Financial advisers register now for FAIS training or make other career plans.
Many financial advisers and intermediaries are facing another deadline by which time they either have to obtain certain qualifications or they will lose their licences to give advice.
This is in terms of the Financial Advisory and Intermediary Services (FAIS) Act, which became law in 2002. In terms of the Act, financial advisers have to be "fit and proper" to give you advice.
The "fit and proper" requirements are outlined in the regulations under the Act and include certain levels of competency that advisers must meet.
Some advisers already have qualifications that exceed those required - for example, if you have a relevant degree or are a Certified Financial Planner.
But many do not. In terms of the FAIS Act, these people have to prove that they are competent to give advice through assessments or by obtaining certain qualifications. The regulations under the FAIS Act set out the minimum levels of competency a person must have in order to give certain advice, as well as a further minimum level that he or she must achieve by a certain date.
About 9 600 people who give financial advice or render intermediary services wrote assessments organised by the Insurance Sector Education and Training Authority through the University of South Africa in February and March 2004 to prove that they had the minimum standards required.
Those who passed were registered or granted licences to give advice, but they must obtain a higher-level qualification in order to keep their licences.
In FAIS-speak, those giving a certain level of advice have to obtain 30 credits in the appropriate skills programme within two years of being licensed. For all those who obtained licenses in time for the introduction of the licensing requirement under FAIS on September 30, 2004, this means obtaining the credits by September 30 this year.
Those giving a higher-level of advice have to obtain 60 credits within three years of being licensed, and for those who obtained their licenses before the September 30, 2004 deadline, this means they must obtain these credits by September 30 next year.
The October 2006 deadline is fast approaching, and those who need to acquire 30 credits before then should consider now how they will achieve this before the deadline.
Intec School of Insurance is offering a learning cycle, which you can complete in time to write exams and obtain the relevant credits before the October deadline, but you have to be quick and enrol with Intec by February 17 this year for the first course, or May 5 for the second course.
"Research has shown that the cost and time are key reasons delaying advisers to get started with FAIS training," Nikki Wouterse, the chief executive officer of ICG Learning Solutions, a division of the International Colleges Group, says.
ICG is working with Intec to offer learning solutions in fields in which the government has initiatives to upgrade national skills.
"There is also reluctance among advisers who have been in the industry for a long time to go back to being a student," Wouterse adds.
But if you are giving financial advice and you do not have the necessary qualifications, the Intec School of Insurance can help you get the required credits. Students enrolled with the school achieved a 97 percent pass rate in their 2005 exams, and the school offers support to advisers, including tele-tutoring, facilitation sessions and personalised feedback on assignments.
But before you register, make sure that the courses you are taking can form the stepping stones to the full qualification which may soon be required by law (see related story "Intec School of Insurance offers full range of FAIS courses").
These pages explain the training you are required to have in terms of the FAIS Act, how the credit system works, how to work out which training you need, and the deadlines you need to observe to register for various training options.
Advisers who study towards the qualifications they require in terms of the FAIS Act through the Intec School of Insurance qualify for a 40 percent discount on their fees.
The Insurance Sector Education and Training Authority (Inseta) has chosen the Intec School of Insurance to provide training to those who need to improve their skills and has made a 40 percent subsidy available for financial advisers who study through it.
All independent financial advisers and small to medium enterprises with fewer than 50 employees qualify for the subsidy. Intec says the subsidy is easy to access - you do not have to apply and nor do you have to wait for approval.
You simply pay the Intec School of Insurance 60 percent of the course fees, and the learning institution will take care of all administration and liaise with Inseta, it says.
The subsidy translates into a cost saving of between R760 and R1 220 per individual, depending on what you decide to study.
The Inseta has endorsed the Intec School of Insurance and Intec is the only training provider able to offer the 40 percent Inseta subsidy.
The Intec School of Insurance says its course material meets the requirements of the South African Qualifications Authority and is endorsed by industry players, including the Financial Planning Institute and the Inseta Quality Assurance body.
As a financial adviser or intermediary, you cannot afford not to comply with the FAIS Act, as the consequences of not complying with the Act are serious.
The Act prevents anyone who is not licensed to do so, or who does not comply with the conditions imposed on their licence, from rendering a financial service or giving financial advice.
"Non-compliance constitutes a statutory criminal offence," Warren Neale, the manager of registrations in terms of the FAIS Act at the Financial Services Board, says.
"The Act sets maximum penalties, which can be imposed for contravention of the provisions of the Act. Section 36 of the Act determines penalties for contravention, with the maximum penalty set at R1 000 000 and/or 10 years' imprisonment," Neale says.
"In addition, the Ombud for Financial Services Providers can also make awards in favour of aggrieved clients to a maximum of R800 000."
Neale says clients who have suffered a loss as a result of inappropriate advice can lay a complaint with the office of
the Ombud for Financial Services Providers, an independent body established in terms of the FAIS Act to handle consumer complaints regarding financial services providers.
The message is very clear: You need to comply with the FAIS Act, including ensuring you have the correct training, or make alternative career plans. The risk of continuing to operate as a non-compliant financial adviser is too high.
Note that this summary and related stories is for the purposes of understanding and simplifying FAIS training. It does not attempt to give a comprehensive account of the FAIS Act or the full role of each organisation.