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Registrar approves amendments to the determination of Fit and Proper Requirements for FSP's

24 June 2007 FSB

Extension of the date by which providers must comply with column four requirements in the determination of Fit and Proper requirements

The Registrar of Financial Services Providers, after consultation with the Advisory Committee on Financial Services Providers, has approved amendments to the Determination of Fit and Proper Requirements for Financial Service Providers, 2006 (the Determination) and the Exemption Regarding Certain Minimum Qualifications, 2004 (the Exemption).  On 19 June 2007 confirmation was received that the Government Gazette containing the amendments had been published. 

The purpose of the amendment to the Determination is to extend the period by which financial services providers, their key individuals and representatives must comply with the relevant conditional qualification requirements as detailed in Column Four of Table A and Column Three of Tables B and C of the Determination. 

The Determination now requires that the aforesaid persons must within a period ending 31 December of the fourth year from the date of licensing or first appointment, as the case may be, complete the relevant conditional qualification requirements that applies to them.  In other words, persons who would have had to comply with the requirements by 30 September 2007 have now until 31 December 2008 to obtain the required qualifications.

An exemption from the minimum qualifications was previously granted to providers who render financial services in respect of assistance policies as defined in the Long-term Insurance Act, No. 52 of 1998 and who had applied for authorisaion on or before 31 December 2004.  The latter Exemption would have expired on 30 September 2007.  This Exemption has also been amended the result of which is that this category of providers now only have to comply with the qualification requirements by 31 December 2009. 

The amendments were granted after it was established that between 40% and 42% of the key individuals and representatives of licenced FSPs would be unable to meet the conditional qualification requirements by the respective compliance dates.  A study conducted by the Financial Services Board (FSB) indicated that this failure to comply was caused by a variety of factors, including differences in compliance timelines and academic timelines, inaction by a minority of the persons affected, and in some cases, lack of access to relevant programmes or training providers. 

Gerry Anderson, the Deputy Executive Officer : Market Conduct and Consumer Education states "that the main purpose for granting this exemption is to streamline the qualification requirements for different financial products".  He added that "it must be borne in mind that one of the objectives of the Financial Advisory and Intermediary Services Act, 2002, is to professionalise the intermediaries and advisors in the interest of consumers of financial services products.  This includes raising the level of formal qualifications of persons engaged in this activity.  This objective remains a priority and the licences issued to the affected persons who fail to meet these requirements will have to be reconsidered."

The FAIS Division of the FSB is currently in the process of a comprehensive review of the current Determination.  In this regard, the FSB has been engaging with industry representatives and representatives of SAQA, INSETA and BANKSETA, regarding the development of such a new Determination.  However, this process has not been finalised and no decisions thereon have yet been taken. 

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