The Financial Services Board (FSB) is moving quickly towards beginning the licensing process for financial advisors and intermediaries, required in terms of the Financial Advisory and Intermediary Services (FAIS) Act 2002. JMR Software spoke to the FSB`s FAIS head Manasse Malimabe to find out more.
Has the FSB approved bodies to assist with the licensing process?
It is estimated that there are between 12 000 and 20 000 financial services providers to be licensed in terms of the Act. As the FSB does not have the capacity to process all the licence applications, the Act makes provision for the board to delegate its powers to representative bodies. The FSB has decided to delegate two functions, ie consideration of applications for FSP licences and approval of compliance officers. The FSB provisionally approved two authorisations in June: the Insurance Brokers Council and the Group Administrators Forum.
When is the licensing process likely to begin?
As from 15 October, all intermediaries, except for banks and those dealing with foreign currency investments, are able to apply for a licence in terms of FAIS either directly from the FSB, or through the various recognised bodies. It is expected that banks and forex intermediaries will be able to follow suit in November when the relevant codes of conduct will be published.
How long will registration take and when will the Act come into effect?
At this stage it is not possible to estimate how long the licensing process will take. The length of the process will depend on the capacity of recognised bodies. But we expect the process will take between six and nine months.
Tell us more about what the Act requires in terms of compliance officers?
The Act stipulates that any authorised financial service provider with more than one key individual, or one or more representatives, must appoint a compliance officer. The compliance officer`s task will be to monitor compliance with the Act and liaise with the registrar. A compliance officer can either be a director, a member of a CC, an auditor, trustee of a Trust, principal officer or company secretary. The compliance officer may also be any person whom the registrar deems to have suitable qualifications and experience.
What are the requirements for becoming an FSP approved compliance officer?
A compliance officer can either be a director of a company, a member of a close corporation, an auditor, a trustee of a trust, a principal officer, a public officer, or company secretary or any person with suitable qualifications and experience as determined by the Registrar. These requirements include:
* Legal or accountancy university degree with at least three years` experience;
* Already appointed as a compliance officer relating to financial services industry; or
* An accredited member of the Compliance Institute of South African with three years` experience in the financial services business.
Tell us more about the fit and proper requirements for being granted a licence?
In processing the licence applications for financial services providers, we consider the fit and proper requirements in terms of the following:
* Honesty and integrity
* Qualifications and experience
* Operational ability
* Financial soundness
There are various competency level requirements for different categories of financial services providers.
Does this mean advisors may drop out of the industry?
The entry-level requirements are set at such pragmatic levels that we do not expect many advisors to be disqualified. In addition, the Act makes provision for representatives, who do not meet the minimum requirements, to be exempted provided they meet with certain requirements within a prescribed period. Where the applicant does not meet the required minimum level of qualifications, recognition of prior learning (expertise gained in the field) will be given.
How will the licensing process catch out fraudsters?
The FSB has a database of individuals that have been investigated for various scams. The LOA has also offered access to their reference database to allow more suspect individuals to be identified during the licensing process. We are also depending on people in the industry as well as the public to come forward with any relevant information on licensees.
What is the FSB doing to ensure that people are aware of the pending licensing process?
Starting in July, the FSB will be embarking on a series of road shows in cities and towns across SA. The target audience will be all categories of eligible financial services providers.
What impact do you hope the FAIS Act will have on the industry?
FAIS aims to offer consumer protection as well as professionalisation of individuals in the financial services industry. The FSB will commission a study to determine the impact of FAIS legislation on the financial services industry. Research will be conducted before the effective date of the Act, and will be followed by a similar survey three to four years after the effective date, to determine the impact of the legislation.
It`s a long road ahead, but the FSB is optimistic that, together with financial advisors and institutions, it can help raise the standard of financial advice given in SA.
Share