The Latest Determination of Fit and Proper requirements refers to three types of training under the competence requirements. A look at the definitions will help readers distinguish more clearly what impacts on them, and what not. I underlined what I regard as important aspects of the definitions.
- “class of business training” means training in respect of a class of business and which training is provided and assessed by an accredited provider or an education institution;
- “CPD” means continuous professional development. A “CPD activity” means an activity that is accredited by a Professional Body, allocated an hour value or a part thereof by that Professional Body and is verifiable. CPD excludes an activity performed towards a qualification and product specific training, but class of business training is not, provided that the provider is duly accredited.
- “product specific training” refers to training in respect of a particular financial product and which training is assessed, including any amendments to that particular financial product.
The following are important definitions relating to the above:
- “assessed” in relation to competence requirements, means the structured process of gathering reliable evidence to determine the level of a person’s competence in relation to a pre-determined standard. We queried this with the FSB who advised that this standard is determined by the training provider.
- “accredited provider” means a person that is recognised and certified or accredited by a Quality Council as having the capacity or provisional capacity to offer a qualification or part-qualification registered on the NQF at the required standard.
- “professional body” means a body recognised by the SAQA as a professional body for purposes of the NQF Act. We have only been able to identify 4 such bodies in South Africa, and this may yet prove to be a challenge.
Class of Business training
Section 29 of the Determination indicates the following requirements, in respect of COB training, inter alia.
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 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.
Who should attend Class of Business training?
- All FSPs, Key Individuals and Representatives appointed after 1 April 2018.
- FSPs, Key Individuals and Representatives who seek authorisation, approval or appointment for new financial product categories after 1 April 2018.
- Representatives working under supervision as at 1 April 2018, or appointed under supervision after 1 April 2018.
- Certain exemptions apply, depending on the type of business one does, and how it is conducted, e.g. execution of sales. We strongly advise that prospective students seek advice from their Compliance Officers.
For information on what will be available, have a look at this Moonstone presentation.