Fit and Proper 2018

On 15 December 2017, the latest amendments to the FAIS Fit and Proper Requirements were published under Board Notice 194 of 2017.  Key requirements became effective on 1 APRIL 2018, and other requirements effective from 1 May 2018, 1 August 2018 and 1 March 2019.

For the full document, right-click on this link and open in a new tab;

Significant changes have occurred to most of the Fit and Proper criteria against which FSP’s, Key Individuals and Representatives will be measured.

A short summary of the new changes are:

  • A more stringent approach to measuring Honesty and Integrity which now also includes the term “Good Standing”
  • A lot more emphasis is placed on the FSP to ensure staff meet competency requirements.
  • 6 new Product Categories have been added and “Class of Business” categorizations have been further defined.
    Product categories are also classified as Tier 1 or 2 to allow for competency requirements by certain Reps.
  • Class of Business training for impacted KI’s and Reps appointed before 1 April 2018 was to be completed by 1 AUGUST 2018
  • The Qualifying Criteria for the Regulatory Exams have also been completely re-written.
  • CPD hours have been adjusted to 6-18 hours annually and are specific activities that have been accredited by a Professional Body for the purposes of ongoing professional development. This requirement commenced on 1 JUNE 2018
  • Financial Soundness applies to FSP’s and Juristic Reps and although working capital and liquidity requirements still remain, a “liquidity calculation form” has been introduced for completion and 1 MARCH 2019 is the deadline by which FSP’s must comply.
  • Operational Ability changes, now include “automated advice” (1 MAY 2018), a governance framework as well as appointment conditions for FSP’s when employing KI’s and Reps.

Debarment 2018

Last years most recent changes to the FAIS Act, saw a re-write of section 14 Debarment by FSP and removal of section 14A Debarment by Registrar, in the Act.

The new impacts are:

  • FSP’s must debar employees that materially contravene the Act.
  • FSP’s must have a documented Debarment Policy and Procedure in place, that must also be given to Reps when being debarred.
  • When deciding to debar a Rep the FSP must notify the FSCA of such action within 5-days of deciding it.
  • Rights of the Rep are more clearly defined.
  • Even if the Rep leaves the FSP before being debarred, the FSP has 6-months to still take action to debar that Rep.
  • A debarred Rep no longer has to wait 12 months before becoming “employable as a Rep” again. Applying the measures of “Good Standing” an FSP can justify re-appointing the person.
  • The Financial Sector Regulations Act defines the requirements of a Tribunal and the Authority’s ability to take action.

Services Under Supervision 2019

For the full document, right-click on this link and open in a new tab;

Briefly, the changes are:

  • A relevant FSCA FAIS -approved Qualification must be achieved within 6 years of appointment.
  • New Reps have 12 months to complete Class Of Business Training.
  • Product Specific Training must still be done before entering the Rep role, but a period of time gaining Experience performing financial services is still necessary.
  • Affected Reps have 2 years to pass RE5.
  • Once all these competencies are complete, CPD must start, but it must start in the 7th year after becoming a Rep.
  • A list of Conditions are described that basically outline a structured performance-review requirement by the FSP.
  • Differences are that any ‘knowledgeable’ person can be the Supervisor and the FSP can decide how frequently reviews will be done.

Codes of Conduct 2019

In November 2017 already, the FSCA FAIS department published a draft amendments for comment document, that has significant changes to the General Code of Conduct as well as changes to the Specific Code for Short-term Deposits.

Although it was expect that these changes would be effective from 1 January 2019, further publications of the final Codes are still awaited.

To see the “invitation to comment” document, right-click on this link and open in a new tab; on the page that opens, expand the “Documents for Consultation” link to show the list.