the register once you receive confirmation of this. Whilst not on the register, such a rep is not allowed to provide ANY financial advice or intermediary services.

The wise thing to do, of course, is to make RE 5 preparation part of the new appointee’s training program. Do not wait for the end of the second year – this just causes unnecessary stress.

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