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Johannesburg - An estimated 300 000 people in the financial service sector may lose their jobs before the end of the year because of regulatory exams, according to an industry organisation.
The Level 1 (RE 1) exam, which is compulsory to anyone who sells financial services, tests regulatory compliance and needs to be passed by December this year.
An estimated 140 000 people need to take the exam to continue working in the industry.
Some in the sector estimate that the current pass rate of the exam is between 25% and 29%.
Chris van der Walt of the National Association of Independent Financial Advisers (Naifa) calculates that, if the employees of financial intermediaries are included, the job losses could top 300 000.
“But the more important concern is for the two million consumers who are currently serviced by these intermediaries.”
The current pass rate of less than 1% of people who have written the exam has not been released, Gerry Anderson, Financial Services Board deputy registrar: financial services providers told Fin24 in response.
“Any information provided to you on this issue can only be attributable to mere speculation.”
The exams have come under fire from many in the industry, including Sanlam CEO Johan van Zyl who called it “madness” and “unnecessary”.
Phillip Matlakala, chief executive of Metropolitan Retail, also weighed in on the matter this week, saying it would have a negative impact on life assurers like Metropolitan operating in the low- and middle-income market, and on the industry’s ability to create jobs.
The financial services sector is the third-largest employer in SA and data shows the industry now accounts for 12% of the labour force in the formal sector, compared to almost 14% only two years ago.
“We are concerned about the complexity of the imminent regulatory exams. One needs to ask oneself to what extent intermediaries need to know the letter of law as pertaining to FAIS (the Financial Advisory and Intermediary Services Act).
"Appropriate knowledge of the legislation is obviously important, but I believe that the legalese of FAIS is the domain of compliance and legal officers.
“This is extremely unfortunate in Metropolitan’s case as the company has a policy of recruiting intermediaries directly from the communities it serves and it’s likely that Metropolitan’s intermediaries will be disproportionately affected.”
“We have highly skilled and professional managers who ensure that our intermediaries follow the spirit and intent of the law, so I do not understand why intermediaries should be expected to write exams this complicated.”
A survey conducted by Metropolitan, with research group TNS, showed that more than half of the group’s intermediaries knew people who had left or were considering leaving the industry - many citing regulation as the main the reasons for leaving.
Matlakala says that Metropolitan’s bid to recruit from SA’s 200 000 unemployed graduates has had “limited success” as the regulatory barriers to entering the industry as an intermediary are simply too high.
“Surely this can’t be aligned with government’s agenda to promote job creation.”
Advisers have complained that the multiple-choice questions are too difficult, that the exams are only available in English, the deadline (for the first regulatory exam - December 2011) is too tight and that the required pass mark (65% or 66%, depending on the exam), is too high.
Many also balk at the cost (R900 an exam).
Naifa, together with independent financial advisers, plans to lodge an application on April 8 with the Equality Court to order the Financial Services Board to translate the exams in a second language.
It is estimated that half of the financial advisers are Afrikaans.
“The FSB is not prepared to debate matters of this nature through the media,” Anderson said.
“The Naifa is welcome to liaise directly with the FSB of any issues of concern it may have. The information at our disposal is that certain court papers are being prepared, but the FSB was not aware that this was being done by the Naifa.”
The FSB previously said it will not consider translating the exams in English, because of the cost involved in having the exams in all 11n languages and also because the subordinate legislation issued in terms of the FAIS Act is available only in English.
- Fin24
The Level 1 (RE 1) exam, which is compulsory to anyone who sells financial services, tests regulatory compliance and needs to be passed by December this year.
An estimated 140 000 people need to take the exam to continue working in the industry.
Some in the sector estimate that the current pass rate of the exam is between 25% and 29%.
Chris van der Walt of the National Association of Independent Financial Advisers (Naifa) calculates that, if the employees of financial intermediaries are included, the job losses could top 300 000.
“But the more important concern is for the two million consumers who are currently serviced by these intermediaries.”
The current pass rate of less than 1% of people who have written the exam has not been released, Gerry Anderson, Financial Services Board deputy registrar: financial services providers told Fin24 in response.
“Any information provided to you on this issue can only be attributable to mere speculation.”
The exams have come under fire from many in the industry, including Sanlam CEO Johan van Zyl who called it “madness” and “unnecessary”.
Phillip Matlakala, chief executive of Metropolitan Retail, also weighed in on the matter this week, saying it would have a negative impact on life assurers like Metropolitan operating in the low- and middle-income market, and on the industry’s ability to create jobs.
The financial services sector is the third-largest employer in SA and data shows the industry now accounts for 12% of the labour force in the formal sector, compared to almost 14% only two years ago.
“We are concerned about the complexity of the imminent regulatory exams. One needs to ask oneself to what extent intermediaries need to know the letter of law as pertaining to FAIS (the Financial Advisory and Intermediary Services Act).
"Appropriate knowledge of the legislation is obviously important, but I believe that the legalese of FAIS is the domain of compliance and legal officers.
“This is extremely unfortunate in Metropolitan’s case as the company has a policy of recruiting intermediaries directly from the communities it serves and it’s likely that Metropolitan’s intermediaries will be disproportionately affected.”
“We have highly skilled and professional managers who ensure that our intermediaries follow the spirit and intent of the law, so I do not understand why intermediaries should be expected to write exams this complicated.”
A survey conducted by Metropolitan, with research group TNS, showed that more than half of the group’s intermediaries knew people who had left or were considering leaving the industry - many citing regulation as the main the reasons for leaving.
Matlakala says that Metropolitan’s bid to recruit from SA’s 200 000 unemployed graduates has had “limited success” as the regulatory barriers to entering the industry as an intermediary are simply too high.
“Surely this can’t be aligned with government’s agenda to promote job creation.”
Advisers have complained that the multiple-choice questions are too difficult, that the exams are only available in English, the deadline (for the first regulatory exam - December 2011) is too tight and that the required pass mark (65% or 66%, depending on the exam), is too high.
Many also balk at the cost (R900 an exam).
Naifa, together with independent financial advisers, plans to lodge an application on April 8 with the Equality Court to order the Financial Services Board to translate the exams in a second language.
It is estimated that half of the financial advisers are Afrikaans.
“The FSB is not prepared to debate matters of this nature through the media,” Anderson said.
“The Naifa is welcome to liaise directly with the FSB of any issues of concern it may have. The information at our disposal is that certain court papers are being prepared, but the FSB was not aware that this was being done by the Naifa.”
The FSB previously said it will not consider translating the exams in English, because of the cost involved in having the exams in all 11n languages and also because the subordinate legislation issued in terms of the FAIS Act is available only in English.
- Fin24
