Transcript
8/6/2019 FAIS Competence Requirements Article
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1 Anna Bouhail Educational Head SAIFM
COMPETENCY REQUIREMENTS FOR REPRESENTATIVES Representatives of Financial Services Providers off er f inancial services with respect
to an array of f inancial products and are acting for a variety of diff erent f inancial
services entities ranging f rom insurance and f uneral brokers to investment
institutions, f inancial planning entities and call centres.
In order to protect investors f rom unethical and ill-informed advisors it is important
that standards be set for representatives of Financial Services Providers in terms of
honesty and integrity as well as product and regulatory knowledge.
In 2008 these standards were raised by the introduction of the new Fit and Proper requirements in
terms of the FAIS Act.
Although regulatory reform took place within the Financial Services environment since the
enactment of the FAIS act in 2002, the new requirements introduced were still received by the
industry with mixed reaction. The requirements outlined the route that Financial Services Providers should take to become Fit and Proper and the requirements applicable to Representativesare
illustrated below.
HONESTY AND INTEGRITY
The f irst requirement is honesty and integrity. The personal characteristics of representatives are
clearly very important as clients rely on representatives to guide them honestly with respect to
advice on f inancial services and products. The f it and proper requirements state that a Financial
Services Provider may not appoint a representative when evidence indicates one of the following:
The applicant was found guilty within a period of 5 years preceding the application of
criminal proceedings or liability in civil proceedings by a court of law of f raud, dishonesty,
unprof essional or dishonourable activity or breach of f iduciary duty
HONESTY AND
INTEGRITYCOMPETENCE
EXPERIENCE
REQUIREMENTS
Q UALIFICATION
REQUIREMENTS
MINIMUM
QUALIFICATION
REGULATORY
EXAMINATIONS
CONTINOUS
PROFESSIONAL
DEVELOPMENT
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has bee fo
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ofess o al o voluntary bo y of
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ligence incom© etence or mismanagement of suff icient im © ortance
The applicant has been enie membership of a statutoryprofessional or voluntary bo y
The applicant has been found guilty by any regulatory or supervisory body inside or outside
the country or has not had authorisation to carry on business ref used, suspended or
withdrawn by any such body The applicant had a licence grantedby any regulatory or supervisory body withdrawn
The applicant has beendis ! ualif ied f rom taking part in the management of any company,
regardless of whether the dis ! ualif ication has since been lif ted or not
The representative also has the duty to declare on a regular basis to the Financial Services Provider
whether his honesty and integrity status might have been affected.
COMP "
#
" $ CE REQUIREMENTS
Under F%
& S it is also mandatory for an advisor to conduct a thorough f inancial needs analysis for
their clients before giving advice and is re ! uired to offer product comparisons and e'
plain their
associated pros and cons.Therefore it is imperative that a representative satisfy specif ic competencere ! uirements before appointment.
The Fit and Proper re ! uirements prescribe the minimum e'
perience and ! ualif ications a
representative must meet before appointment or must obtain whilst working under supervision.
( elevant transitional arrangements are applicable to representatives approved between 2003 and
2009.
EXPERIENCE REQUIREMENTS
The Fit and Proper re ) uirements set different re ) uirements with respect to e0
perience for the
different categories (Cat I, II, IIA, III & IV) of representatives. The re ) uirements are outlined in Board
Notice 106 of 2008. The e0
perience must be practical e0
perience gained specif ically in terms of thesubcategories for which the representative is appointed.
QUALIFICATION REQUIREMENTS
The new f it and proper re ) uirements are moving away f rom the original 30/60 credit re ) uirements
with the introduction of minimum recognised ) ualif ications. This was done in order to ensure
uniform standards and to minimize reliance on SETAs and other ) ualif ication authorities. The
) ualif ication re ) uirements for the different appointment dates are tabled below.
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Qualification requirements as per date of appointment
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30S
ep 2004 31 Dec 2007
Complete relevant registered skills
programme of 30/60 credits by 31
December 2009
T es as per time limits stipulated
1 Jan 2008 31 Dec 2009
Complete relevant registered skills
programme of 30/60 credits by 31
December 2011
Or
Complete a f ull U ualif ication f rom the
list of recognised U ualif ications by 31
December 2013
T es as per time limits stipulated
1 January 2010 and beyond
Need to complete a f ull U ualif ication
f rom the list of recognised
U ualif ications whilst working under
supervision
T es as per time limits stipulated
30/60 CREDIT REQUIREMENT
The 30/60 credit re V uirement only applies to representatives appointed before 2010. 30/60
Q ualif ication re V uirements are listed in Board Notice 106 of 2008. Where a representative is
responsible for more than one product, only the highest V ualif ication re V uirement should be met.
