Mostly dazed and confused

So it appears that brokers will be able to write their level one exams in Afrikaans. That is great news and a result of a concerted effort by all concerned to get the authorities to listen to reason.

But wait. There’s more.

What about the brokers who don’t have English or Afrikaans as their first language and whose client base doesn’t have English or Afrikaans as their first languages, either?

What happens here?

Do those brokers and associations who won this battle have an obligation to turn their attention to support their counterparts? I believe so. But I do have to ask myself why the broker associations haven’t done so already, or perhaps they have done so and they didn’t tell anyone?

What I did find amusing was that I received a media statement from the FSB, which was prepared in response to the Beeld newspaper story on the so-called victory.  And it was in Afrikaans. I wonder if the FSB was trying to make a point, or am I too cynical?

 

 

 

I haven’t had much to blog about recently. Its been relatively quiet, what with trying to make ends meet, trying to keep clients, trying to find new business, and trying to live a balanced life.

But a couple of things have forced me out of my slumber. For one, the debate about reputations and how these can be made, broken or dented, very quickly.

Think Julius Malema vs. the ANC, Frankies vs. Woolworths, NMF vs. the media, McDonalds vs. the blind lady and her guide dog, and Naspers and Boekehuis, and finally a private individual who is tilting his helmet at several established corporate SA windmills, like Don Quixote.

Normal 0 false false false EN-US JA X-NONE

And then today (19 January) the ANC holds a press conference to explain why they stepped into take control of the affairs of the Limpopo province.  

Now before you get bored and think this is a blog about public relations; take a breath. These are my thoughts about the law and how people and organisations resort to the law to either protect themselves or attack others. You might believe, like me that the United States is known as an extremely litigious society. I’m beginning to believe that certain parts of South African society are displaying increasing litigious tendencies.

Increasingly local, regional and national government functionaries and public servants are resorting to the law in defence of their behavior or to keep their jobs, or more interestingly, get people fired from their jobs. Public figures are ‘using’ the law and lawyers to defend themselves. Now you might say that this is their right. I’m not arguing that point. I’m arguing that perhaps the law is and can only be used by people and organisations that can afford lawyers and legal representation. After all do you know a lawyer that will take on a case in South Africa without payment? I don’t. Let me correct that: I know of very few lawyers or law firms that will do that.

And if you want to see a one-sided fight, simply watch an individual or SME attempt to take on a corporate. It starts off fairly evenly, with both sides arguing their points. And then the war of attrition commences. Inevitably the individual or SME runs out of money. Whatever happened to doing the right thing? Whatever happened to leaving quietly, when you know, in your heart of hearts, that you are wrong?

For me it’s about principles, ethics, integrity and finally honesty. It's about doing the right thing. 

 

 

The #ANCYLmarch has made me re-evaluate my middle-aged commitment to the country and its future.

After all, I sit here in my comfortable chair and acknowledge that in general terms I support the principle behind the march, in much the same way as I supported the occupy wallstreet campaign. So what stopped me from getting involved in any part of the march?

Is it because I’m white and don’t have a history of marching when I feel strongly about something? Is it because I don’t support the ANCYL and its leaders? Is it because I’m too scared to get involved and hide behind my familial responsibilities of earning an income? Or is it because I don’t give a hoot about the youth, the unemployed or those in a less privileged position than I am?

The short truthful answer is a bit of all of these thoughts.  The fact is that in my ‘working life’ I have been retrenched, unemployed, underemployed and finally entrepreneurial. The similarity between me and the majority of those that marched is that I am also a product of apartheid. The difference is that I had the benefit of a solid public school education.

The truth is that the issues raised by the marchers aren’t political – they are social and economical. The fact that a fragment of the ruling political party has taken the lead to highlight these issues shows how segmented the political environment is and also exposes the huge vacuum in terms of opposition politics.

Perhaps it’s time I re-evaluated my view that it’s always about politics? Perhaps I need to start thinking about the other SA citizens and stand up and be counted. Perhaps I should stop blaming the government for our current situation. Perhaps I need to start exercising my constitutional rights. Perhaps I need to start thinking like a citizen…

 

It's been a month since my last post - because I had nothing of import to say. It's also been a month in which I have learnt a lot and didn't have time to reflect on my learnings. 

Now before I carry on, some honest context:

*I've always considered myself a bit of pragmatic liberal with anti-racist tendencies.

