In a nutshell
In terms of Section 32 of Board Notice 194 of 2017 (Determination of Fit and Proper Requirements for Financial Services Providers, 2017), every sole proprietor, key individual and representative must comply with the minimum Continuous Professional Development (CPD) requirements set out in Sections 31 to 34 of the Board Notice (see link below). Section 33 sets out the minimum number of hours of CPD activity required in each CPD cycle. A CPD cycle is defined and means a period of 12 months commencing on 1 June of every year and ending 31 May of the following year.
Who is exempted?
The CPD requirements do not apply to Category I FSPs, key individuals and representatives that are authorised, approved or appointed only to render financial services or manage or oversee financial services in respect of Long-term Insurance sub-category A and/or Friendly Society Benefits. In addition, the CPD requirements do not apply to any representative of a Category I FSP that is appointed to render a financial service only in respect of a Tier 2 financial product and/or render an intermediary service in respect of a Tier 1 financial product. (For details of Tier 1 and Tier 2 Financial Products, please refer to Annexure 3 of Board Notice 194 of 2017).
What is CPD?
The term “CPD activity” is defined and means, inter alia, an activity that is accredited by a Professional Body but excludes any activity performed towards a qualification or product specific training.
The term “professional body” is also defined, and means a body recognised by the SAQA as a professional body for purposes of the National Qualifications Framework Act, 2008.
In brief, this all means that, commencing on 1 June 2018, all FSPs, FSPs (sole proprietors) key individuals and representatives (other than those that have been exempted by the provisions of Section 31(2)) must begin their CPD training and must complete the minimum number of hours before 31 May 2019. (See Section 33 of the Board Notice for details of the hours required).
Specific obligations on each FSP
In terms of Section 32(2) every FSP must establish and maintain policies and procedures on CPD that include details of how the FSP, key individual and representative will maintain knowledge and skills that are appropriate for their activities and responsibilities, update their knowledge and skills and develop new knowledge and skills to assist with their current functions and responsibilities or functions contemplated in the future.
These policies and procedures must include training plans for each CPD cycle to ensure that CPD is relevant and appropriate for the authorisation, approval and appointment of the FSP, key individual and representative, must addresses any identified needs, knowledge and skills gaps and must continually seek to improve the professional standards and practices of the FSP, its key individuals and representatives.
Beware the Ides of May
Each person who undertakes a CPD activity must be able to show that, in choosing the activity, these issues were considered and found to be present to some extent in the activity.
There are two cautionary notes to be considered by FSPs, key individuals and representatives before undertaking any CPD activity on offer:
- Has the entity that offers the activity been accredited by a Professional Body? If not, the activity is worthless from a CPD point of view. Standing to be corrected, the only Professional Bodies that seem able, at this stage, to accredit any activity that may be appropriate to the financial services universe, are the Compliance Institute of South Africa, the Financial Planning Institute of Southern Africa, the Institute of Risk Management South Africa and the Insurance Institute of South Africa.
- Does the activity satisfy one or more of the following the criteria (see Section 32(1)(c)):
- Is the activity relevant to the functions and role of the person in question?
- Does the activity contribute to the skill, knowledge, expertise and professional and ethical standards of that person?
- Does the activity address any identified needs or gaps in the technical knowledge of the individual who has chosen the activity?
- Does the activity address any identified needs or gaps in his or her generic knowledge and understanding of the environment in which the financial service is rendered or managed or overseen?
- Does the activity address the individuals’ knowledge and understanding of applicable laws?
This short summary does not deal with the CPD record keeping requirements and all FSPs are encouraged to read Sections 31 to 34 of the Board Notice insofar as CPD activities are concerned. It is important to bear in mind that the Conduct of Business Return that will replace the annual Compliance Report (probably in 2019) will almost certainly ask for proof that all CPD requirements have been met – both by individuals concerned and by the FSP itself.