FAIS fit and proper requirements and CPD

Under section 8A of the FAIS Act, financial services providers (FSPs), their Key Individuals (KIs) and their representatives must be fit and proper at all times. The requirements are in the Determination of Fit and Proper Requirements, Board Notice 194 of 2017 (in force since 1 April 2018, amended by Board Notice 707 of 2020). The Conduct of Financial Institutions Bill, when it is passed, will replace FAIS; until then these requirements stand.

The components

Honesty, integrity and good standing	FSPs, KIs and representatives
Competence	FSPs, KIs and representatives: experience, qualifications, regulatory examinations, class of business and product specific training
Continuous professional development	FSPs, KIs and representatives
Operational ability	FSPs, KIs and representatives; a juristic representative always has at least one KI
Financial soundness	FSPs and juristic representatives only

Competence

• Experience lapses after 5 consecutive years of not rendering the service. KIs of Category I FSPs need at least 1 year of management or oversight experience; Category IIA and III FSPs and representatives need 3 years.
• Qualifications: a recognised qualification for the class of business; for Category II, IIA and III, at degree level.
• Regulatory examinations: representatives write RE5; KIs and FSPs write RE1, with RE3 for Category II and IIA and RE4 for Category III. They are passed before appointment, unless the person works under supervision.
• Class of business and product specific training is completed before the service is rendered, recorded in the FSP's competence register within 15 days, and kept for 5 years.
• Category I FSPs, KIs and representatives dealing only in Long-term Insurance subcategory A or Friendly Society Benefits are excluded from the qualification, examination, class of business training and CPD requirements.

Working under supervision

A new representative who has not yet met the competence requirements may render services under supervision (FSCA FAIS Notice 86 of 2018, from 1 February 2019), with deadlines counted from the date of first appointment for each product:

Class of business training	Within 12 months
RE5	Within 2 years
Qualification	Within 6 years
Experience	Supervised for at least the minimum experience period, until assessed as experienced
Agreement	A written supervision agreement before supervised work starts
Supervisor	A KI, or a fully compliant representative for the same products

A representative who misses a deadline must stop rendering the service and come off the register; an FSP must debar a representative who no longer meets the requirements (see debarment).

CPD

• The cycle runs from 1 June to 31 May.
• Hours a cycle depend on the classes of business, not the FSP's category, and are the same for FSPs, KIs and representatives: 6 hours for one subclass within a class, 12 hours for more than one subclass within a class, 18 hours for more than one class.
• Part cycles: someone appointed during a cycle needs (annual hours ÷ 12) × months appointed.
• Absence: for maternity, paternity or adoption leave, long illness or disability, or caring for a family member, the hours reduce to (annual hours ÷ 12) × (12 − months absent), for at most 3 consecutive cycles.
• What counts: activities accredited by a SAQA-recognised professional body as verifiable, with an hour value. Study towards a qualification and product specific training do not count.
• Evidence: representatives and KIs give the FSP their evidence within 15 days after the cycle ends; the FSP records it in the competence register within 30 days and keeps it for 5 years.
• Exempt: Category I Long-term Insurance subcategory A or Friendly Society only; representatives rendering only Tier 2 services, or only intermediary services on Tier 1 products.

The representative register

• The FSP keeps a register of its representatives, regularly updated, with each one's name, business address, whether employee or mandatary, and the categories they may render services in (section 13(3) of the Act).
• Appointments and removals reach the FSCA's central register within 15 days under the FSP's licence conditions and FAIS Information Circular 4 of 2013; a representative the FSCA debars comes off within 5 days of the FSCA telling the FSP.
• Updates go through the FSCA e-portal, the FSCA web service or Form FSP 5; bulk uploads stopped on 1 April 2022.
• The FSP's competence register records each person's qualifications, examinations, experience, training and CPD. The FSP must tell the FSCA immediately if a KI no longer complies.

Sources

• Board Notice 194 of 2017 (Government Gazette 41321)
• FAIS Act, section 13
• FSCA FAIS Notice 86 of 2018: services under supervision
• Moonstone: representative registers and debarments

A summary for employers and practitioners, not legal advice. The regulator's and the legislation's own text govern.