*I’ve struggled to understand why people still felt aggrieved about what impact apartheid had on individuals.

*I avoided doing business with government departments and parastatals, rationalising the fact that I didn’t need the aggravation or the lack of payment for work done

* I didn’t want to employ people based purely on the colour of their skin, in order to win “BEE” business.

I worked on two pieces of business that have changed my world-view or at least my view on life in South Africa for the majority of the population. There may have been a lot of water that has past under the apartheid bridge since the first democratic election, but the fact remains that we have at least one generation of people who were directly and indirectly impacted by the ‘previous regime’ and the effects can’t be simply washed away by the acknowledgement of the past by the white population.

My response in the past would have been to tell people harping on about past, to get over it and get on with it. I was steadfast in my approach, until someone I trust and respect challenged me.

He said: “You don’t understand, because you never suffered like we did.”

I said: “But that’s in the past.”

He said: “For you it is. You had the benefit of a good education. You had opportunities”

I said: “But that’s not my fault.”

He said: “No. But its limited my opportunities, and still does. It needs to be fixed.”

I said: “Hell. So what do you want me to do?”

He said: “Acknowledge it and do something about it.”

And that’s when I decided it was time to do something about it. I have started listening to what people were saying. I started hearing the subtext. I also heard a truism spoken by a prominent business leader, which we sometimes conveniently forget. The majority of the people in South Africa are black and the majority of the population have not had the benefit of a good education or the opportunities that I had and occasionally squandered. Not because I was white, but because I’m not always a good entrepreneur.

I'd like to suggest that our view is coloured by the number of successful black people we see either in the media or in the public domain. They are a very small minority.

So I have undertaken to get involved in my community and my country and make a difference. I have undertaken to support causes that will make a difference. I will help where and when I can.

But I still need guidance. What more can I do?        

 

This is posted in the interests of sharing information on the proposed national health insurance plan. I didnt put it together. It came to me via a PR consultant...

John Cranke, regional head, coastal region PSG Konsult Corporate, unpacks the complicated and controversial NHI Green Paper

What is the “Green Paper”?

The green paper outlines the broad policy proposals for the National Health Insurance (NHI) and is published for comment and consultation. Three months have been allowed for this. After this, a policy document, or white paper, will be finalised and then draft legislation will be developed and submitted to Parliament.

What is National Health Insurance (NHI)?

NHI is a healthcare funding system which is aimed at providing universal coverage, i.e. everyone will have access to quality healthcare services and be protected from financial hardships linked to accessing these services.

NHI will therefore ensure that everyone has access to a “defined comprehensive package of healthcare services” irrespective of whether they are employed or not.

How and when will it be implemented?

It is envisaged that NHI will be phased in over a 14 year period commencing in 2012. The process has been broken into three phases with the first 5 years dedicated to the building and improvement of the public health sector to improve quality and performance in that sector. In addition, from April 2012, piloting of NHI will commence in 10 districts – these will be selected after the current audit of all public health facilities has been completed.

How will it be funded?

Details of the funding model are not 100% clear. However, it is expected that NHI will be funded from public finances (taxes), mandatory contributions from individuals and employers  and partnerships with the private sector. In addition, there is also the potential for co-payments and user charges from individuals. Interestingly, the Minister of Finance stated at the launch of the policy paper that additional taxes on individuals would be a last resort.

NHI contributions will be made by all employed persons, although the level of income above which NHI contributions will be mandatory is not yet known. However, based on the implementation plan in the green paper, it seems unlikely that contributions to NHI will commence in the first phase (5 years). Instead, the first phase of NHI (including its piloting from April 2012) will be funded from existing public finances and a Conditional Grant.

More clarity is expected on whether or not NHI contributions will receive favourable tax treatment in October, when Minister Gordhan delivers his medium term budget policy speech. 

What is more detail still required on?

·      The income threshold above which contributions to NHI are compulsory

·      What treatment packages would be covered

·      As stated above, the detail of the funding model

·      The role of private healthcare providers contracted to deliver services

·      Governance and accountability structures.

What are the challenges to the implementation of NHI?

·      The disease burden in South Africa will put the provision of healthcare services under pressure. This refers to:

o   HIV / Aids and TB;

o   maternal, child and infant mortality;

o   non-communicable diseases like high blood pressure, diabetes, chronic heart disease, chronic lung disease, cancer and mental illnesses;

o   injury and violence.

