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FAIS Fit and Proper requirements – A deadline is looming

The Fit and Proper requirements of Board Notice 194 of 2017 need to be implemented and complied with before specific deadline dates. Wednesday, 31 July 2019 is such a deadline.

A Representative working under supervision as at 1 April 2018 or appointed in the period 1 April to 31 July 2018, must comply with Class of Business Training requirements by 31 July 2019. Class of Business is one of the new requirements that Board Notice 194 of 2017 introduced, which have an impact on FSPs, Key Individuals and Representatives approved or appointed after 1 April 2018, as well as on those FSPs, Key Individuals and Representatives that want to add new product categories. This requirement came into effect on 1 August 2018.

Class of Business training explained

Section 29 of the Determination of Fit and Proper requirements indicates the following in respect of COB training:

A FSP and representative must complete the class of business training relevant to those financial products for which they are authorised or appointed prior to rendering any financial service in respect of such products. A key individual must, likewise, complete the class of business training in respect of the classes of business it manages or oversees and for which it is approved to act as key individual prior to managing or overseeing the rendering of any such financial services.

The FSP must therefore ensure that it, its key individuals and representatives are:

  • proficient in respect of,
  • understand, and
  • have completed adequate and appropriate class of business training relevant to the financial products in respect of which they render financial services.

What must be included in Class of Business training?

  • the range of financial products within the class of business;
  • general and specialist characteristics, terms and features of such financial products;
  • typical fee structures, charges and other costs associated with such products;
  • general risks associated with investing, purchasing or transacting in these products;
  • Investment and risk principles, options and strategies in respect of such products;
  • the appropriateness of different products or product features in the class of business for different types of clients or groups of clients;
  • the typical role players or market participants in respect of these products, including their legal structure;
  • the impact of applicable legislation, including taxation laws, on such products;
  • the impact of applicable economic and environmental factors e.g. economic and business environment and cycles, inflation, government monetary and fiscal policies and interest rates and exchange rates on the products and the performance of those products;
  • any inter-relationship within and between particular classes of business; and
  • industry standards and codes of conduct relevant to the class of business.

FAIS Notice 86 of 2018 that came into effect on 1 February 2019 further determines that a supervised representative must within 12 months from the date on which a person was first appointed as a representative in respect of a particular financial product comply with the Class of Business training requirements applicable to that financial product.

To all representatives to whom the 31 July deadline apply: There are only 4 months to go. Will you comply?

Moonstone Business School of Excellence (MBSE) is a duly accredited institution and provides training in all nine CoB modules stipulated in the Act. Click here to visit the MBSE website or visit the Event page for more detail.

Click here to download the relevant annexure from the Board Notice 194 of 2017 that describes all 9 Classes of Business.

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