Qualifications; Exemptions and CPD

Presented by Dr. Des Leatt

Compli-Serve Seminar (Durban)

13 September 2012

Programme

Introduction

Recognised Qualifications (an update)

2nd Level Regulatory exams & exemptions

CPD – update and current developments

Questions as and when!

Introduction

Recognised qualifications and qualifications in general are here to stay so we all need to stay informed;

2nd Level Regulatory Exams are looming in the not too distant future – some exemptions are possible;

The design of the FSBs CPD policy is “work in progress” and much has been done since 2008 to shape FAIS Fit & Proper “CPD” hence this update is important;

Recognised Qualifications

“DOFA” (Date of First appointment)

The date of 1st appointment in an authorised FSP (which may not be your current employer) is extremely important when it comes to determining your experience, qualifications and RE datesThe FSB is on a “campaign” to update their records, if you received a “DOFA” letter from the FSB best to respondThey will probably repeat this exerciseIf you want to check your status send an email with your ID to FAIS.DOFA@fsb.co.zaBreak in service – original date holds, with the exception; if you are out of the industry for 5 years you will be regarded as a new entrant when you return (importantly this effects your experience and the “reduced” qualification requirements of the transitional period);If you change jobs get a letter confirming your Fit & Proper qualification status, including license categories etc.

What do we mean by FSB Recognised Qualifications?

The Registrar does NOT quality assure and accredit qualifications – that is SAQAs job!The Registrar takes Qualifying Criteria (developed by the FSB in consultation with industry) and compares the qualification against these criteriaIf the Registrar deems the qualification appropriate then it is recognised and included in the list of recognised qualifications.Therefore SAQA accredits qualifications and the Registrar recognizes qualifications which are appropriate, based on a comparison with the relevant qualifying criteria.

Generic & Specific qualifications

The list of recognised qualifications distinguishes between GENERIC (G) & SPECIFIC (S) qualifications (which applies to the transitional period, i.e. up to end December 2009) and

Specific (SP) qualifications (which applies to the (post-transitional period i.e. from 1 January 2012 onwards)

Generic “G” qualifications(indicated with a “G” on the list of recognised

qualifications)

Qualifications that match the qualifying criteria only partially in terms of their content are recognised as GENERIC “G”, and as a result an individual that has obtained this type of qualification will also have to complete the product specific 2nd Level Regulatory regulatory examinations.

Specific “S” qualifications(Recognition up until end December 2009

indicated with an “S” on the list of recognised qualifications)

Qualifications that match the qualifying criteria 80% in terms of their content are recognised as SPECIFIC “S” qualifications;

All individuals whose date of 1st

appointment in an authorised FSP (DOFA) is between 2004 and 31 December 2009 who has completed these types of qualifications will be exempted from writing the applicableproduct specific 2nd Level Regulatory examinations.

Specific “SP” qualifications(Recognition from 1 January 2010 onwards indicated with an “SP” on the list of recognised qualifications)

Qualifications that match the qualifying criteria 100% in terms of their content will be recognised as “SP” and this would mean that individuals appointed from 1 January 2010 onwards who complete these qualifications will be exempted from writing the applicable product specific 2nd Level regulatory examination

Note: The period from 1 January 2010 onwards is sometimes called the Post-Transitional period

Application for recognition of a qualification

Any person, student/learner or institution can apply for the recognition of a qualification. There is now a fee of R1700 for a Generic application.

Complete in detail QA1 to QA8 of Qualifications Application Form

Same or similar qualifications?

Universities operate under Higher Education rules adopted by their respective senate and council. Essentially this gives them the right to tailor make their subject offering within the parameters established by Higher Education.

To illustrate, I know of a University whose Bachelor of Science degree required two third year major subjects and another University which only required one third year major in their Bachelor of Science degree combination.

Both are Bachelor of Science degrees approved by Higher Education but they are not the same.

