Moonstone: Accepting the inevitable

It is doubtful whether there is one person who can honestly say that he associates fully with each and every aspect of the FAIS Act. Quite frankly, that possibly applies to each and every piece of legislation, some more so than others.

When contentious legislation is passed, one is obliged to abide by it, although, like in the case of the Firearms Act, protest can lead to a desired outcome. This may not happen overnight, but it is the correct way to approach it.

With time running out for those still short of the required minimum 30 or 60 credits, I am very concerned that there are still folk out there who refuse to accept the inevitability of the final deadline of 31 December 2009. This applies if you were FIRST appointed as a key individual OR representative in an authorised FSP between 2004 and 31 December 2007 in terms of the Fit and Proper requirements. There are other permutations, but essentially those affected by this deadline, aiming for the minimum credits, will not be fit and proper and will have to cease practicing.

Even scarier is the fact that in one instance that we are aware of, not one but two compliance practices in fact told a non-compliant key individual that the FSB is understaffed, and lacks the means to effectively stop him from conducting business from January next year. We can only assume that the intent of such advice was to get him to change his choice of compliance officer, which is a sad indictment on those supposed to monitor amongst other things, honesty and integrity.

The simple answer is of course that the FSB does not need to send out a hit squad to remove him from his practice. Legislation forbids product providers from doing business with, or paying commission to, non-compliant practices. Unless the brokerage debars the individual, the whole FSP will see its commission frozen.

Failure to do so by the product house/s could jeopardise its own license, something we believe they would be rather loathe to do.

With the suspension of one's license comes several other embarrassing obligations:

• You may not conduct any new business
• You must notify all clients and product providers of the suspension (and copy the FSB with such correspondence)
• You must transfer any outstanding business to another FSB and advise the FSB thereof

Should the suspension be lifted you will face an uphill battle regaining your reputation. It simply does not make sense to go this route.

It is not going to help to fight the inevitable by refusing to conform to the requirements. One has to remember that the deadline for obtaining the required credits has been extended several times, and those not in possession of the minimum requirements do not really have a leg to stand on after December 2009.