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A year after the release of the revised FAIS Fit and Proper Standards and the last quarter of the first legislated CPD cycle, and still there appears to be much confusion regarding what CPD is and isn’t.
CPD – Continuing Professional Development is an ongoing process by which industry professionals keep updated regarding market trends, business processes and matters impacting on their profession. In the Insurance Industry that would mean staying abreast of risks impacting on our related areas of insurance, market trends which impact the risks we underwrite and cover, legislative updates in a host of different areas impacting on our clients and us as an industry, and business processes that impact how we provide advice and services to our clients.
Being Professional Development the framework within which CPD is governed largely rests with professional bodies, whether statutory or voluntary, providing parameters for evidentiary completion and reporting of CPD activities. As the South African market does not have a statutory professional body, the Regulator has stipulated a framework for CPD for Fit and Proper requirements of licensed persons, which incorporates aspects of Professional Body involvement.
Fit and Proper – Board Notice 194 of 2017
A CPD Activity is: An activity which is rated an approved by a Professional Body and is verifiable, but excludes product specific training and qualification study
A Professional Body is: A SAQA Recognised Professional Body
Section 32 of the Board Notice expands more on CPD activities and the framework set out by the Regulator.
CPD became a requirement on the 01st of June 2018. The requirement stipulates that those who are licensed advice givers need to complete 6, 12 or 18 hours of CPD by the 31st of May each year. The hourly requirement is determined by the number of sub-classes and Classes of Business in which a person is licensed to provide advice to consumers.
Therefore, if person is licensed to advise on Personal lines insurance and Commercial lines insurance the requirement is a minimum of 18 hours of CPD.
If a person is licensed only to advise on one Class of Business such as Commercial lines insurance, they must complete 12 hours of CPD.
However, if a person is licensed only for one sub-class of Commercial lines insurance such as Trade Credit, they only need to complete 6 hours of CPD.
The Regulations provide a pro-rata formula for licensed individuals who become impacted during a CPD cycle, and only have a few months to complete the CPD rather than the full year, but these also only apply in specific circumstances listed in the Board Notice.
The Board Notice also places requirements on Authorised FSP’s to take a planned approach to CPD and to consider the training needs of the company and its licensed individuals and to implement policies and procedures to facilitate the CPD process.
A common question at the Regulators office is: Who is a Professional Body? The SAQA process of recognising Professional Bodies only took effect in 2012, and therefore is still relatively new. As there are also many Insurance related industry bodies, it has also been difficult for many to assess which of the associations these Professional Bodies are. SAQA Recognised Professional Bodies related to the industry include:
|CISA – Compliance Institute of SA||FPI – Financial Planning Institute||IISA – Insurance Institute of SA||ILASA – Institute of Loss Adjusters of SA|
|IoBSA – Institute of Bankers SA||IoDSA – Institute of Directors SA||IRMSA – Institute of Risk Managers SA||SAICA – SA Institute of Chartered Accountants|
|VDQSA – Vehicle Damage Quantification Body of SA||Institute of Fraud Examiners|
It is important to note that as all of these bodies are voluntary bodies, their only role in the FAIS Fit and Proper requirements is to rate and approve CPD Activities. There is no requirement for any person to be a member of these bodies to ratify their CPD activities, or that CPD activities must be recorded on any system to validate their authenticity and relevance for FAIS purposes. It was expressly due to the voluntary nature of these professional bodies that the business sector of the industry requested that the requirement for professional bodies to track CPD be removed from the Draft Board Notice whilst it was out for public comment in 2016.
Therefore, once an approved CPD activity is completed by a licensed individual, the relevant CPD Provider should supply an evidentiary record such as a certificate stating that the person has completed the activity. The certificate should also state the CPD rating and which professional body approved the activity. This record is then supplied to the FSP by the licensed representative as evidence and for the purposes of recording the completed CPD hours.
Professional vs ‘FAIS’ CPD
Messages become confused when there appear to be more than one set of requirements, however in this instance there is a direct parallel between the Regulator and Professional Bodies. When considering the list of relevant content in the Board Notice, it is clear that CPD activities for the Regulator and Professional Bodies have a direct correlation to each other. Therefore, whatever CPD activities one completes for regulatory purposes, would also be relevant for Professional Membership CPD.
Where the Regulator deviates, is in the exclusions. The CPD Definition given in the Board Notice specifically excludes product training and qualification study, which many Professional Bodies allow for CPD purposes. This exclusion by the Regulator is due to these activities being a requirement for approval as a licensed individual and therefore cannot relate to CPD for regulatory purposes.
Therefore, members of Professional Bodies should caution that they complete the minimum CPD hours with activities related to the Regulator and then complete their Professional Membership CPD requirements within the ambit of the relevant Professional Bodies requirements.
Article by: Charmaine Koch of AC Develop