Second Level Regulatory Exams & Qualifying Criteria

12 Sections

Long Term Insurance subcategory A, Friendly Society Benefits & Category IV

Short & Long Term Deposits

Long Term Insurance subcategory C & Retail Pension Funds

Participatory Interests in Collective Investment Schemes

Securities & Instruments (shares; money market instruments; debentures; warrants; bonds; derivatives)

Second Level Qualifying Criteria 12 Sections (Continued)

Short Term Insurance: Personal Lines

Short Term Insurance: Commercial Lines

Health Care Benefits

Pension Fund Benefits

Category IV

Long Term Insurance subcategory B1

Long Term Insurance subcategory B2

2nd Level Regulatory exams

The following applies with respect to the Second Level Regulatory exams;1. If for example a representative is approved for Long

Term C & Retail Pension Funds then you must write a combined 2nd Level RE Exam for these subcategories

2. if you are approved for Collective Investment Schemes then you must complete a 2nd Level Re Exam for CIS

3. if you are approved for Health Care Benefits then you must complete a 2nd Level RE Exam for this subcategory

If you are approved for EACH of the above then you must three Second Level Regulatory exams.

How then do 2nd Level exemptions work?

Must have completed an FSB recognised qualification (verify & certificated)

Skills programmes & credits don’t provide exemptions

2nd Level Exemptions (cont)

The above table is slightly out of date, the list now includes the name of the training institution

The ID number used is the SAQA ID number

The list is published for EACH Category of license (Cat 1; Cat 11/11A; Cat 111; Cat 1V)

A KI or a Rep must have completed a verified, certificated, recognised qualification to qualify for exemption

Skills programme and credits will NOT provide exemptions

EACH recognised qualification will have a “G”; or an “S” or an “SP” or NO designation (if applicable) for EACH product subcategory (now 1.1 to 1.20)

2nd Level Exemptions (cont)

The final column is used to indicate if applicable to a Key Individual appointment

Board Notice 135 of 2012 gives the latest list of recognised qualifications – the BN contains some errors and will be revised

No electronic access on the FSB website yet but it is work in progress, and an online search facility will become available in due course

If you have a qualification, search BN 135

2nd Level Exemptions (cont)

If your qualification is listed check if any product columns (1.1 to 1.20) have an “S” or “SP” designation

Exemption applies for ANY subcategory marked “S” or “SP”

NO exemptions apply for a “G” Generic classification

Designations such as AFP; RFP and CFP & any other designation does NOT carry exemptions, UNLESS the underlying qualification has been completed

DOFA from 1 January 2010 onwards qualification MUST carry an “SP” designation

Exemption Example: CFP with underlying qualification provides exemption for LT A; LT B1; LT C; Retail Pension Benefits; Participatory Benefits in CIS; Health Service Benefits; Friendly Society Benefits; LT B2 & applies to a KI (see hand-out)

One implication of the 2nd Level Regulatory Exams requirements

Interrogate your license profile to make sure that you are authorised for the correct license categories and subcategories –don’t include these if you do not require them!

Warning: If you remove a subcategory and then want to reinstate it you fall under the NEW Fit & Proper requirements

Consultative review of 2nd Level Criteria by the FSB

The FSB has announced that a consultative review of the 2nd Level Qualifying Criteria will take place

Industry and interested stakeholders will be invited to participate

FSB cannot commit to timelines at this stage

SOME EXAMPLES OF QUALIFYING CRITERIA 2nd Level Regulatory exams

Section 10: Short Term Insurance: Personal Lines

No Task to be performed

Knowledge Criteria (the knowledge required)

Skill Criteria (the skills required)

1. Determine the clients need for insurance.

Explain the principles of insurance including the concepts of insurable interest, insurable risk, duty of disclosure, indemnity, average, compensation, subrogation, proximate cause, contribution.

Ask relevant questions relating to product offering in order to determine the clients need for insurance

Section 9: Securities & Instruments

No Task to be performed

Knowledge Criteria (the knowledge required)

Skill Criteria (the skills required)

4 Develop and

present a financial

plan with

recommendations

and alternatives.

