Secondary

What can we learn from the RE Process thus far?

The REs became available twenty months ago. What could have been done differently?

Let me start off by saying that there is no doubt in my mind about the necessity for regulatory examinations. From numerous conversations with a wide variety of advisors, it became apparent that a huge misunderstanding exists about just what the level 1 REs are all about. Until the introduction of the exams, few people took the trouble to read the relevant legislation. The following comment from a reader explains the point:

I wrote my RE5 Exam yesterday. The test I wrote did not relate to the industry I’m appointed in. I wrote the test the first time on 23 April 2012. I also studied 5 different tests made available on the FSB website and none of these test related to the test I wrote yesterday. I feel each industry should have their own test with industry related terms and understandable language relating to our specific industry. I do not deal in long term investments, fixed deposits, I am not a broker and I am not a banker. I’ve been in the motor Industry for 20 years, I have done FAIS compliance since 2004.

Far from trying to show this candidate up, I have a lot of empathy with her and a lot of others who are equally confused. At the heart of the problem, as so often happens, lies communication.

The “syllabus” (qualifying criteria) was drawn up in consultation with the industry. Those, like the lady quoted above, who feel that the exams did not relate to their industry, is quite correct. It concerns the legislation relating to the giving of advice and provision of intermediary services to consumers of financial products. All financial products.

The level 2 REs will possibly be closer to what she expected, but will still focus on legislation, albeit legislation specific to her industry.

Obtaining the right study material was probably the biggest challenge for most people. The Regulator maintained throughout that it would not endorse any study material.

The only commitment it made in this regard was to indicate what legislation needed to be used in conjunction with the qualifying criteria. Those who took the trouble to use the Preparation Guide, with its linking of the tasks in the qualifying criteria to the legislation, had a distinct advantage.

There are two problems in respect of preparation material.

The majority of candidates found it difficult to read and understand legal speak. It became even worse when their study material did not contain the latest updates. They then had to refer to a later Board Notice, provided, of course, that they were aware of such an update. For this reason, many opted for easy to understand guides. While this may have contributed to their understanding of the legislation, it did not always prepare them for the professional level at which the regulatory exams are pitched.

Secondly, we all grew up with text books which we studied in preparation for exams. The absence of an official textbook resulted in a wide variety of offerings, not all of which resulted in candidates being properly prepared, despite many hours of studying.

We now await the announcement of the launch of the level 2 REs.

Hopefully, some of the issues raised above will be addressed, if not by the regulator, then by training material providers. The qualifying criteria for most of the level 2 REs have been around for a very long time.

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