·      Countries with national health programmes all tend to have high net incomes, low unemployment and large and stable tax bases, none of which is prevalent in South Africa. This makes Government’s objectives regarding job creation all the more critical in order to broaden the tax base.

·      Closing the personnel gap will be critical. There is a severe shortage of health professionals in the public sector.

·      Improvement of quality of care in public hospitals and in turn engendering confidence in the public healthcare system, is crucial to the success of NHI because it is assumed citizens will transfer voluntarily from the private to the public healthcare systems. The potential for negative fallout if citizens have to pay a compulsory contribution to NHI and also fund their own private medical cover due to an underperforming public healthcare system is something we believe the ruling party will want to avoid at all costs.

·      The negative perception created by the periodic labour unrest in the public system may act as an impediment to gaining confidence in the public healthcare system and will therefore have to be dissuaded vigorously in future.

·      The central procurement system proposed will be complex and may be prone to corruption.

·      The ultimate implementation of NHI will mean every beneficiary has to be issued with a NHI card. Presently no system exists and the logistics and expense of getting this done as a precursor to NHI is significant.

What are the positive factors?

·      The green paper has been met in a positive manner with stakeholders indicating their acceptance of the underlying principles of NHI  and their willingness to engage constructively in the process.

·      The green paper acknowledges the expertise available in the private sector in the areas of administration and management of insurance funds and has indicated that NHI will draw upon that expertise.

·      The implementation of NHI will be phased in over a period of (proposed) 14 yearsand won’t be rushed.

·      Although the single-funder, single-purchaser publicly administered fund is the preferred model, the green paper does not shut the door on a multi-payer approach – indicating that this will still be explored. 

·      Medical scheme cover will not be done away with – citizens wanting to pay for this cover over and above their mandatory NHI contributions will be able to do so.

·      The proposed risk-adjusted capitation system encourages good quality outcomes and minimises the potential for fraud and over-servicing.

·      Reimbursing hospitals according to diagnosis-related groups instead of costs incurred is recognised as a method for analysing quality and reducing risk.

·      The strong emphasis on primary care, through a totally re-engineered primary healthcare system,will help shift healthcare from a predominantly curative to a preventative system, with resultant curtailment of downstream costs. The re-engineering process will see the appointment of;

o   District Clinical Specialist Support Teams;

o   School Health Services;

o   Municipal Ward-based Primary Health Care Agents

·      The establishment of an independent watchdog body, called the Office of Health Standard Compliance, to monitor whether the required standards are being adhered to. 

·      The improvement of the public hospitals should result in competition with privatehospitals, which will have a positive impact on the price of services in those facilities too.

What does this mean for medical schemes?

It is difficult to predict the future of medical schemes and what their on-going roles will be  and how private medical scheme members are going to react, until more is known about the funding and benefits (including quality of care) of NHI. However, what is known at this point is although contributions to NHI will be mandatory (above a still to be disclosed income), you will still be allowed medical scheme membership, but will have to forego tax subsidies.

The Registrar of Medical Schemes, Dr MonwabisiGantsho, has stated that he will continue to regulate medical schemes until a well-developed NHI is in place, which could take at least 14 years. Thereafter, even if only supplementary “top-up” health insurance products remain, the requirement for regulation will remain.

 If pushed to predict the likely implications of NHI on medical schemes we would comment as follows;

·      Due to the mandatory NHI contribution, low income earners will in all likelihood leave the medical schemes, with a negative impact on those risk pools as they are generally low-claiming members.

·      Medical scheme cover will probably evolve into health insurance based cover, which would mean doing away with, or revamping, the Medical Schemes Act as many of its provisions (Prescribed Minimum Benefits, community rating, fixed solvency levels) would be redundant.

·      The emergence of health insurance products to address the gaps in NHI, e.g. medication falling outside of the Essential Drugs List, diagnostic procedures which fall outside the approved guidelines and protocols and private sector providers not contracted to NHI.

Conclusion:

It is impossible to deny that the maladies inherent in the current tiered Healthcare system need to be addressed. We believe that the systematicapproach proposed in the green paper is a positive first step in that direction. As outlined above, there are significant challenges to overcome – and the successful ultimate implementation of NHI may rely on concurrent success in other aspects of the broader development plans mapped out for South Africa.

