Many view compliance as a box-ticking exercise, but really, it’s about building trust. Everyone throws around the words ‘trust’, ‘integrity’ and ‘honesty’, but we all know that these are easily used as veneers to solicit prospects. While heavy on our admin, compliance institutions help us have the ‘proof’ to back up the claims that we authentically help our clients make better decisions.
To offer financial advice or provide an intermediary service, the Financial Sector Conduct Authority (FSCA) requires key individuals and representatives to remain ‘fit and proper’ according to the Financial Advisory and Intermediary Services (FAIS) Act.
Whilst this is a legal requirement, it’s a verifiable metric for the level of delivery of professional services.
In the past couple of years, we have seen the introduction of continuous professional development (CPD) requirements for financial services providers and Key Individuals (KIs). Essentially the CPD requirements are put in place to ensure that the people responsible for an individual’s financial affairs are up to date with the financial world around them.
However, due to the adolescent nature of the CPD requirements and recent socio-economic turbulence (i.e. COVID-19), we are seeing tweaks and changes to the compliance standards being ushered in at the beginning of new CPD cycles.
Most recently we have seen a decrease in required CPD hours from 18 to 13.5 hours for the 2020/2021 cycle (first announced last year). This change is likely due to the unavailability of face-to-face events that generated CPD points for attendance.
The response to the COVID lockdown saw many extensions granted to the financial services sector. Persons who were unable to meet the previous deadline of 31 May 2020 were given an additional three months up to 31 August 2020 to meet the CPD requirements for the 2020 cycle.
The FSCA stated that the 2020/2021 CPD cycle would start on 1 September 2020 and end on 31 May 2021. The CPD hours for this cycle will be calculated on a pro-rata basis, calculating nine months instead of 12.
If you already started with your CPD activities for the 2020/2021 cycle from June 2020 (i.e. you did not take advantage of the extension), you may recognise your hours from 1 June 2020; irrespective the CPD hours for 2021 cycle remains as pro rata and as follows:
|Class of Business||Example||CPD Hours
31 May 2021
|a single class of business : with single product (subclass)||Short Term Personal Lines : Motor ONLY||4,5|
|a single class of business : with multiple product (sub classes)||Short Term Personal Lines : Motor + Property +||9|
|More than one single class of business : Short Term Insurance
PL + Long Term Insurance + Investments +
|Short Term Insurance + Life Insurance + Investment||13,5|
But at the end of the day, the hours for compliance tick-boxes are actually more valuable to your personal growth and the ability to consistently deliver a better, higher-quality advice offering to your clients. They’re what adds value to the certifications, accreditations and hours of work you put in behind the scenes that your clients never see but will always benefit from when they most need credible and reliable advice, and that builds trust.