Secondary

Compliance

Complex F & P Competency Requirements

The natural tendency is to approach these obligations in the same manner as we did in the past – tick the box, close the file and carry on regardless.

BIG MISTAKE.

Like the long and winding road, it starts off in a general direction, only to get more and more specific as we proceed on the journey.

For starters, training is not simply a matter of getting some credits, or obtaining a qualification. Apart from Class of Business, Product Specific and continuous professional development (CPD), you have to ensure that you stay abreast of developments in a number of other areas as well.

General competence requirements

Section 12 of Board Notice 194 of 2017 determines the following:

A FSP, key individual and representative must –

  1. have adequate, appropriate and relevant skills, knowledge and expertise in respect of the financial services, financial products and functions that it performs;
  2. comply with the minimum requirements set out in Part 2, 3, 4 and 5 of this Chapter; and
  3. maintain their competence.

Section 13 then elaborates on the responsibilities of a financial services provider (FSP) in respect of the above.

The FSP must establish, maintain and apply adequate policies, internal systems, control and monitoring mechanisms to ensure that it (the FSP), its key individuals and representatives are compliant, and REMAIN compliant with the general competence requirements as well as the minimum requirements contained in Chapter 3, including product knowledge and CPD.

Competence register

A FSP is required, by 1 May 2018, to establish, maintain and update on a regular basis a competence register in which all qualifications, successfully completed regulatory examinations, product specific training, class of business training and CPD of the FSP, its key individuals and representatives are recorded.

This document will assist the FSP in complying with the demands of Part 3 and 4 which reads:

An FSP must be able to demonstrate and record that it has evaluated and reviewed at regular and appropriate intervals-

  • its representatives’ and key individuals’ competence and has taken appropriate action to ensure that they remain competent for the activities they perform; and
  • the appropriateness of the training and CPD

The evaluation and review contemplated above must, inter alia, take into account –

  • technical knowledge and its application;
  • skills and expertise; and
  • changes in the market, to financial products, financial services and legislation.

As a clincher, Part 8 reads:

The requirements set out in Parts 2, 3, 4 and 5 of Chapter 3 and Chapter 4 are minimum requirements and compliance with that requirements does not in itself serve as evidence that a person complies with the general competence requirements in section 12.

A question that arises is how to ascertain what is “…adequate, appropriate and relevant skills, knowledge and expertise in respect of the financial services, financial products and functions” that you perform?

Will this only be determined during an onsite visit from the Regulator, or assessed as part of your Conduct of Business return?

Will the person making such a call know enough of your business to be able to do so objectively and fairly?

Where, in the past, you could tick the boxes in the compliance quiz and move on, there are no boxes now.

Remember the Pete Seeger song, “Little boxes”?

And the people in the houses all went to the university
And they all get put in boxes, little boxes all the same
And there’s doctors and there’s lawyers
And business executives
And they all get put in boxes, and they all come out the same.

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