However, we see the proposals as an important “peg in the ground” for the way forward, where success in the first phase proposals alone would make the attempt to reach a fully implemented NHI worthwhile.

 

 

Mindshift

"...John Maynard Keynes famously wrote three generations ago that “ideas, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else”..."

Sometimes I ocassionally publish a release. This is one of those times, from an economist in SA, who's views I resepct and follow.

By Cees Bruggemans, chief economist at FNB

Addressing poverty, unemployment and inequality is centre stage on the national agenda today.

Are these pressing problems so difficult to manage?

South Africa needs a growth locomotive. Public sector infrastructure investment would be the ideal vehicle. Huge backlogs, plenty of finance, strong construction sector. It would allow long planning horizons and greater certainty, reinforcing private business confidence and getting further fixed investment leverage.

It would allow a quantum jump in GDP growth.

But to attain that South Africa would also need a better flow of its resources, meaning wage levels and increments reflecting productivity potential, allowing healthy labour absorption.

South Africa would also need large numbers of good quality human resources to enter the labour market annually, allowing high productivity and trade competitiveness.

All of this on the old principle of meritocracy without which one ends knee-deep in alligator swamps.

Business as usual? Perish the thought.

The public sector should employ more highly trained technical manpower able to sustain very high contract loads of infrastructure projects.

The labour market needs to function more easily in terms of demand and supply and the resulting wage setting, with the public sector as largest employer setting the right example.

The education establishment needs to teach and train to the highest standards, so that large volumes of high quality matrics, technical manpower and university graduates can be delivered annually to a hungry labour market.

That’s the way to challenge inequality, unemployment and poverty.

Impossible? Can’t be done?

Prefer instead to nationalise the leading heights of the economy, such as mining, banks and agriculture and reorganize their functioning while through other interventions and subsidization change industry?

Why are the first-mentioned supplyside reforms so difficult they can‚t be achieved, but the latter temptations supposedly a walk in the park for determined bureaucrats?

There’s no logic here, except ideology, with in some instances a whiff of self-enrichment enlivening the proceedings.

John Maynard Keynes famously wrote three generations ago that “ideas, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else”.

No better examples of good AND bad ideas shaping affairs as currently playing in South Africa.

 

I’m reading and following this nationalization debate in South Africa with growing concern. Not because of narrow self-interest, but because I wonder what will be left for my kids when they enter tertiary education institutions and eventually the job market - their economic infrastructure inheritance.

Where are the youth leaders standing up and telling the government to stop tampering with their inheritance? Could it be that change in any country only happens if its politically motivated or driven by a political party or group of disenchanted people?

So where is the voice of the youth in SA? Surely they aren’t as stupid as they are pretending to be?  Or have they left the country because they have listened to their parents discussing “the writing is on the wall and all this nationalization talk is the final straw that broke Mandela’s dream?”

And who gave the microphone to the ANCYL to speak on behalf of the youth of this country any way? Or perhaps it’s the parents that are at fault. Perhaps we (parents) need to have the courage of convictions and educate our kids about the damage that nationalization talk. That is, if nationalization will really wreck our economy as the doomsayers are predicting…

And that’s the challenge we face. The lack of unbiased information or research into whether the tampering with an economic model will in fact be bad for the country, or not. The vested interests on both sides of the debate could both be right, after all. Examples of failures and successes are regularly rolled out for all to see.

A prime example of the debate was evidenced this week when organized labour (cosatu) and organized mining (Chamber of Mines) shared a platform in Sandton, talking to organized business (SACCI – SA chamber of commerce & industry) about the dangers and opportunities of either model (nationalization or the status quo). They each attempted to ‘scared the hell’ out of the audience with their messages. In most instances these doomsayers served only to harden the positions held by the audience.

The audience was made up of business people, each one looking for the opportunity to increase or at least maintain their current short-term positions. There were no youth in the room, asking about the longer-term benefits and what they could expect to inherit.

So why hasn’t there been an uprising; a revolt; a public display of disappointment by the youth? Our own winter of discontent? Its probably because this is seen as a political issue between big business and big government. Two boys trying bully each other into giving way and being beaten into submission. It appears that this is an ego thing and neither party really gives a toss, except to win the argument. Big business is looking after shareholder interests while big government is looking after its next election victory.

So who has the country’s interests at heart? Certainly not us old farts (anyone over 30). It’s the youth. Anyone born since 1994 who is committed to this country and its success.  

