A reader recently queried whether the FSB is entitled to request documentation from a non-licensed entity:
I have a small business where we book appointments for Financial Consultants to meet with new prospects. Our business is to sell leads/appointments. We do not, at any time, dispense financial advice, nor collect commissions. We were advised by both a compliance officer and an FSB employee that we are not legally obliged to be FSB registered.
The FSB were informed that we are working in this industry and opened a case/query against us to check whether we need to comply and become FSB registered. One of their requests is for our financial statements dating back 3 years. Do they have a right to request this if we are not required to be registered with the FSB?
Surely as a small business we have a right not to divulge sensitive information to an organisation we are not compelled to be registered with?
Our compliance division responded as follows:
The FSB is entitled to investigate entities in terms of Section 4 of the FAIS Act which reads:
Special provisions concerning powers of registrar
If there is reason to believe that a person is contravening or failing to comply with, or has contravened or failed to comply with, a provision of this Act, the registrar may –
(a) by notice direct that person –
(i) to furnish the registrar within a specified period with any specified information or documents in the possession or under the control of that person and which relate to the subject matter of such contravention or failure;
(ii) to appear before the registrar at a specified time and place for the purpose of discussing such matter with the registrar; or
(iii) to make arrangements for the discharge of all or any part of that person’s obligations in terms of this Act;
This makes a lot of practical sense, of course. How else will the registrar be able to conduct an enquiry into the workings of a scheme like the Relative Value Arbitrage Fund, were they not thus empowered?