Amendment of the Determination of Fit and Proper requirements, 2017
Amendments to the Fit and Proper requirements were published in the Government Gazette No. 43474 on 26 June 2020 and come into effect immediately. The amendments were primarily introduced to align the terminology in these requirements to the Insurance Act, the Long-term and Short-term Insurance Acts. However, in addition to these there are a few key changes that FSPs should be aware of.
Definitions (section 1(1) and section 47)
There were several amendments to the definitions, for the most part, to align the terminology with the Insurance Act, and the Long-term and Short-term Insurance Acts.
Of interest is the amendment to the definition of a “CPD activity” which now clarifies that a Professional Body may only approve an activity that is verifiable. Unfortunately, qualifications are still excluded from the definition of a CPD activity, despite Masthead submitting that there are good reasons why qualifications should ‘count’.
There has also been an amendment to the definition of “annual expenditure” and “remuneration” in Part 3 that deals with financial soundness requirements specific to specific categories of FSPs and juristic representatives. The amendment removes the term “contractor” from these definitions as the intention was to limit the dispensation to variable remuneration only and not to extend it to variable charges or fees payable to third parties for services rendered. The amendment brings the definition back into line with the initial intention of the regulator. FSPs that must maintain liquid assets should consider whether the definition change affects their calculation of liquid assets.
Appointment of Representatives (section 40)
The amendment to section 40(1)(a) has the effect that an FSP cannot appoint a person that is an unrehabilitated insolvent. In the Consultation Report the FSCA confirms that the prohibition only applies to the appointment of a representative, meaning that if a representative is sequestrated after their appointment, they can remain as a representative of the FSP providing that the FSP puts measures in place to deal with the risks that may arise as a result of the representative being sequestrated. This highlights the importance of asking the right questions and conducting appropriate checks prior to appointing a representative to your FSP to make sure that you do not inadvertently fall foul of this requirement.
ENDS
Click here to read the Amendment of the Determination of Fit and Proper Requirements, 2017.
Click here to read the Consultation Report relating to the proposed Amendments to the Determination of Fit and Proper Requirements for Financial Services Providers, 2017.
Click here to read FSCA Communication 35 of 2020 (FAIS) relating to the Publication of final amendments to the General and Short-term Deposit Codes of Conduct as well as the Fit and Proper Requirements under the FAIS Act.
