To guarantee customers get the best possible support, individuals who provide a service should thoroughly understand the products they offer. Understanding a product enables you to confidently propose and discuss the product and its benefits. This better aligns customer needs and products, resulting in higher customer satisfaction and fewer complaints.
As a Financial Service Provider (FSP), you have a duty to ensure your key individuals (KIs) and representatives are knowledgeable about the products they are authorised to sell. You therefore need to demonstrate that you provide your KIs and representatives with adequate and relevant training, and monitor and track their competence.
You also need to show that you evaluate and review their technical knowledge, ability and competence as markets change. Keeping them up to date as changes occur ensures they remain competent for their tasks.
Product Specific Training (PST) is an ideal way to gain in-depth product knowledge. Board Notice (BN) 194 of 2017 defines PST as “training referred to in section 29(5) in respect of a particular financial product and which training is assessed, including any adjustments to that particular financial product.”
PST is therefore product training that is also assessed. As products can materially change, PST is ongoing.
Criteria for appropriate PST
Section 29(5) of BN 194 of 2017 lists the criteria that PST must include to be deemed appropriate. These can be summarised as:
- Specific characteristics, terms and features of the product.
- The product’s nature, complexity and underlying components.
- How the product and its underlying components are structured and priced.
- How the fee structure and costs impact the returns or product benefits.
- Nature and features of any guarantees and the associated costs.
- Risks associated with the product, as well as the risks of investing, purchasing or transacting in the product and its underlying components.
- Tax impact on the benefits or real return of the product.
- The potential impact of external factors on the product’s performance, such as extreme market or economic conditions.
- Investment concepts, options and strategies within the product.
- Flexible benefit or service options available within the product.
- Accessibility and/or restrictions to funds.
- Level of liquidity of the product and its underlying components.
- Intended target market and suitability for customers or a group of customers.
- Intended and expected outcomes that will be achieved for or delivered to clients.
- Customers and groups of customers for whom the product is not expected to be suitable.
- Identity of product suppliers, their good standing and regulatory status.
- Disclosures relevant to the product, its underlying components and the product supplier.
- Lock-in periods, termination conditions, exit options and the associated costs.
- Accessibility of benefits or funds under the financial product and any associated restrictions or limitations.
To update your PST, start by identifying the product providers with whom you have agreements and the products your representatives sell. You can then contact the providers and ask them for PST. If a provider does not offer PST, rather wait until training is given before offering financial services in that product.
Record keeping
FSPs and representatives are accountable for providing validation of PST, both internally and externally. Missing deadlines or failing to complete all standards of the competence requirements, such as PST, impact on a representative’s Fit and Proper status. This can have serious implications, including regulatory action or even debarment.
It is therefore important to maintain proper records of training interventions and assessments. Within 15 days of completing any PST, be sure to add participants’ names into the FSP’s competence register. In addition to recording these competence activities, it is advisable to also include supporting evidence of other training and activities done.
Be sure to keep all training-related material and documentation for at least five years. If requested, you must be able to report this information to the Financial Sector Conduct Authority (FSCA).
Masthead’s online competence register
To alleviate some of the administrative burden of PST and competence record keeping, an FSP will benefit from choosing a system that can keep track of PST easily and conveniently. Masthead has developed an online competence register that offers advisors this functionality.
Besides keeping track of all your training activities and qualifications, the Masthead competence register has further benefits:
- Easy access – all users of the Masthead Learning Centre can access the register.
- All seminars, online learning activities and class of business training completed via the Masthead Learning Centre are automatically logged.
- Training records across all areas can be stored in one place – you can add any of your other training records with the click of a button and upload supporting documents.
- Records are retained for at least five years.
- Value-adding functionality – you can export records, sort and filter records alphabetically and numerically, and capture additional information such as notes and email.
- Our register is easy to use.
Being able to track how your FSP, KIs and representatives have acquired and maintained their knowledge, skills and competence fulfils the requirements of BN 194 of 2017. It is also an aspect of wider compliance, as the Fit and Proper competence criteria require that you can demonstrate that your FSP has suitable policies, internal systems, controls and monitoring methods.
Besides complying with regulation, equipping your FSP with the right knowledge to confidently serve customers is a great way to make them happy and get more referrals.
To find out more about the Masthead competence register and how it can benefit your FSP, speak to your Masthead consultant.