Describe the different types interest-bearing investments including but not limited to: money market instruments, bonds, gilts, loan stock

Describe the different types of collective investments and explain the differences to the client in plain language and in accordance with the client’s existing knowledge in order to assist the client make an appropriate investment decision.

Section 8: Participatory Interests in Collective Investment Schemes

Task to be performed

Knowledge Criteria (the knowledge required)

Skill Criteria (the skills required)

3 Analyse and evaluate the client’s financial status as part of a basic needs analysis

Describe the main asset classes underlying a collective investment in terms of structure (including risk vs. return, volatility) as it relates to: bonds, equities, property / alternative investments and cash investments.

Determine a client's investment needs in terms of investing for income and /or growth, based on the client's risk profile, including advice on existing investment portfolios and implications of portfolio restructuring.

Section 6: Short & Long Term Deposits

Task to be performed

Knowledge Criteria (the knowledge required)

Skill Criteria (the skills required)

7 Adhere to the requirements of the Specific Code of Conduct for Short-term Deposit Business.

Discuss the requirements of the Code in terms of:Unsolicited contacting of clientsGeneral duties of the providerContractual terms and conditionsDuties regarding furnishing advice to clientsDetails on account operationConfidentiality and privacyAdvertisingComplaint resolution processesWaiver of rights

Comply with the Specific Code of Conduct for Short-term Deposit Business when giving advice in deposit products

Continuous Professional Development within the FAIS Fit & Proper regime

Key aspects under discussionThe CPD Board Notice published in 2008 will be repealed & replaced

Significant changes under discussion, consultative process is underway, framework appears to be largely in place

CPD MAY roll out July 2013 but no certainty as yet

CPD will be an annual cycle of maximum 20 hours, ranging from 5hrs; 10hrs; 15hrs and a max of 20 hours (depending on product subcategory).

The reporting cycle will commence 1 July and end 30 June

CPD will be recorded on the Rep Register using ID numbers

The FSB will only recognise verifiable activities

CPD can be a Learning Programme (via a CPD provider) OR a combination or a recognised programme of a professional body

Purpose of CPD

Develop and maintain knowledge and skills

Develop and maintain professional competence

Render financial services with due care

Maintain awareness

CPD Activities

An approved CPD programme/activity must fulfil purpose of CPD

Conference/seminars/workshops

Complete part or full qualifications

Write or co-write articles, including peer review of journals

Published book that is relevant

Presentations of papers, lectures etc.

Interview on radio or TV

Any other FSB approved CPD activities

After 36 months a CPD programme/activity must be re-submitted

Can be online

Duties of a CPD provider

Act honestly at all times

Verify identity of attendees

Upload names and associated activities onto CPD register

Submit quarterly records to the FSB

Records to be maintained for 3 years

Report dishonesty

Provision for lapsing, withdrawal and debarring of provider

Provision for a complaints system

Application to become a CPD provider

Any person/institution/professional body

Can be web-based

Process undertaken to develop programme/activity must be provided

Subcategories the activity addresses

Standard application form

A fee will apply to register

FSB approval required

CPD programme – hours recognition guide

TABLE A (now annual cycle with a max of 20 hours

Programme/Activity CPD hours

Full programme 20 hours per year

1 day workshop 1 day 6 hours

2 days 12 hours

3 days 18 hours

4 days 20+ hours

Attend a CPD activity less

than 3 hours

3 hours per activity

Write an article 10 hours per article

Write a published article 20 hours per article

Write a published book 20 hours per book

Delivery of an activity as

above (two per cycle)

1 day 12 hours

Interview on radio/TV 1 CPD hour per 30 minute

interview

Complete qualification 20 hour per qualification

Contact information

Dr. Des Leatt (Compli-Serve: CO)

Education & Training Consultant

Phone: 021-851 9691

Cell: 082 857 0050

Email: des@CompliServe.co.za OR desleatt@netactive.co.za