Regulatory Info
New Fit & Proper Requirements
Quick Tip! (7 of 2009) – REGULATORY EXAMS (PART 1)
Source: Dr. Des Leatt
- Regulatory examinations
- What will be the focus of these exams?
- Key principles underlying the regulatory examinations
- What is an examination body?
- The first level regulatory examination requirements
- How will the regulatory examinations be managed, controlled and quality assured?
- Version control of regulatory examinations
- Qualifying criteria and the regulatory exams
- Qualifying criteria – tasks, knowledge criteria and skills criteria
REGULATORY EXAMINATIONS
The "new" Determination of Fit and Proper requirements published in 2008, have introduced the industry to a new concept, namely Regulatory Examinations. There is little doubt that these Regulatory Examinations will make an important impact on the financial services industry. An impressive amount of planning has taken place in respect of these exams including numerous workshops with a wide range of task teams working on the preparation and content of the Regulatory Examination regulations.
There will be two levels of Regulatory Examinations. FIRST Level Regulatory Exams which will be compulsory for ALL key individuals AND Representatives (with the exception of representatives licensed for Long Term Insurance Category A products (1.1) and Friendly Society Benefits (1.19) products), and SECOND Level Regulatory Exams which will not be covered in detail in this Quick Tip because they must only be written after the first level regulatory exam have been completed. There may be some instances when a key individual or a representative may be granted exemption from a second level Regulatory Examination, BUT this is NOT the case for FIRST Level Regulatory Exams!!
The Regulatory Exam concept is important and ALL key individuals and representatives must familiarise themselves with their obligations in terms of these Regulatory Examinations.
WHAT WILL BE THE FOCUS OF THESE EXAMS?
The FIRST Level Regulatory Exams which could be referred to as a CORE exam will focus on the FAIS Act and subordinate legislation such as the General Code of Conduct, disclosures and other requirements of the FAIS legislation. In addition the FIRST Level Regulatory Exam will also include the FICA Act and other relevant anti-money laundering legislation.
The regulatory examinations will aim in particular on testing the application of factual knowledge in relation to;
The rendering of financial services applicable to specific categories and subcategories of clients;
The relevant legal provisions, particularly the rights and duties which they vest in providers and clients, their appreciation of the legal meaning, the implications of these provisions, and testing the competence of candidates to apply these provisions correctly.
The regulatory examinations will be multiple choice questions, mostly based on case study type assessments that are practical and relevant to the industry.
The FSB has confirmed that the content of the questions will be based on the current General Code of Conduct, the FAIS Act and FICA. You will not be required to remember sections of the Act – this will be provided where necessary. The Regulatory Exams will however test how you understand the applications of the Act. All questions will be based on the qualifying criteria found in Annexure 1 of Board Notice 105 of 2008. No other criteria will be tested.
KEY PRINCIPLES UNDERLYING THE REGULATORY EXAMINATIONS
The qualifying criteria for the FIRST Level Regulatory Exam determine the scope and content of the regulatory examinations (published in BN 105).
A key individual and a representative must take and successfully pass any such regulatory examinations set by the Registrar.
There will be no limit on the number of attempts a key individual makes to pass these exams.
The Registrar must approve Examination Bodies who will conduct the exams on behalf of the FSB.
The Registrar will publish in the Gazette practical matters related to the management and control of the Regulatory examinations.
Allowance will be made for learners with special needs.
WHAT IS AN EXAMINATION BODY?
The Registrar began a process in 2009 which led to the appointment of Moonstone; the FPI; Leselo/IOB – the Institute of Bankers; and the SAIFM as Examination Bodies. There will only be a limited number of Examination Bodies, in some respects they will be similar to Recognised Bodies. The Registrar published a Board Notice Number 154 of 2008 on 29 December 2008 which determines the criteria for the approval of an Examination Body.
Examination Bodies will set, conduct, manage and record the results of Regulatory examinations.
Regulatory examinations will be available from 2010. Probably from April 2010.
Accredited training providers were not invited to apply for recognition as an Examination Body; Examination Bodies may NOT provide training and/or study material for the Regulatory Exams.
They are under the direct control of the Registrar,
The pass mark will be 70%
There will be no limit to the number of attempts to pass, however, if you re-write a Regulatory Exam you must re-write to complete Regulatory Exam, not just a specific section of the Regulatory Exam.
Examination Bodies have discretionary powers to offer a choice of completing ONE examination that addresses the qualifying criteria for two different exams; for example a Category I key individual acting as a representative may be given the option by an Examination Body to write the FIRST Level Regulatory Exam for Category I key individuals plus the First Level Regulatory Exam for representatives in one combined exam.
THE FIRST LEVEL REGULATORY EXAMINATION REQUIREMENTS
Key individuals and representatives appointed between 2004 and 31 December 2009 must have completed their relevant FIRST level Regulatory Exam by 31 December 2011.
Key Individuals who are also deemed to be “acting as representatives” must also complete the FIRST Level Regulatory Exam for representatives.
There are different FIRST Level Regulatory Exams for key individuals appointed in Cat I; II/IIA; III and IV. If you are a key individual appointed in any two such Categories then you must write BOTH of the relevant Regulatory Exams.
HOW WILL THE REGULATORY EXAMINATIONS BE MANAGED, CONTROLLED AND QUALITY ASSURED?
The Registrar will publish in the Gazette practical matters related to the Regulatory Exams such as;
The setting and taking of the exams
The curricula
The drafting of the exam papers
The criteria for determining a successful pass mark/level
The examiners (if any)
The time, place and date of such exams
The supervision of the exams
The evaluation and marking of the exams
The moderation of the exams and
The communication to the examinees of the results of the exams.
VERSION CONTROL OF REGULATORY EXAMINATIONS
There will be only one national version of any regulatory examination for any category or subcategory
ALL Regulatory Exams will be hosted and distributed by the Registrar.
Examination Bodies will have access to the regulatory examinations based on their application criteria and area of expertise.
The intention is to ensure that the content, quality and standard of each Regulatory Examination is the same nationally.
There will be no fluctuation in standard or quality across Examination Bodies, Provinces, etc.
ALL regulatory examinations MUST be:
Valid – they test what they intended to test, i.e. the qualifying criteria;
Reliable – the standard of the examinations is the same across different demographical areas and examinations bodies;
Fair – all candidates that are tested in the same category/subcategory should receive questions that cover the same competence outcome, are of the same standard or level of complexity and the same style;
Consistent – two candidates with the same knowledge and skill should obtain the same results.
To ensure validity Regulatory Examination questions will be tested and moderated;
The Registrar may subject regulatory examinations to an external moderation prior to their use.
QUALIFYING CRITERIA AND THE REGULATORY EXAMS
The purpose of the qualifying criteria is to provide the criteria against which the regulatory examinations will be set. In order to establish credible qualifying criteria which could be used for this task the Registrar established various task teams to determine the qualifying criteria which would be used by the Registrar. An enormous amount of work was done by these task teams and the outcome is a highly authentic and credible framework and structure that can be used as the basis for the required Regulatory Examinations.
QUALIFYING CRITERIA – TASKS, KNOWLEDGE CRITERIA AND SKILLS CRITERIA
Each section in Board Notice 105 of 2008 describes various TASKS to be performed with associated KNOWLEDGE CRITERIA (the knowledge that you require) and SKILLS CRITERIA (the skills that you require) that you will need to perform the task.