But don’t fret old farts. We do have a role to play – Those parents among us need to educate our kids about standing up and speaking their minds and thinking independently and questioning the media debate and the vested interests that push one particular approach above another. Question their motives; question their research; question their views. Parents – teach your kids to speak up and verbalize their thoughts. The consequence of being silent might well be an economic model that may, or may not lead to the economic destruction of a country that we all love.

 

Dear Mr Strydom,

Thank you for your letter of today’s date.

It is unclear what is meant by “open letter” as you are always and have always been able to address letters of any nature to the FSB.  I do not normally respond to open letters, for professional reasons, but I will make this a rare exception.  My response is not an open letter for distribution elsewhere.

I will attempt to respond to the matters raised by you, seriatim :

Ad par 1 – the FSB is a responsible regulatory organisation.  There is no objective whatsoever to negate or obviate the future role of the Financial Intermediary in any way whatsoever.  Indeed, the opposite is true, we would, through the regulatory framework, wish to encourage the growth of the independent and small FSPs.  The reasons for the uncertainty referred to by yourself, is therefore unclear as it would appear that it is based on misperceptions.  In this regard, there have been a number of pronouncements, particularly in the media, regarding the prescribed regulatory examinations based on totally incorrect facts and consequently making conclusions intending to create a negative mindset.

Ad par 2 – It is unclear where the comments received by you originated.  However, as far as the prior consultations by the FSB were concerned, the FSB is prepared to engage with any party and has followed an open door policy.  Normally, this engagement does not extend to trade unions as the FSB is not in the labour field.  However, your attention is drawn to the fact that recent engagements with industry included discussions with both Solidarity and SASBO (the latter being a member of COSATU). 

Ad par 3 – I cannot, for understandable reasons comment on internal structures and meetings of the Financial Intermediaries Association.  On your comments on the content of the exam, I have to refer you to the comprehensive document issued to affected persons earlier this year as well as a Circular 7 of 2011 which was issued to all FSPs some two weeks ago and urge you to peruse the two documents (refer attached).

I wish to make the following comments:

1)      The exams were not intended and are not designed to be ambiguous (Please see the appropriate remarks in the attached circular).

2)      The exams are not intended and were never intended to catch anyone out (again the circular refers to this).

3)      I would assume that if you read the documentation on the exams provided with an open mindset, one can only come to the conclusion that the purpose of the regulatory examinations is not to make a natural person honest nor give such a person integrity.  The purpose is to bring to the attention of all affected persons their legal obligations in terms of the Financial Advisory and Intermediary Services Act, 2002, and only that.  In addition, the professionalisation of the industry is not the object as will be gathered, but rather the creation of the culture of compliance with the requirements of the legislative framework.

With regard to your closing remarks about the future role of the small independent advisor, my comments are reflected in my opening paragraph.

I trust the foregoing puts the matters raised by you in the appropriate context.

Yours sincerely,

G E Anderson

DEPUTY REGISTRAR : FINANCIAL SERVICES PROVIDERS

 

Dear Mr Anderson,

 

            Please find attached open letter regarding the above.

 

Thanks & Regards 

 

Hendrikus Strydom

Tel: +2716 423 1234 

Fax: +2716 423 6644

Cell: +2783 304 2681

 

Just kidding, but the launch on Tuesday morning of the Code for Responsible Investing (crisa) in Johannesburg, was a very large affair and the way the ‘ball’room was divided up into layers was very instructive.

At the front was the stage, where all good stages belong – used for grandstanding, making statements that may, or may not be taken to heart by the audience.

In front of the stage was the first level of people in the asset management sector in South Africa – the asset managers and the VIPGP (the very important government people), namely finance minster Gordhan and the head of the GEPF (yup – another acronym – government employee pension fund), John Olifant.

The next section of tables was taken up by the service providers to the asset managers and the VIPGP – the ratings agencies, risk managers, advisors, asset consultants and the like. And finally the riff raff. Much like the food chain or hierarchy that provides asset management services to the pension fund industry in SA.

Finance minister Gordhan was in top form, suggesting that rural development is important and making the point that it is government’s intention that rural areas are developed so people can develop a livelihood there. To prove his point Gordhan says that R45bn (5%) of the PIC fund is aimed at the developmental sector.

