Friday May 31 was meant to mark the end of the first 12-month cycle for financial advisors to earn the continuous professional development (CPD) hours needed to meet their ‘fit and proper’ requirements.
A day before the deadline however, the Financial Sector Conduct Authority (FSCA) unexpectedly offered a two-month exemption from June 1 to July 31.
It said the exemption was to allow financial services providers (FSPs), key individuals and representatives until July 31 to comply with CPD requirements for the current (2018) CPD cycle.
The FSCA’s explanation was brief and vague and has left the financial services industry questioning the reasons behind the extension.
CPD provider Black Onyx director Andrew Ludwig says there was much debate as to which route the FSCA would take when it came to the enforcement of this CPD deadline. “One can only speculate that it had no clear [legal] enforcement solution or that there was pressure from certain [large] organisations who would be temporarily forced to stop operating, which would result in devastating consequences to the actual citizens of South Africa.”
Financial Planning Institute of Southern Africa CEO Lelané Bezuidenhout is clear on what happens if not enough CPD hours are accumulated by the new deadline: “The Fais [Financial Advisory and Intermediary Services] Act determines that in order to remain licensed, FSPs must comply with the ‘fit and proper’ requirements. Not meeting the CPD hours means that you are no longer fit and proper and should be debarred. FSPs need to remove KIs [key individuals] and representatives from the [representative] register – which means they can no longer take part in regulatory activities [advice and intermediary services]. Only once they meet their CPD hours can they be added back to the representative register of the FSP.”
The FSCA added that:
- The exemption does not detract from the CPD hours required for the next (2019) CPD cycle;
- The next (2019) cycle will still run from June 1 2019 until May 31 2020;
- CPD hours completed for the 2018 cycle in the exemption period won’t count towards the 2019 cycle [presumably for those who don’t yet comply with 2018 requirements]; but that
- CPD hours completed in the exemption period by those who already comply with CPD requirements for the 2018 cycle will be awarded towards the 2019 cycle.
Thus it seems that the 2019 cycle will only be 10 months, effectively, at least for those who haven’t yet complied with 2018 requirements. The FSCA is yet to provide clarity on this, telling Moneyweb only that it is “finalising a guidance note for the industry which will give more detail, including how next year’s cycle will be affected”.
In the meantime, the new deadlines may prove quite challenging for CPD providers to accommodate.
MD of training provider Integrity Academy Johann Cloete confirmed this via the LinkedIn platform, saying: “It will be an administrative nightmare to ensure who still need to finish and who already comply by the 31/05/2019.”
Ludwig added: “Compliance teams and accrediting bodies across the country are exhausted after three crazy months to meet this (original May 31) deadline. I genuinely feel sorry for everybody involved, as this only serves to prolong the chaos while compromising the credibility of CPD campaign itself.”
The extended deadline has also called the FSCA’s ability to enforce the requirements into question.
This clearly sends out the wrong message about the authority, notwithstanding the 12 months every FSP has had to get their teams fit and proper, says Ludwig. “This deadline should never have come as [a] surprise to any competent FSP.”
While some industry participants were relieved, the general response was one of disappointment.
I’m not impressed with the FCSA’s decision to exempt CPD requirements for the 2018 cycle. This effectively moves deadline from tomorrow to 31 July and it moves the industry 5 steps back. No cause for celebration!!
— Nirvana (@_neodeon) May 30, 2019
The following comments were made on LinkedIn:
BREAKING NEWS: CPD I am in total disbelief that the FSCA released this notice today … This does so much more harm than good. Not only to the FSCA, but the Financial Services industry in its entirety. I always support regulation when it sits well with my values and my vision for what we do, but I cannot support this decision. Everyone had 12 months to comply and there was no lack of opportunity or content to fulfill the requirement. There is simply no excuse or reason to justify this decision from a compliance perspective … How do we evolve into a full-blown profession if the regulator cannot stick to their guns? … – Francois du Toit
It waters [down] our professionalism, very unfair to those of us that made an effort to obtain the points. Those in our industry who could not obtain at least 18 hours of knowledge [etc] should not have been allowed to continue to advise clients. Very disappointed in the decision taken. – Helen Martin
… FSCA cannot regulate this industry if they cannot enforce. They promise the public a professionalized industry but move the goal posts constantly. I assess myself and our company compliance based on EU legislation as well as SA legislation. – Robyn Clark
This industry has had ample opportunity to change, however the tail continues to wag the dog, in all areas. We can’t rely on legislation to elevate the professionalism of the industry – if you want to be a professional, then be a professional. CPD points, qualifications, they all tick boxes which has no measure of your professionalism. The fact that the dates have shifted shows the extent to which the legislation and implementation is dictated by insurance companies. I’m not sure how we break this cycle of influence, but we can all agree this isn’t in the clients best interest. – Charles Mc Allister
Questions were sent to the FSCA on Friday but were not answered by the time of publication.
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