The Fit and Proper Requirements 2017 published recently, also provides stipulations on operational ability.
Billy Seyffert, COO of Moonstone Compliance and Risk Management, pointed out an important consideration for Key Individuals:
A FSP must have at least one key individual per class of business in respect of which the FSP is authorized. This could be a single person responsible for managing or overseeing the rendering of financial services in respect of all or multiple classes of business of the FSP provided that it –
- is approved for all such classes of business; and
- has the operational ability to oversee or manage the rendering of financial services in respect of all such classes of business.
A key individual, where he or she is-
- approved or appointed as a key individual of more than one FSP or juristic representative; or
- approved or appointed as a key individual of an FSP or juristic representative and appointed as a representative of an FSP other than the first mentioned FSP,
must be able to demonstrate to the Registrar, in a form and manner which may be determined by the Registrar, that he or she has the required operational ability to effectively and adequately manage or oversee the financial services related activities of all the FSPs or juristic representatives for which the key individual was approved or appointed.
In addition, a FSP must, on a regular basis, assess the operational ability of its key individuals to adequately and effectively perform their functions taking into account individual circumstances, the nature, scale, range and complexity of the FSP’s financial services related activities and whether the key individuals are approved as key individuals or appointed as representatives of other FSPs.
The intent of this clause is possibly to address the issue of rent-a-KI where someone fills the position but does not have the ability or capacity to fulfil the legal obligations required of a key individual. If this applies to you, note the double whammy above: You cannot wait for the FSB or your compliance officer to tell you. “…a FSP must, on a regular basis, assess the operational ability of its key individuals to adequately and effectively perform their functions…”