FAIS Fit and Proper in layman's terms

This post by Stuart Brown, Miway’s Regulatory Competence Specialist, explains how to remain FAIS Fit and Proper.

I decided to write this article as I regularly come across people who work in the financial services industry, governed by the FAIS Act, and who have little or no clue how they are affected by it. If you are a representative of a Financial Service Provider (FSP) then read this piece as your career may depend on it. The views expressed in this article are done so in my personal capacity.

When the FAIS Act came in to effect on 30 September 2004, it brought with it certain requirements that a person who gives advice and/or renders intermediary services needed to comply with to remain employed in their position. These persons are referred to as representatives and reflect on the central register of the Financial Services Board (FSB). These requirements are referred to as the Fit and Proper requirements. Fit and Proper requirements are divided into four sections, namely:

It all starts with the date you were appointed as a representative of a FSP. This date is referred to as the Date of First Appointment (DOFA) and it is determin ed by the first FSP you worked for and that registered you as their representative with the FSB.

Your DOFA determines a few important things, e.g. by when you need to pass the first level Regulatory Examination (RE), and by when you need to acquire your full qualification.

There are other requirements which at some point you will need to comply with, but for now let us focus on the following two:

Most people are focusing on passing the RE and are forgetting that they need to get a full qualification in line with the industry they are a representative in. People normally talk about “FAIS Credits” but they are actually credits towards a qualification. Your DOFA will determine how many credits you need or if you need to get the full qualification.

The other requirements are the second level RE and Continuous Professional Development (CPD). Currently there is no requirement to meet them and the industry is awaiting further direction from the FSB regarding when they will be legislated and what the transitional arrangements will be.

Every representative should be aware that should they not meet the first two requirements by their respective due dates, the FAIS Act and its subordinate legislation provide that such representatives must be debarred until they meet the competency requirements.  Most people think that debarment is only effected where a person was dishonest and acted without integrity, but it also applies to not meeting the competency requirements. FSPs cannot employ you if you are not Fit and Proper and there are those who will terminate your employment if you lose this status while in their employ.

The first thing is to send a request to the FSB to confirm your DOFA as it appears on their records. The request must be sent to FAIS.DOFA@fsb.co.za with a certified copy of your ID (not older than 3 months). The FSB will send you your DOFA report that will give you information about when you were first appointed as a representative and in what category/s and sub-category/s you were appointed in.

• The date of first appointment is the date you were first registered with the FSB as a representative.
• The category is the specific license category that the FSP who registered you is licensed to sell financial products in.
• The sub-category is the type of policies that the FSP is licensed to sell. The example above is Short-term insurance Personal Lines. If you follow the link** below you can see all the sub-categories for a category 1 license. Find out from your Compliance department which one you belong to.
• The advice date is the date when you were first registered to give advice in that licence category and sub-category.
• The intermediary services date is when you were first registered to render intermediary services in that licence category and sub-category.

If you have worked for a lot of companies then you need to look for the oldest date that you were registered in that licence category and sub-category when working out if you are Fit and Proper.

From here you can see if you meet the abovementioned requirements.

Step 1 - take your DOFA and calculate 2 years from that date to determine when you should write or should have written the first level RE.

Step 2 – to calculate when you should acquire your qualification or credits by, take the oldest date that you were appointed to the specific licence category and sub-category you are working in, or would like to work in and apply the following:

• If the date is from 2004 to 2007 then you should already have 30 credits towards a qualification relevant to what you are doing by 31/12/2009.
• If the date is from 2008 to 2009 then
  - you should already have 30 credits towards a qualification relevant to what you are doing by 31/12/2011; or
  - you should already have a complete qualification by 31/12/2013.
• If you were appointed from 2010 then you have six years from your DOFA to complete your qualification.

Now that you know how to do this, are you Fit and Proper?

Many representatives rely on their employers to keep them informed of their Fit and Proper status, but it is their responsibility to know what the expectations are and to ensure they meet them long before the deadline.

Knowledge is power, know your Fit and Proper status!

* https://www.fsb.co.za/Departments/fais/Pages/Qualifications.aspx

There are a number of lists here, but if you were appointed from 2004 to 2009 then use “List 3” “Qualifications recognised for Category I FSPs for the transitional period only” otherwise use “List 1”, “Qualifications recognised for Category I FSPs”

**https://www.fsb.co.za/departments/fais/registration/documents/fsp22011v2.pdf

By Stuart Brown
Regulatory Competence Specialist