Secondary

Amended supervision requirements

Amended supervision requirements – Formal agreement now a necessity

FSCA’s FAIS Notice 86 of 2018, the Exemption of services under supervision, came into effect on 1 February 2019, except for certain conditions, like the supervision agreement that was delayed until 1 March 2019.

Supervision agreement

It is now not only a requirement that a formal agreement be drawn up between the FSP and the rep – the details of such a contract is actually spelt out in FAIS Notice 86.

According to Condition 3 of FAIS Notice 86, the FSP and supervised representative must enter into a written supervision agreement, prior to the rendering of services under supervision. This agreement may form part of any other relevant agreement or the FSP’s performance management process.

The Condition further determines that the supervision agreement must –

(a) identify the supervisor;
(b) set out the tasks and functions the supervised representative performs on behalf of the FSP, including the categories of financial services and financial products in respect of which the supervision agreement applies;
(c) set out the appropriate and relevant knowledge, skills and expertise required to competently perform the tasks and functions referred to in (b);
(d) set out the training needs of the supervised representative and the training programme that will be implemented to address those needs; and
(e) set out the supervision arrangements, including the –
(i) duties and responsibilities of the supervisor and supervised representative;
(ii) supervision methodology, tools, processes and procedures, including the oversight, monitoring and assessment methodologies, processes and procedures;
(iii) criteria and procedures to assess whether it is appropriate for the supervised representative to work under a reduced level of intensity of supervision;
(iv) criteria against which the supervised representative will be assessed and the intervals of the assessments; and
(v) sign-off criteria by the supervisor.

The table below outlines by when it must be in place.

Condition Effective Date
Supervised reps appointed on or after 1 December 2018 1 March 2019
Supervised reps appointed before 1 December 2018 1 June 2019

In other words, existing reps under supervision have to have a supervision agreement in place by 1 June. For new appointments, this should form part of their employment contract.

The FAIS Notice also covers the detail with regards to the duties of the FSP, supervisor and representative as well as the intensity of supervision.

Are your contracts in place?

Click here to download FSCA FAIS Notice 86 of 2018.

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