The industry appears to be anxiously waiting for an answer to this question from the FSB. There are certainly guidelines about what can happen, but will the circumstances call for a new approach?
We asked Paul Rabenowitz, who co-compiled a legislation handbook, for his views on the matter.
The question on everyone’s lips is: what will the FSB do after the 30th of June? Will they get rid of all those who have not written the regulatory exam?
Representatives
For representatives, this is not a valid question to ask as the FAIS Act creates responsibilities for FSPs to monitor their reps. Put differently, the FSB does not have to do anything – it is the FSP’s responsibility to do something!
Section 13(2)(a) of the Act states that an FSP must at all times be satisfied that their reps are competent and comply with the fit and proper requirements. Therefore it is clearly the responsibility of an FSP to ensure that their reps wrote the regulatory exam in time.
What must the FSP do if a representative did not write the exam?
Section 14(1) of the FAIS Act states that an FSP must debar a representative who is no longer competent (and not having written the exam qualifies as no longer competent). Debarment is not optional – it is compulsory. Thus it is clear – the primary responsibility rests on FSP’s to ensure that their representatives are competent and if not, they must debar that rep.
Any FSP that fails to debar a representative faces the risk of suspension or withdrawal of their licence and it is also an offence under section 36 of the Act and may be subject to a fine not exceeding R 1 million.
Debarment for competence is not for a minimum period of 12 months – representatives can be reinstated as soon as they pass the exam.
In our next newsletter, we discuss the possible steps applicable to Sole Proprietors and Key Individuals.
Those who cannot wait until then can download the FSB’s Fais Circular 02/2010 on the Fit and Proper Competency (Qualifications) Requirements for Sole Proprietors (FSPs) and Key Individuals.
