Operating your business in a compliant manner includes formalising your knowledge of the financial products in which you render financial services and keeping your knowledge up to date thereafter.
The Fit and Proper requirements specify how to comply with the Product Specific Training (PST) requirement but obtaining the training can sometimes be challenging.
PST is defined in Board Notice (BN) 194 of 2017. Section 29 (5) refers to training in respect of a particular financial product and assessment of the trainee’s product knowledge thereafter. Training and product knowledge assessment also apply to a product’s amendments.
The intention of PST is clear: representatives should know a product before rendering any financial services regarding a specific product. But BN 194 of 2017 does not specify who is responsible to provide the training.
Who can offer PST?
Key Individuals or supervisors of representatives can provide PST if the training complies with the 19 requirements of BN 194 of 2017 and is accompanied by an assessment. It would make sense for trainers to first have obtained training, so they can pass on adequate knowledge and understanding about the specific product.
As one cannot justify training or assessing themselves, FSPs with only one representative, who is also the KI, or a sole proprietor, would need someone else to train and assess them, such as the Product Supplier.
Broker consultants from product suppliers often provide training on products, but almost never provide an assessment. This does not comply with the requirements of PST and could mean that your representatives are acting without the proper competency. It may therefore be better to request PST from product suppliers to obtain compliant PST.
PST should be recorded in your competence register as soon as it is completed, together with proof that the training was assessed.
Deadlines for PST
Representatives under supervision as at 1 April 2018 had until 31 July 2018 to obtain PST on the products they offer.
Representatives fully qualified and not acting under supervision before 1 April 2018 are deemed to have done PST in respect of the products, they were marketing at that time. Representatives appointed for the first time after 1 May 2018 need to complete PST on each product they intend to offer before rendering financial services in that product. PST must also be completed if a product materially changes or if Representatives intend to render financial services in a new product.
PST and PI cover
Professional Indemnity (PI) cover generally requires representatives to comply with all the necessary Fit and Proper requirements. FSPs also have a general duty to comply with the law and take reasonable steps to minimise the chance of a claim.
If a representative renders financial services on a product and cannot produce proof of PST when submitting a PI claim, the underwriter might not entertain the claim. A PI claim that is repudiated due to a representative’s non-compliance can have serious financial consequences for your FSP. Representatives and KIs responsible for representatives should therefore not take the requirement of PST lightly.
Update your PST
To ensure your PST is up to date, you can revise the list of product suppliers with which your FSP has agreements, as well as the products your representatives offer. We also recommend contacting all your product suppliers and request compliant PST. If a product supplier does not offer PST, rather reconsider rendering financial services in that product until training is available.
If a product has changed, be sure to complete PST before rendering financial services in that product. Your representatives should only render financial services in products in which their PST is up to date. After training, be sure to update your competence register.
The PST requirement exists so representatives are in the best possible position to provide accurate product information to clients. Although PST does not count towards CPD hours, it still plays a vital role in representatives’ competence requirements.