Are you properly fit?

Dr. Des Leatt, Skills specialist at Compli-Serve SA.

Three key facets to face when it comes to Fit & Proper requirements.

The revised Fit & Proper requirements see some potentially significant changes ahead in how FSPs, Key Individuals and Representatives will have to operate to comply. While there are various factors to face, three key aspects should be considered now.

Good standing

New to the Honesty & Integrity concept is Good Standing, which effectively covers personal character, good standing and competence. Good standing can be viewed as the application of honesty and integrity. We should all know it when we see it but in the corporate world, Key Individuals and representatives will need to apply their mind as to how best convince the Registrar or a prospective FSP that they are indeed of “good standing". The FSB now also requires that personal character and good standing will apply to corporate identities, demonstrated through the FSPs corporate behaviour as well as the personal behaviour of its KIs and directors. In addition, there are now some 18 incidents that indicate if someone is dishonest or lacks integrity or good standing. The seriousness of a person’s conduct, its relevance and the passage of time since the incident are all factored into this assessment. Full and prompt and accurate disclosure of anything relevant to the FSP, or FSB is essential.

CPD

Undertaking CPD training will be required where it is likely that the minimum standard will be 6 hours, up to a maximum standard of 18 hours within an annual cycle. Evidence to prove that CPD points were attained, will have to be provided – so it would be best to keep track of CPD activities as they happen. CPD points can only be awarded by professional bodies and the context must contribute to professional knowledge, addressing identified needs or gaps.

Training: Class of business and product specific training

An FSP must ensure that it, its Key Individuals and representatives, prior to the rendering of any financial service, are proficient and have completed adequate training on the class of business in which that product falls; and that the financial product knowledge, including any amendments, has been assessed and trained for accordingly.

Qualified advice is of course essential, and possibly the most popular change in terms of regulatory examination requirements is that a Key Individual no longer has to write and pass the RE5 regulatory exam. They must of course write, as well as pass the RE1 Exam, in addition to applicable RE3 or RE4 exams.

It will also now be possible for an FSP that is currently authorised to render financial services in respect of Long-Term Insurance B1, B2 or Short-Term Insurance Personal lines, to render financial services in respect of the proposed new financial product subcategories, provided the FSP applies within two months after the commencement date of the new Fit & Proper requirements.

There are many more requirements and conditions to consider in order to be compliant. For your business to be properly fit, seeking compliance support would be a good exercise to consider.