Page 93 - Profile's Unit Trusts and Collective Investments 2021 issue 2

Legislation and Guidelines

the license in all official correspondence, brochures,
other marketing material and advertisements. Obviously Advice
a FSP must be able to produce the original copy of the Advice is defined under FAIS as
license on demand. “any recommendation, guidance or
Although several FSCA notices that impacted on Fit proposal of a financial nature
and Proper were published after 2008 (when the first furnished, by any means or medium, to any
requirements were tabled), the requirements did not client or group of clients.”
change substantively until 2017. Board Notice 194 of 2017 Excluded from the definition of advice are the
was published in December 2017 and replaced earlier display of marketing material and conveying of
versions of the Registrar’s Determination of Fit and Proper purely factual information, such as procedures
Requirements for Financial Service Providers (FSPs). for entering into transactions or answers to
routine administrative queries. Advice given by
The new requirements altered the way in which board members of pension funds or friendly
FSPs, representatives and Key Individuals are evaluated societies to members about benefits is also
against the Fit and Proper criteria. Some of the main specifically excluded.
changes since 2008 include:
The definition of financial products under FAIS is
The requirement that FSPs ensure that KIs and
also broad, and includes all collective investment
representatives achieve the requisite CPD points schemes, shares, debentures, money market
(and verify and record CPD activities in a register) instruments, long or short-term insurance
An adjustment in required CPD hours (now 6 to products, and offshore investments.
18 hours annually depending on licence category)
linked to specific activities accredited by a
professional body (such as FPI) for CPD purposes
A stricter approach to determining if individuals Swedish Roots
live up to the “Honesty and Integrity” provisions The dictionary definition of an
(which now also include the term “Good ombud (originally ombudsman)is
Standing“) “an official appointed in Britain to investigate
Significant modifications to the qualifying complaints against public authorities”. The term
criteria for the Regulatory Exams is derived from a Swedish word meaning
commissioner or legal representative.
Inclusion of FSPs and Juristic Representatives in
the Financial Soundness criteria
Introduction of a “liquidity calculation form”
Greater emphasis on staff competency
Splitting of products into two tiers which affect competency requirements (ie, Tier 2
products are considered less complex and compliance requirements are less onerous, but
collective investments fall under Tier 1)
The introduction of six new product categories
Expanded requirements for companies offering automated advice
Many of the revised Fit and Proper Requirements impacted the training needs of KIs and
representatives. The new regulations came into effect on 1 April 2018, and the product-specific
training requirements had to be in place by 1 May 2018.
Further amendments to the Fit and Proper requirements (GN707) that were published on
26 June 2020 were primarily introduced to align the terminology in Fit and Proper with the new
insurance acts.
In the FSCA’s own words, this is expected to have “very little to no impact on FSPs or their
representatives as no new requirements are essentially created.”
One point worth noting is that the revised definition of a “CPD activity” stipulates that a
professional body may only approve an activity that is verifiable.

Duties of Authorised FSPs and FSPRs
Once licensed, an authorised FSP has a number of duties and obligations. These are aimed at
ensuring that the FSP continues to meet the FAIS requirements and deals with clients in a “fit and
proper” manner. Amongst the duties imposed by the Act, the FSP must:

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Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts