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Getting serious about fit and proper requirements

16 January 2009 Gareth Stokes

If you want to work in the financial services industry then you have to comply with the FAIS Fit and Proper requirements. The Financial Services Board (FSB) is the body tasked with the administration of all applications. They note that “in terms of sectio

Sole proprietor, key individual or representative

But before we proceed, we’d like to provide a refresher on how the FAIS Act defines the various role players. A key individual is the “natural person responsible for managing or overseeing, either alone or together with other so responsible persons, the activities of the body, trust or partnership” that renders the financial service. In the case of a corporation with one member, that member is viewed as the key individual. And a sole proprietor falls into the same category. A representative is defined as “any person who renders a financial service to a client for or on behalf of a financial services provider...” The definition specifically “excludes people rendering clerical, technical, administrative, legal, accounting or other services in a subsidiary or subordinate capacity.” The importance of this exclusion was highlighted in a recent FAIS Ombudsman determination in which the complainant was compensated after an individual employed in a clerical capacity rendered financial advice without being registered to do so.

The Financial Services Board supplies comprehensive brochures that cover FAIS Fit and Proper requirements. These brochures can be downloaded at the FSB website (

Unravelling the fit and proper qualification requirements

There are two considerations when an application is first made to the registrar. These are entry level qualifications and experience. A sole proprietor “must have a qualification that is recognised by the registrar as being appropriate for the category or subcategory” they are seeking approval for. A key individual, on the other hand, “must have at least one year’s experience in managing or overseeing the financial services of an organisation…” The sole provider, key individuals and representatives have to complete a series of regulatory exams. Level I exams cover legislation including the FAIS Act and FICA Act. These exams also cover the content of various subordinate legislation such as regulations and codes of conduct. The second level examinations deal with product specific information. As a general rule Level I must be written within two years of appointment while Level II must be completed within a year of receiving an appropriate qualification. Key individuals only write Level II exams if they’re going to be giving advice or rendering intermediary services themselves…

Another important part of the FAIS Fit and Proper requirement is the ongoing education of all role players in the advice industry. Depending on the category and sub-categories that an advice giver is approved for, they have to complete between 15 and 60 hours of Continuous Professional Development (CPD) in a three year period. CPD points are awarded for attending industry training and presentations.

The entry level for representatives varies depending on the category they apply for. The entry level for Category I and IV is a matriculation certificate. But representatives for long-term insurance category A and Friendly Society Benefits must have ABET Level I. Other life categories such as Categories II, IIA, and III must have Bachelors or equivalent qualifications to begin. Newly appointed representatives can select a qualification to complete over a five year period.

All financial services providers must ensure that their representatives and key individuals are on track to complete their chosen qualifications within the new timeframes.

Editor’s thoughts:
The registrar seems to have a firm grip on the licensing requirements for individuals in the industry. Are you confident that all of your staff will comply with the FAIS Fit and Proper requirements within the expected timeframes? Add your comments below, or send them to


Added by Nicolene, 29 Mar 2010
I am desperately in search of the definitions of subcategories 1.8-1.1.18, please assist as the only guidance notes i have are on deposits and foreign currency denomiantions
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