He went on suggest that asset managers should reflect on how individuals get shared benefits in society, suggesting that if this isn’t done, that it will lead to an increase in social tensions. Gordhan reminded the audience that short termism had played a crucial role in the recent financial crisis; something that the country is still trying to emerge from. “100m people lost their jobs internationally. While locally 1m people lost their jobs. R60bn was lost due to recession. It will take SA 3 or 4 years to recover from the recession.”

Gordhan then touched on executive remuneration, suggesting that more attention is needed on accountability responsibilities. He mentioned pay disparity saying that the benefits of the few and the effects on the many had to be considered.

On a panel following the official proceedings was shareholder activist Theo Botha, who reminded the audience that they – as asset managers - generally voted for executive remuneration when asked to do so. Also on the panel was David Couldridge who suggested that as the remuneration systems drive senior executive behavior, the same as true of the asset management sector.

 

Here is the report back from a meeting held between the fia and the FSB on 5 July. It is pasted below, for those of you who aren't members of the fia. I would be keen to hear your thoughts. I have highlighted some issues I thought appropriate. What I couldn't find is an FSB response to the language issue, which goes wider than Afrikaans, but includes any or all of the official languages in SA.

I do still wonder why the FSB doesn't hold a 'townhall' or road-show with its clients' nationally. Could it be that they may not like what they hear?

---

FEEDBACK

FIA/FSB MEETING ON REGULATORY EXAMS, HELD ON 5 JULY 2011

The FIA was represented by Arnold van der Linde, Seamus Casserly, Justus van Pletzen and Joe Kotzé.

The FSB was represented by Dube Tshidi, Gerry Anderson and their team of legal and regulatory exam project experts.

Since inception of the FAIS Act the FIA agreed and supported the FSB in attempting to professionalize the financial planning, insurance and investment industry. At the outset it must be emphasized that the FIA is still in full support of the principles underpinning the regulatory exams and professionalizing the industry. However, there have been a number of developments since the introduction of the regulatory examinations on level 1 and we are now in a better position to debate the real concerns and issues regarding these examinations. There are consequences which might seriously impact financial intermediaries and employees of insurers going forward, also resulting in less effective rendering of financial services to consumers.

The main purpose of our meeting with the FSB was to address the fairness of the exams from a holistic point of view. It was most certainly not to try to abolish the examinations.

Salient points in the FIA presentation:

We confirmed our commitment to the principles underpinning the exams but voiced our concerns about the current state of affairs where rumours and speculation about the outcomes of the exams are rife and mostly negative in nature. It was necessary to be transparent about all relevant data as soon as possible. We held the point that the exams may well still be in a pilot phase and that it was therefore possible to address the myriad of problems and effect such changes that will make the exams fair to all.

It must be stressed that the FSB received abundant feedback from industry, and specifically from the FIA, about the problems experienced. We earlier presented them with a comprehensive legal opinion obtained from Webber Wentzel pertaining to the exercising of powers by the registrar in the process of withdrawal of licenses and debarring of intermediaries who fail the exams. Such powers were confirmed in the legal opinion but the concept of fairness of the exams was highlighted as a consideration when exercising such powers.

Our proposal to the FSB rested on focusing on the fairness issue as a resolve to most of the problems experienced. The purpose of the exams should constantly be had in mind when compiling a question bank – to test understanding of relevant regulation as a primary means to establish greater professionalism in the financial services industry. This process should then involve evaluating exam questions and answers by experts on relevant levels, taking into account all the factors that may influence preparation for the exams and actual taking of the exams. It will also then result in having to reconsider time frames for these exams and to plan new dates for the examinations on both levels 1 and 2, as well as the commencement date of Continued Professional Development cycles.

Matters that may have a bearing on the overall fairness of the exams include:

·       Complexity and ambiguity of questions and answers;

·       Relevancy of some questions to different sectors of the industry and different categories of providers;

·       The apparent disparity in exam papers where “luck of the draw” may determine the outcome;

·       How amendments to legislation may affect answers to questions drawn up before such amendments;

·       Questions that may fall outside the framework of the qualifying criteria;

·       The pass mark in relation to other qualification pass marks;

·       Time allowed for these exams may be insufficient for some categories of providers and intermediaries;

·       The language issue where some questions are perceived to be a test of comprehension of the English language rather than of the subject matter;

·       The appeals process lacks transparency.

