About Lesson
Legislative Reference
- FSCA FAIS Notice 86 of 2018 – Exemption of Services under Supervision
- FAIS Act – Sec 8
- BN 194 of 2017 – Sec 12
- BN 194 of 2017 – Annexure One
Task 1: Demonstrate understanding of the FAIS Act as a regulatory framework
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Task 2: Contribute towards maintaining a FSP Licence
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Task 3: Define the role of the Key individual in terms of the FAIS Act.
The Financial Advisory and Intermediary Services (FAIS) Act defines a Key Individual (KI) as a person who manages or oversees an authorized financial services provider's (FSP) financial services. KIs are responsible for ensuring that the FSP complies with the FAIS Act and its licensing requirements.
Responsibilities
• Manage and oversee
KIs manage the FSP's activities and supervise the people who work for them
• Ensure compliance
KIs ensure the FSP adheres to the FAIS Act, its license conditions, and the General Code of Conduct
• Ensure fit and proper status
KIs ensure that all representatives who report to them maintain their fit and proper status
• Submit regulatory reporting
KIs ensure that all regulatory reporting is submitted to the FSCA on time and with the correct information
• Maintain operational capabilities
KIs ensure that the FSP's operational capabilities are in accordance with FSCA licensing requirements
• Key Individual considerations
KIs must carry out their duties with due care, skill, and diligence. They must also be honest and have integrity.
Consequences of non-compliance
The FSCA can take action against KIs who fail to perform their duties, including debarment and fines.
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Task 4: Adhere to the specific Codes of Conduct
This task is mainly about the General Code of Conduct (GCOC).
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Task 5: Comply with regulated record keeping requirements
To comply with regulated record-keeping requirements as a Financial Services Provider (FSP), you must meticulously maintain detailed records of all client interactions, financial advice provided, and related transactions, ensuring they are easily accessible, stored securely, and kept for a minimum of five years after the termination of the financial product or service, allowing for inspection by the relevant regulatory body upon request; this includes both electronic and paper records, with the responsibility to readily convert them into a readable format if needed.
Key aspects of FSP record-keeping compliance:
Comprehensive documentation:
Capture all client communications, including verbal conversations, written correspondence, and any financial needs analysis conducted.
Client identification:
Maintain proper records of client identification documents used to verify identity.
Transaction details:
Record all financial transactions executed on behalf of the client, including product details, dates, and amounts.
Advice records:
Document the rationale behind any financial advice given to clients, including suitability assessments and reasons for product recommendations.
Accessibility:
Ensure records are easily retrievable and can be presented to the regulator within a specified timeframe if required.
Storage and security:
Implement robust systems to protect records from loss, damage, or unauthorized access.
Important points to remember:
Legal obligation:
Failure to comply with record-keeping regulations can lead to penalties and regulatory action.
Third-party storage:
If using a third-party to store records, ensure a written agreement is in place clearly outlining responsibilities.
Regular review:
Regularly review and update record-keeping procedures to maintain compliance with evolving regulations.
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Task 6: Comply with the requirements of the FIC Act and Money Laundering and Terrorist Financing control regulations, as it applies to the FSP.
FICA
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Task 7: Dealing with complaints that have been submitted to the Ombud for FSPs.
Complaints - procedures and processes
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Task 8: Operate as a Representative in terms of the FAIS Act.
"Operating as a representative" in terms of the FAIS Act means acting as an individual who provides financial services to clients on behalf of a licensed "Financial Services Provider" (FSP), essentially meaning you are employed or mandated by the FSP to deliver financial advice or products to clients, while adhering to all the regulatory requirements set out in the FAIS Act regarding qualifications, conduct, and client protection.
Key points about being a representative under FAIS:
Acting on behalf of an FSP:
You cannot directly provide financial services in your own name, but must do so under the license of the FSP you are representing.
Required qualifications:
To operate as a representative, you must hold the necessary qualifications and pass relevant regulatory exams to demonstrate your competence in the financial services field.
Compliance with codes of conduct:
You are bound by the FSP's compliance framework and the FAIS codes of conduct, which dictate ethical standards and client-centric practices.
Supervision and oversight:
The FSP is responsible for supervising your activities as a representative, ensuring proper client interaction and adherence to regulations.
Example scenarios of a representative under FAIS:
A financial advisor employed by an insurance company who sells insurance products to clients.
A stockbroker working for a brokerage firm who provides investment advice to clients.
A mortgage loan officer at a bank who assists clients in applying for home loans.
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