On Monday we discussed the functions of the FSB’s FAIS Compliance Department in an article by the same name. We indicated where they get information which leads to further action, including on-site visits to FSPs. Today we expand on this for those who still await their first inspection.
There is a strict protocol to be followed – inspectors do not just rock up at your door for what is termed “friendly” inspections. You have to be given adequate notice via a request for a scheduled appointment. Where there are grounds to suspect serious misconduct, there may be a different approach.
We saw on Monday that there are reasons why certain FSPs are chosen. These range from the regulator’s risk rating of your practice, based on certain criteria, and information from other sources. These include competitors, the media and other regulatory and government bodies.
By law, the inspectors are allowed to request certain documentation, question staff, conduct interviews and extract sample files.
After the inspection, you receive two reports. A risk mitigation report, in terms of FAIS, identifying the shortcomings in your practice, and how to set it right. The second report, contains corrective steps that need to be taken in terms of FICA.
Charene Nortier, the presenter, does a good job of relating theory back to practical examples.
She points out instances where people conform to the requirement by having the prescribed forms, but where it is clear that there was not a “…common meeting of the minds” between the FSP and the client.
This information was drawn from the FSB broadcast on 19 September, which also discussed the General Code of Conduct, Conflict of Interest, Profile Changes, Training for Representatives, Complaints and several other practice related subjects.
If you would like to ensure that you understand the practical obligations of these topics, you can order a DVD of the complete presentation, which also contains a session on Treating the Customer Fairly, the next ghost likely to jump out of the cupboard.