Debarment process of representatives
Procedures to be followed by all financial services providers in order to notify the Registrar of financial services providers regarding debarment of representatives:
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The provider should debar any representative who does not comply with the fit and proper requirements;
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Debarred representative(s) must be removed from the register of representatives that the provider must maintain.
The provider should inform the Registrar of Financial Services Providers in writing of the debarment of representatives or key individuals of the representative within 15 days.
There was an extension to the deadline for removal to end April 2010.
Compliance officers and compliance arrangements
Any authorised financial services provider with more than one key individual or one or more representatives must, appoint one or more compliance officers to monitor compliance with this Act, and to take responsibility for liaison with the registrar.
Such person may be any person with suitable qualifications and experience determined by the registrar.
A compliance officer must be approved by the registrar.
Accounting and audit requirements
An authorised financial services provider must:
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Maintain full and proper accounting records on a continual basis, brought up to date monthly; and
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Annually prepare financial statements reflecting:
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the financial position of the entity at its financial year end;
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the results of operations, the receipt and payment of cash and cash equivalent balances;
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all changes in equity for the period then ended; and
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a summary of significant accounting policies and explanatory notes.
An authorised financial services provider must cause the statements to be audited and reported on by an external auditor approved by the registrar.
The financial statements must be submitted by the FSP to the registrar not later than four months after the end of the provider's financial year, or such longer period as may be allowed by the registrar.
The FSP must maintain records in respect of money and financial products held on behalf of clients, and must, in addition to and simultaneously with the financial statements submit to the registrar a report, by the auditor who performed the audit, which confirms for different categories of financial services providers:
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The amount of money and financial products at year end held by the provider on behalf of clients;
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That such money and financial products were throughout the financial year kept separate from those of the business of the authorised financial services provider and, report any instance of non-compliance identified in the course of the audit and the extent thereof.
Despite anything to the contrary contained in any law, the auditor of an authorised FSP must report to and inform the registrar in writing of any irregularity or suspected irregularity in the conduct or the affairs of the FSP concerned of which the auditor became aware in performing functions as auditor and which, in the opinion of the auditor, is material.
If the appointment of an auditor of an authorised FSP is terminated:
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The auditor must submit to the registrar a statement of what the auditor believes to be the reasons for that termination; and
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If the auditor would, but for that termination, had reason to submit to the registrar a report regarding a material irregularity, the auditor must submit such a report to the registrar.
A financial services provider may not change a financial year end without the approval of the Registrar.
New submission dates for financial statements
In the past Section 19 of the FAIS Act required that all FSPs submit their financial statements to the Registrar no later than six (6) months after the end of their financial year end. With the publication of the Financial Services Laws General Laws Amendment Act, 2008, the submission dates for financial statements in terms of the FAIS Act have changed. Basically what this means is that FSPs now have four (4) months to submit their annual financial statements to the Registrar. The change in the timeframe for the submission of the financial statements comes into effect on 1 May 2009 which means that: anyone with a financial year end on or before 30 April 2009 still has 6 months to submit their financial statements for 2009; anyone with a financial year end on or after 1 May 2009 has 4 months to submit their 2009 financial statements to the Registrar; and everyone will need to submit their 2010 financial statements to the Registrar within 4 months from their financial year end.
Determination of Fit and Proper Requirements for Financial Services Providers Personal Character Qualities of Honesty and Integrity
An applicant must be a person who is honest and has integrity.
Any of the following factors constitutes prima facie evidence that the applicant does not qualify:
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Has within a period of five years preceding the date of application:
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been found guilty in any civil or criminal proceedings by a court of law (whether in the Republic or elsewhere) of having acted fraudulently, dishonestly, unprofessionally, dishonourably or in breach of a fiduciary duty;
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been found guilty by any professional or financial services industry body (whether in the Republic or elsewhere) recognised by the Board, of an act of dishonesty, negligence, incompetence or mismanagement, sufficiently serious to impugn the honesty and integrity of the applicant;
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been denied membership of any body on account of an act of dishonesty, negligence, incompetence or mismanagement, sufficiently serious to impugn the honesty and integrity of the applicant;
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been found guilty by any regulatory or supervisory body (whether in the Republic or elsewhere), recognised by the Board; or
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had its authorisation to carry on business refused, suspended or withdrawn by any such body, on account of an act of dishonesty, negligence, incompetence or mismanagement sufficiently serious to impugn the honesty and integrity of the applicant;
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had any licence granted to the applicant by any regulatory or supervisory body suspended or withdrawn by such body on account of an act of dishonesty, negligence, incompetence or mismanagement, sufficiently serious to impugn the honesty and integrity of the applicant; or
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Has at any time prior to the date of application been disqualified or prohibited by any court of law (whether in the Republic or elsewhere) from taking part in the management of any company or other statutorily created, recognised or regulated body, irrespective whether such disqualification has since been lifted or not.
Competency
A key individual must have at least one year’s experience in managing or overseeing the financial services of an organisation, and the experience period must relate to the period required for the category or subcategory he / she is approved for.
A representative must have the relevant product related experience.
The qualification requirements must also be met before the Registrar will approve the application. There is a list of recognised qualifications that can be consulted.
If a specific qualification does not appear on the list, application can be made to the Registrar to approve the qualification.
All key individuals are required to write regulatory examinations. There are two levels of regulatory examinations. The first level regulatory examination deals with the legislation, such as FAIS and FICA, and the subordinate legislation such as the regulations and codes of conduct. The second level regulatory examinations deals with product specific information.
Key individuals are only required to write the second level regulatory exams if they give advice or render intermediary services (act as representatives).
CPD refers to continuous professional development. This occurs after the key individual has met the requirements regarding the regulatory examinations. The purpose of CPD is to help the key individual to keep their knowledge and understanding of the legislation and industry up to date, without you having to obtain more qualifications or examinations. Depending on the category or subcategory the key individual is authorised for, needs to complete between 15 and 60 hours of CPD activities over a 3 year cycle.
Any employer, conference organizer, industry body or professional association may apply to the FSB to have activities registered as CPD activities for FAIS purposes. Application forms are available from the FSB, as part of Board Notice 106 of 2008.
These activities can include:
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Courses, conferences, seminars;
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Studies leading to formal assessment; can include distance learning, additional qualifications, or attendance at formal courses;
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Workshops;
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Structured self study programmes including web and computer based programmes that assess knowledge.
It is essential to obtain evidence of attendance at these programmes and that the compliance officer, of the company, keeps record of CPD hours to report back to the FSB.
When do the new requirements apply?
Approved between 2004 – 2007:
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Qualification achieved by 31/12/2009
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First level examination 31/12/2011
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Second level examination by 31/12/2013
Approved in 2008:
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Qualification achieved by 31/12/2011 or 2012, depending on choice;
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First level examination 31/12/2011
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Second level examination by 31/12/2013
Approved in 2009:
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Qualification achieved by 31/12/2013
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First level examination 31/12/2011
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Second level examination by 31/12/2013
Approved in 2010:
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Qualification achieved by 31/12/2015
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First level examination 31/12/2012
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Second level examination by 31/12/2016
Operational ability
An applicant must have and be able to maintain the operational ability to fulfil the responsibilities, including at least the following:
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A fixed business address;
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Adequate access to communication facilities including at least a full-time telephone or cell phone service, and typing and document duplication facilities;
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Adequate storage and filing systems for the safe-keeping of records, business communications and correspondence; and
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An account with a registered bank including, where required by the Act, a separate bank account for client funds.
An applicant must have in place, the appropriate money laundering control systems and provision for training of staff, including identification, record-keeping and reporting procedures, where required under the Financial Intelligence Centre Act, 2001.
Financial Soundness An applicant must not be an unrehabilitated insolvent or under liquidation or provisional liquidation.
The assets of an applicant (excluding goodwill and other intangible assets) must exceed the applicant’s liabilities (excluding loans validly subordinated in favour of all other creditors), subject to any exemptions granted.
The 2010 compliance report
The 2010 compliance reports were published on 31 May 2009. For the 2010 reporting year there will be 10 different reports as indicated in Table A below. Financial Services Providers must submit the compliance reports by the submission date.
Table A
Type of FSP
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Reporting Date
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Submission Date
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Category I FSP without Compliance Officer
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31 December 2010
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28 February 2011
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Category I FSP with Compliance Officer
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31 May 2010
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15 August 2010
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Category II and Forex Authorised FSPs
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31 August 2010
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31 October 2010
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Category IIA FSP(Annual)
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31 May 2010
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30 June 2010
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Interim compliance report for Category IIA FSPs
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31 August 2010
30 November 2010
28 February 2011
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30 September 2010
31 December 2010
30 March 2011
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Category III FSPs (Annual)
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30 June 2010
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31 July 2010
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Category III FSPs (Interim report)
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31 December 2010
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31 January 2011
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Category IV FSPs
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31 August 2010
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31 October 2010
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Foreign FSPs
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31 August 2010
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31 October 2010
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Handover report
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One month after the FSP was informed of resignation
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