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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2 Anna Bouha

 

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  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 "  

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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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3  Anna Bouha

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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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4  Anna Bouha

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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 �

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L 

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D I     T   S  

CATEGy  

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�  

 

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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5  Anna Bouha

� 

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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.