Secondary

Appointing a Key Individual

The rapidly changing nature of the business we find ourselves in often demands changes which we did not foresee.

On Monday I received a call from a reader who is currently in a business which he shares with a partner. The latter is the key individual (KI) and he is a representative.

His partner informed him recently that he wants to hang up his boots, which leaves our caller in a rather precarious position. He passed the RE 5 for reps, but has not attempted the RE 1 for KIs, nor is he sure about the competency, experience and qualifications requirements for appointment as KI.

No problem, I said. This will make an interesting topic for a short article.

That was a big mistake on my part.

After speaking to Louise Willemse, who heads our licensing and profile changes department, I realised that there is a lot more to this than just filling in a form or two.

As usual, one’s date of first appointment, experience in various products, as well as the products, which the FSP is licensed for, plays a major role in what is required. But wait – that’s not all.

Take for instance the qualifications requirement. FSP form 4 indicates the following in the guidelines:

Sole proprietors and key individuals must comply with the qualification requirements set out in the Determination of Fit and Proper Requirements for Financial Services Providers, 2008.

In terms of the aforementioned Determination, qualifications must be recognised by the Registrar and must be listed on the List of Recognised Qualifications. Please refer to the List of Recognised Qualifications to determine whether the qualifications listed under section G.1. are recognised. If the qualifications are not recognised you must, prior to submitting this application, apply in the prescribed form and manner to the Registrar for recognition of the qualifications.

If the qualifications are recognised, indicate under ‘Qualification Code’ in column two of the Table under section G.1. the qualification ID number as reflected on the List of Recognised Qualifications.

Attach certified copies of the qualifications and indicate on Form FSP 14A what documentation is attached.

There are various requirements concerning experience, including products and management of the business. The latter requires the following information:

Indicate under section I.1. the sole proprietor’s and key individual’s experience in the management or oversight of the activities of a business or part thereof. Indicate under section I.2. the name(s) of the person(s) providing the required reference(s). The reference letter(s) must accompany the application and must be indicated on FSP Form 14A.

Ironically, this reference letter may not be provided by a HR department.

To summarise: replacing or appointing a new key individual is a complex process best left to the experts. If at all possible, it should form part of your contingency planning, as the Regulator is not keen on a rent-a-KI arrangement. Finding a suitable KI is a rather difficult task, and where an emergency arises, more than doubly so.

If you need guidance with the appointment or removal of a KI, you are welcome to phone Louise of Moonstone’s licensing department on 021 883 8000. She started this aspect of our business in 2004.

Only Chuck Norris knows more about this than Louise.

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