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A NOTE ON REGULATORY EXAMS

There has been a lot of discussion relating to the Regulatory Exams that must be written by all financial services providers by December 2013. This is a short summary of the requirements and details of the exams that must be written by each Key Individual and Representative.

FIRST REGULATORY EXAM

The First Regulatory Exam must be written and passed by 30th June 2012.

The First Regulatory Exam must be written by all Key Individuals and by all Representatives.

It is important to note that Key Individuals who provide any form of financial service to clients are also regarded as Representatives while Key Individuals who manage Representatives and who do not interact with clients at all are considered to be Key Individuals only.

The distinction is important because the former individual will be required to write at least two First Regulatory Exams.

 

The First Regulatory Exams comprise the following:

RE 1: First Level Regulatory Examination: Key Individuals in Category I, II, IIA and III
RE 2: First Level Regulatory Examination: Key Individuals in Category II and/or IIA
RE 3: First Level Regulatory Examination: Key Individuals in Category III
RE 4: First Level Regulatory Examination: Representatives

This means that:

  • Category I Key Individuals who are also Representatives will be required to write two exams, namely RE 1 and RE 4;
     
  • Category II and IIA Key Individuals who are also Representatives will be required to write three exams, namely RE 1, RE 2 and RE 4;
     
  • Category III Key Individuals who are also Representatives will be required to write three exams, namely RE 1, RE 3 and RE 4;
     
  • All Representatives from all categories will be required to write one exam, namely RE 4;

The exam is about the Financial Advisory and Intermediary Services Act 2002, the General Code of Conduct and the specific Codes of Conduct that apply to Categories II, IIA and III providers.

Please download a reader friendly version of the qualifying criteria for these exams.

[You will need an Adobe Reader(R) version 5.0 or later to open these downloads. If you do not have Adobe Acrobat Reader, please visit http://www.adobe.com/products/acrobat/readstep2.html and download a Reader at no charge.]

Four examining bodies have been appointed by the FSB and it is their responsibility to prepare the exams and to make available the examination centres where these exams may be taken by individuals. These examination bodies may not act as training providers and may not provide any form of learning material to individuals.

The exams are expected to be available by the end of April 2010 which leaves 20 months within which to write and pass the exams.

INSETA have issued a "Request For Bid" which is a invitation to training providers to bid for the appointment to INSETA as providers who will design and develop the curriculum and learning material needed for RE 1 and RE 2 and make provision for the updating and maintaining of these materials.

It is not at all certain what the time frames are for this material to become available and Key Individuals and Representatives will have to begin training on their own initiative in the meantime.

It is estimated that there are about 14,500 authorised financial services providers and about 140,000 Representatives. One can safely say therefore that there at least 150,000 exams that will have to be written by December 2010. It is unlikely in the extreme that any significant number of individuals will be ready to write these exams by April next year. It is more probable that most people will only be in any state to write the exams from say (optimistically) October 2010. That means that they have 15 months or approximately 330 days to write the exams. That in turn means that about 450 people must write the exams each day from October 2010 if everyone is to be accommodated.

If a Key Individual or a Representative fails to pass this exam by the 30th June 2012, he or she will no longer be fit and proper and will have to be debarred.

SECOND REGULATORY EXAM

The Second Regulatory Exams must be written and passed by 31st December 2013. This is four years away but having regard to the scope of these exams, we considered it prudent to bring to your attention just what is required.

These exams are product specific and must be written by every Representative – and this includes Key Individuals who provide any form of financial service to clients.

The Second Regulatory Exams include the following:

RE 5: Second Level Regulatory Examination: Long Term Insurance Category A
RE 6: Second Level Regulatory Examination: Short and Long Term Deposits
RE 7: Second Level Regulatory Examination: Long Term Insurance Category B, Long Term Insurance Category C and Retail Pension Funds
RE 8: Second Level Regulatory Examination: Participatory Interests in Collective Investment Schemes
RE 9: Second Level Regulatory Examination: Securities and Instruments
RE 10: Second Level Regulatory Examination: Short Term Insurance: Personal Lines
RE 11: Second Level Regulatory Examination: Short Term Insurance: Commercial Lines
RE 12: Second Level Regulatory Examination: Health Care Benefits
RE 13: Second Level Regulatory Examination: Pension Benefit Funds
RE 14: Second Level Regulatory Examination: Long Term Insurance Category A: FAB

Please download a reader friendly version of the qualifying criteria for these exams.

[You will need an Adobe Reader(R) version 5.0 or later to open these downloads. If you do not have Adobe Acrobat Reader, please visit http://www.adobe.com/products/acrobat/readstep2.html and download a Reader at no charge.]

As will be seen, there is a great deal to be covered in each exam and although these need be completed only by December 2013, four years is not a great deal of time for part time study and preparation.