The Financial Services Board (FSB), National Treasury and the Association for Savings & Investment SA (Asisa) are standing firm in the face of an outcry – which is reaching hysterical proportions – against financial advisers having to write and pass first-level examinations by the end of the year in order to continue giving you financial advice.
The outcry has seen intermediaries establishing websites dedicated to the issue, the circulation of a petition to scrap the exams and the formation of a new body to represent independent financial advisers.
The controversy also saw Asisa’s chairman, Johan van Zyl, break ranks with the industry last week, when, interviewed on radio in his capacity as the chief executive of Sanlam, he described the exams as “madness” and “unnecessary”.
Earlier last week, Peter Dempsey, the deputy chief executive of Asisa, said in a statement to Personal Finance that Asisa supports the FSB’s drive to increase the level of regulatory knowledge in the industry. Asisa maintains that key individuals and representatives who interact with consumers must fully understand the applicable regulations, he says.
This week, Sanlam did a backward somersault. In replies to queries from Personal Finance, Lulu Letlape, the Sanlam Group executive for corporate affairs, issued a statement saying: “Sanlam, through Asisa, has been part of the discussion and consultation by the FSB regarding the first-level regulatory exams.
“Sanlam supports the general objective of the FSB to protect consumers and to professionalise the financial services industry. We therefore support the examinations that aim to achieve these objectives appropriately.
“We commit to preparing our advisers for these exams, especially since this is critical for the continued success of our business. We believe it is critical to monitor the results of the exams to ensure that there are no unintended consequences. In support of Asisa’s request, we do not intend to comment further on the exams.”
The exams have two levels:
*First level: the compulsory testing of the advisers’ knowledge of their legislative environment in terms of the Financial Advisory and Intermediary Services (FAIS) Act. The FAIS Act and its subordinate codes of conduct set out the obligations and responsibilities of your financial adviser to ensure you receive appropriate advice and are provided with products suitable to meet your financial needs.
*Second level: the compulsory testing of product knowledge, with a total of 29 examinations covering different products. Advisers are required to write examinations on the products for which they are licensed. If advisers hold recognised qualifications, they may be exempt from some or all of the second- level tests.
At a media conference on the government’s policy document “A safer financial sector to serve South Africa better”, Ismail Momoniat, the deputy director general of the National Treasury, made it clear that the government wants a much improved environment. He said that:
*All financial services providers must be appropriately licensed or regulated;
*Regulation and supervision must be transparent and sufficiently intense, intrusive and effective; and
*The operational independence, integrity and accountability of all regulators should be strengthened.
Momoniat said the financial services industry should be held to a higher standard of market conduct than other industries for numerous reasons including the fact that under-performance or even failure of financial products such as retirement annuities may impose considerable hardship on consumers.