One of the biggest challenges facing intermediaries in 2013 is the on-going economic turmoil, both globally and in South Africa. It is possible that the industry will feel the effects of this contagion even more this year than last. To survive the tough times intermediaries should focus on maintaining and growing their businesses through diversification and the provision of outstanding service and sound financial advice to their clients.
In addition to the economic environment each segment within the financial services industry faces unique battles. The remuneration issue in the financial planning and short term industries, demarcation in the healthcare sector and retirement funding reform in the employee benefits space will dominate the industry debate this year.
All sectors in the financial services industry also face the overarching challenge of legislation governing competency requirements, specifically the Financial Services Board (FSB) and Regulatory Examinations (RE). The REs had the greatest impact on financial intermediaries in 2012 and are set to remain in focus this year as the deadline for rewrites looms.
The RE impacted intermediaries in two ways. Firstly, it created a financial burden in respect of training, study material and exam fees. Individual practices also had to allow for potential loss of income due to disruptions in their day-to-day business activities.
Secondly, it contributed to a loss of valuable industry experience. Financial services providers (FSPs) that failed the exam had to lapse their licences, with the result that valuable staff and representatives were forced to look for alternative employment in a shrinking financial services career environment. Many FSPs closed shop and entered into associations with other FSPs as a solution to this problem.
There is no disputing that the REs were offered in a format that certain intermediaries found difficult to master, but the bottom line is that these exams are a necessary step towards professionalism in the industry. Compliance with the Financial Advisory and Intermediary Services (FAIS) Act and its Fit and Proper requirements will be a key area of focus for the FIA through 2013.
Planning for RE level 2 exams is high on the agenda. The FIA is engaged in on-going consultations with the FSB and other industry stakeholders about which recognised qualifications will offer candidates exemption from the level 2 exams.
A process of identifying training providers that offer recognised qualifications that will exempt members from the level 2 exams has already begun. The FIA will assist the FSB with reviewing the qualifying criteria due to changes in the regulatory environment that may have taken place since these were formulated in 2008. Training programmes will be implemented once the level 2 product exams have been finalised.
The FIA is also working closely with institutions that offer a FAIS Continuing Professional Development (CPD) platform for CPD providers to ensure that members comply with CPD requirements effortlessly. The FIA aims to arrange and facilitate CPD activities for members countrywide once the initiative goes live. New and amended legislation will remain high on the agenda for all intermediaries.
Financial services regulation is here to stay. The FIA encourages its members to focus on the positive aspects of regulation as well as the long-term benefits to their practices introduced by safeguarding both industry and consumer.