M INIMUM RECOGNISED QUALIFICATIONS
Q ualif ications recognised by the W egistrar are categorised according to the percentage of V ualifying
criteria matched with the content of the V ualif ication. The categories are as followsX
Generic (denoted by a G) Y Partially matches the ̀ ualifying criteria
Specif ic transitional period (denoted by an S) a Matches 80% of the b ualifying criteria
Specif ic non-transitional period (denoted by SP) c Matches 100% of the d ualifying criteria
All d ualif ications recognised as G, S or SP are approved as minimum recognised d ualif ications.
Holders of S and SP d ualif ications will be ee
empted f rom writing the Level 2 f egulatory Examination.
Q ualif ications recognised as S only apply to the transitional period.
Everyone however is re d uired to write the Level 1 f egulatory Examination irrespective of the
d ualif ication held.
READING THE LIST OF RECOGNISED QUALIFICATIONS
The list of recognised d ualif ications was last amended and updated as per board notice 64 of 2009. It is intended that the list will be updated and re-published every d uarter. The latest amendments
have not been published yet.
The notice consists of several lists depending on the license categories (Cat I, II, IIA, III & IV). There
are also additional lists where d ualif ications are listed that will only be recognised if specif ic electives
or unit standards have been selected as part of the d ualif ication.
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The list was developed in a matrix format. An example of the list and how you should read the
information on the list to identify if a u ualif ication is recognised and how the u ualif ication is
classif ied is illustrated below.
Q UALv w v
CAx
v
y
Nx
v
x
L � �
D N
�
. L �
�
�
L
C �
�
D I T S
CATEGy
�
�
1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 KI
When looking at a specif ic � ualif ication, you need to check if the � ualif ication is recognised as G, S or
SP for the applicable category and subcategory to identify if you will be re � uired to complete the
level 2 regulatory examination/s or not.
REGULATORY EXAMINATIONS
The amended Fit and Proper re � uirements introduced regulatory examinations. These examinations
have to be completed by all � epresentatives and Key Individuals of Financial Services
Providers.There will be two levels of regulatory examinations.
The f irst level regulatory (L1) examinations are based on legislative and regulatory understanding
and are applicable to all key individuals and representatives. No exemption available.
The second level regulatory (L2) examinations are based on product specif ic knowledge and are
applicable to representatives that do not hold an S (during the transitional period) or SP (af ter the
transitional period) recognised minimum � ualif ication.
� epresentatives may complete their regulatory examinations whilst working under supervision.
� epresentatives that were appointed between 2004 and 2009 must complete the regulatory
examination level 1 by 31 December 2011 and the relevant second level regulatory examination by
31 December 2013.
� epresentatives who are appointed for the f irst time f rom 2010 onwards have 2 years f rom date of
appointment to complete the f irst level regulatory examinations. They must complete the relevant
level 2 regulatory examinations within 6 years f rom date of f irst appointment.
THE � A � IOUS SUBCATEGORIES
NQF
LEVEL
SAQ A ID
THE A� �
LICABLE CATEGORY - CAT I, II, IIA, III & IV
Alw a s � nsur � ou l ook a � � h � � orr � � � � a � � or
THE CREDITS
AWARDED BY
NA � E OF
QUALIFICATION
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onal Head S AIF
F AILURE TO MEET COMPETENCY REQUIREMENTS
Representatives not meeting the competency re uirements by the relevant date will be deemed not
Fit and Proper in Terms of the Act. The representative might be removed f rom the central register
or the prof ile amended to remove the product/s for which the representative is not ualif ied for.
The Registrar also may debar the representative and re uest to list the representative on the list of
debarred persons.
CONTINUOUS PROFESSION AL DEVELOPMENT REQUIREMENTS
In terms of the Fit and Proper re uirements representatives are re uired to develop and maintain
their professional development by attending ref resher programmes in the form of workshops,
seminars and structured self-study programmes or by additional studies leading to formal
assessments such as an additional ualif ication.
Continuous Professional Development (CPD) activities and programmes need to be recognised by
the Registrar. The representative would therefore have to ensure that the activity or programme
enrolled for has been approved by the Registrar as a Continuous Professional Development (CPD)
programme/activity.
Representatives will be re uired to meet the re uired number of CPD hours in three year cycles
af ter completion of the highest level Regulatory Examination, but no later than six years f rom date
of f irst appointment if appointed af ter 2010.
The hours of CPD re uired for a representative ranges f rom 15 60 hours; dependanton the specif ic
category and subcategory/ies for which the representative is registered for. If a representative is
appointed in multiple categories or subcategories, the highest re uirement in terms of notional
hours will apply.
Representatives will have to log their CPD activities on the on-line CPD register of the Financial
Services Board (FSB).
IN CLOSING
Money is precious to all. Therefore deciding who should advice clients on f inancial matters is a
decision not to be taken lightly. The main aim of the Fit and Proper re uirements is to ensure that all
representatives advising on f inancial products such as investment, insurance and deposits are
e uipped in a manner that will be f air to the client and that will promote the integrity of the South
Af rican f inancial services industry.
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