Product specific training

There seems to be some confusion in the industry regarding the necessity for product-specific training and who must undergo such training. There also seems to be some misunderstanding as to why a person that underwent Class of Business Training (COB) has to additionally complete product training (PST).

The article below covers some of the misconceptions, but in order to fully understand what PST entails a thorough reading of Section 29 of Board Notice 194 of 2017 is required.

There seems to be some confusion in the industry regarding the necessity for product-specific training and who must undergo such training. There also seem to be some misunderstanding as to why a person that underwent Class of Business Training (COB) has to additionally complete product training (PST). This article cover some of the misconceptions but in order to fully understand what PST entails a thorough reading of Section 29 of Board Notice 194 of 2017 is required.  

What is PST? 

It must cover all products that the person is registered for. A person that only performs short-term financial services must therefore undergo PST per option per insurer. This means that the person must for instance be trained on Santam’s personal lines, commercial lines and agri policies – if he services clients for those policies. If he doesn’t provide services relating to marine, then no training on the marine option is required. If he provides advice on the add-on products he for instance has to undergo the X’S Sure training on excess buy-back and tyre insurance. If he provides advisory or intermediary services on Hollard or OMI options, he has to undergo the training relating to their products as well. 

It is obvious therefore that PST is per insurer and may be likened to accreditation, which is an insurer requirement in the life sphere and a Council for Medical Schemes requirement before a specific medical fund’s policies may be sold. The current thinking in the industry is that product accreditation will replace the old RE Level II exams. This is evidenced by the COFI Bill that will in future hold the insurer accountable for advice provided on its products, irrespective of whether provided by own staff or by independent brokers. 

What is the difference between PST and COB?

• COB: general training in relation to a business class or type of product (such as short-term commercial, health benefits or investments – Classes 2, 9 and 7). Most brokers doing business with Brolink are registered for Classes 1 (personal lines) and 2 (commercial lines) only. A representative has 1 year from appointment to complete COB. COB may be provided under supervision.
• PST: specific to the category of registration as well as relating to the different products of each insurer that he is authorised to sell. A representative must complete PST before he may be placed on the register or, if training is staggered over time, he may be placed on the register but may only provide services in relation to options of insurers which was completed. PST may not be subject to supervision. 

Who must undergo PST?

• Representatives newly appointed in the industry.
• Representatives that add a category to their basket of products. 
• KI’s and representatives that never before provided a service in relation to an option (for example marine) or never before provided services in relation to the products of an insurer (for example Bryte).  
• KI’s seeking first-time approval as KI in a specific category. 
• A competent representative that did not provide services on a specific option for a few years. 
• Any competent KI or representative if there are material changes to the product of an insurer.  

What are the requirements of PST? 

The KI’s of a provider must at this stage be comfortable that all representatives are competent on all products of insurers the FSP is contracted to. The KI may not allow a person that isn’t competent in relation to a product to provide financial services on that product. The KI may provide PST, but only if the insurer does not require that all representatives complete the insurer’s product training (which generally is provided online). 

PST must be assessed and the insurer, trainer or KI that provides the training must be satisfied that the representative understands the product. Assessment requires testing in some form (questions during training or completion of a test). It is preferable that the insurer/KI that provides the training work from a manual in order to provide assurance that all trainees get the same information, that all aspects are covered and every person trained are subjected to the same standard. It is preferable that all trainees be issued with a certificate of attendance, a confirmation letter or a copy of the attendance register in order to retain proof of training.  

Section 29 must be studied for the legal requirements and information as to what the training material must comprise and what topics must be covered in all PST manuals.