Moonstone: Internal Compliance Officer Requirements
The following comment in Thursday’s Moonstone Monitor evoked a substantial number of enquiries from concerned readers:
In the past, the following people were allowed to be appointed as the internal CO of an FSP: a director, member, auditor, trustee, principal officer, public officer or company secretary.
From 1 November 2008 this no longer applies. All COs have to comply with the same minimum requirements in respect of qualifications and experience.
An FSP who made use of an internal compliance officer prior to the above date, and who made use of the exemption in terms of the qualification and experience criteria that apply to external compliance officers, now have 18 months in which to qualify. Failure to do so will lead to the termination of the appointment of the CO, forcing the FSP to appoint an external CO if a suitable candidate is unavailable within the FSP.
The distinction that was drawn between an internal and external CO no longer exists - they all have to comply with the required qualifications and experience criteria.
The FSB also approached us in reaction to the article. They agreed with our interpretation of the amendments in the Financial Services Laws General Amendment Act, but indicated that this was not the intention of the Act.
The idea was that the minimum requirements in respect of experience and qualifications should only kick in from a date 18 months after 1 November 2008. This applies to current internal COs as well as new appointments after this date based on their status in the FSP e.g. director, member auditor etc.
The FSB have indicated that they will review this condition in the Act with immediate effect, but it will obviously take time to implement.
In our view it is not unreasonable to expect the FSB to consider new applications for appointment as an internal CO from applicants who not qualify under the new minimum requirements in a favourable light, despite the conflicting conditions in the Act.
It is under urgent consideration by the Regulator, and we willl advise as soon as further news becomes available.
The current requirements for appointment as an external compliance officer referred to above are:
(a) hold a legal or business diploma or degree at NQF level 6, and have at least 3 years' experience in a compliance or risk management function in the financial services industry; or
(b) have attained any specific financial services industry, or compliance related certificate, diploma or degree at NQF level 5 recognised by the Registrar by notice in the Gazette as being appropriate for this purpose, and have at least 3 years' experience in a compliance or risk management function in the financial services industry; or
(c) be an accredited member of the Compliance Institute of South Africa, or be a member of any other organisation recognised by the Registrar by notice in the Gazette as being appropriate for this purpose and have at least 3 years' experience in compliance or risk management function in the financial services industry.
The operative word in all three cases being “…experience in the financial services industry.”
