The RDR Phase 1 status update provided clarity on the FSB’s thinking on the future role and functions of a Key Individual.
Under the discussion of Proposal Y: Advisers may not act as representatives of more than one juristic intermediary (adviser firm), it states:
A number of commentators highlighted the fact that Proposal Y focuses only on advisers, but is silent on key individuals. Questions were raised as to whether key individuals will continue to be able to act as such in relation to more than one authorised FSP. As the FSB has highlighted on various platforms, in addition to supervisory concerns regarding so-called “rent a licence” distribution models, we are equally concerned with “rent a key individual” practices. These are cases where an individual is appointed as a key individual merely because he or she can “tick the blocks” in respect of minimum FAIS qualification and experience standards, but does not in fact carry out any true oversight over services provided by the FSP and representatives concerned. The FSB intends to address this risk through appropriate provisions in the revised FAIS Fit and Proper requirements, which will be published for consultation shortly. It will also increase its supervisory scrutiny of the actual level of oversight being exercised by key individuals, including through enhanced reporting requirements.
Revised Fit and Proper requirements for key individuals (KIs), requiring an FSP to be able to demonstrate that the KI has the necessary operational ability to carry out their responsibilities, including cases where the KI acts as such for multiple FSPs. These provisions will form part of the overall revision of the FAIS Fit and Proper requirements, with consultation planned for late 2015 into early 2016, and implementation targeted for July 2016.
