FSB’S deadline looms for insurance sector

AS THE final deadline for regulatory compliance approaches – next month – the insurance industry is preparing for the effects that failure to obtain compliance could have on the finance and insurance sector.

Loss of employment and skills are at the top of this list. The Financial Services Board (FSB) has reaffirmed its intention to proceed with regulatory action against financial service providers who are not compliant with the fit and proper requirements of the Financial Advisory Intelligence Service Act. The repercussions may be the debarment of key individuals or representatives from practising.

“The consequences of failing to comply are obviously dire – as the deadline approaches, it is easy to see the pressure this is adding to those who have yet to pass the exams,” says Sandra Dunn, chief executive of the Insurance Sector Education and Training Authority (Inseta).

“Many of those who still need to pass are SMME owners, and any job losses and resulting loss of skills that occur from failure to pass the exam are a blow to the industry,” she says.

Failure to comply is also affecting larger firms as people resign.

Inseta’s research involving more than 927 small, medium and large insurance employers in 2011 and last year shows that of the 14 276 employees who resigned from the companies surveyed, resignations were mostly a result of dissatisfaction with the FAIS legislation, and compliance requirements.

“Most of the resignations came from employees who were simply fed up with having to take exams at this stage of their lives and were unable to meet the requirements for passing exams,” says Adeline Singh, manager of Inseta’s skills planning, research and development division, who co-ordinated the research.

But Dunn says that despite the difficulties, the sector is in good shape – with most advisers having passed the exams.

“The industry is now in a better position compared to the same time last year, when large numbers of advisers still had to sit the regulatory exams,” she says.

To help those who still need to sit the exam in the short time remaining, Inseta and the FSB are running a third set of free seminars country-wide, to equip them with the techniques needed to complete the multiple choice questions in the exam paper.

The focus of the seminars is primarily on problem areas that have been identified from an analysis of candidates who have been unsuccessful in the exam several times, or passed after a few attempts. As a result of the lessons learnt, the seminars deal with the problem issues and exam techniques.

These include: the structure of the questions; how to analyse each question; selecting the correct answer; using the time available wisely; and studying for the exam.

Earle Drury, managing director of Faisit, a FAIS seminar training provider, says that the sessions break down one of the major problems facing candidates – the fact that the exams cover a wide area of work, whereas broker knowledge is generally very specific.

“Many candidates said that the seminars helped bridge the gap between knowledge and understanding. Most of those struggling to pass the exams know their study material, but in many cases they simply lack proper exam techniques or understanding of what a question requires,” says Drury.

Dunn says: “The feedback also shows that people recognise that the legislation is vital for the industry’s continued success.

“Becoming compliant may be stressful, but those surveyed see the necessity of it for the industry to thrive.

“Passing the regulatory exams is a necessity for the sector to continue to thrive. Come the regulatory compliance cut-off date, the industry will be a more accountable body, meeting securities market regulation, attesting to its commitment and professionalism as a responsible sector.”