Other factors that should be regarded in the total process include:

·       Exam fees and costs of rewriting;

·       Costs for appeals or re-marking of an exam papers;

·       The financial implications of failing an exam;

·       The effect of studying for these exams on production time;

·       The age factor where the process of studying and retaining information may have become difficult.

Based on the above we are of the considered and respectful opinion that the examinations, their methodology and processes may not be fair to all affected persons. The consequences of failure of these examinations will be detrimental to many functionaries in the financial services industry if the concerns above are not addressed with immediate effect. 

FSB response:

Dube Tshidi and his team confirmed knowledge of all the issues raised by the FIA and other role players in the industry and reiterated that they take these problems very seriously. The FSB is in constant deliberation with National Treasury on how to address all relevant issues and how to resolve problems related to the exams.

What is of importance is the fact that there is a serious effort on the part of the FSB to clean up ambiguous and complex questions through a continuous process of moderation by experts.

This process will obviously spill over to the exams on level 2 where various factors will also come under scrutiny of the FSB and their team of experts. The FIA and industry at large will be involved to assist them in their endeavours to achieve a fair dispensation for all.

The roll out of the regulatory exams is a massive process where mistakes will be made. Such mistakes will be addressed and problems rectified. Because of the magnitude of the project the FSB will consider postponing the final dates for both the first and second level exams.

Gerry Anderson and his team will soon issue a circular to industry in which detail will be given about the process so far. This circular will also contain announcements affecting the exams going forward as well as news about the exams in Afrikaans. The circular in its draft form will first be presented to National Treasury for comment and approval.

Some interesting information was shared by the FSB about the exams at the meeting of yesterday and at previous meetings with other industry bodies:

• Comprehensive stats will be released when the sample is larger – at least 20% of industry must write to give meaningful stats. This 20% mark should be reached in August 2011 because the volumes of candidates are increasing:

o   At present – approximate figures:

§  11 105 reps enrolled, 10 145 wrote = 7,86% of industry;

§  1 658 KI’s enrolled, 1 628 wrote = 12,17% of industry;

§  Overall = 8,2% of industry wrote;

§  Stats are based on ID numbers and only first-time writers;

§  The overall pass mark for representative exams currently stands at 62%;

§  The pass rate is steadily increasing because people are preparing better than earlier;

§  Second-time writers are increasingly successful while third-time writers are declining steeply.

·       Complaints about questions:

o   If representatives all answered only 3 more questions correctly the pass rate will jump to 70%;

o   The FSB meets with exam bodies on a weekly basis to monitor processes;

o   The on-going moderation of questions to withdraw questions that are constantly answered incorrectly is handled as below –

§  Question must be asked at least 50 times;

§  Question pass rate must be 40% or less;

§  Questions will be completely withdrawn and not merely reworded;

§  New questions may be trialled in official exams as an additional question but will not count towards the pass mark;

§  In July experts will review all these particular questions.

 

·       The FSB will consider making available examples of official key individual and representative exam papers from the question bank to assist the industry. Those questions will then be withdrawn from the data bank and replaced with other questions. Another option will be to make known which qualifying criteria should receive more attention, based on questions answered incorrectly.

·       Appeal forms will be available at exam sessions and procedures will be explained by invigilators:

o   There has been numerous successful appeals;

o   R250 cost for three questions – there must be a cost involved in order to curb appeals merely for the sake of appealing.

·       Guidelines:

o   Candidates must focus on preparation for multiple choice type exam - use comprehensive guide documents issued by FSB;

o   Imperative to study relevant legislation because wording of questions and answers come directly from legislation;

o   Time management is important because time allowed is actually longer than scientifically needed for these type of exams;

o   Very few complaints were thus far received about time allowed for exams.

·       The FSB will soon start with satellite broadcasts and conferences to assist industry with exams – a circular with dates and venues will soon be released.

General:

Gerry Anderson referred to the manner in which the FIA is prepared to meet with the FSB as an example of positive engagement. The FIA has regularly been consulting with various departments at the FSB on all industry matters and our collaborative and constructive manner of engagement is highly regarded by the registrar and heads of departments. Therefore we can report that the FIA feedback and proposals are regarded as being under advice and none were rejected.

We trust that we will achieve the outcomes we seek and will communicate to members any further action we may deem appropriate to protect the interests of our members.

Arnold van der Linde

Vice-president

FIA

5 July 2011

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Makes for interesting reading, doesnt it. Email me your thoughts - angelo@2711.co.za