Task8

• Representative


  Any person including a person employed or mandated by such first mentioned person who renders a financial service to a client for or on behalf of a financial services provider in terms of conditions of employment or any other mandate, but excludes a person rendering clerical technical back office work administrative legal accounting or other service in a subsidiary or subordinate capacity which service a) does not require judgment on the part of the latter person or b) does not lead a client to any specific transaction in respect of a financial product in response to general inquiries
• Intermediary service


  Any act other than the furnishing of advice performed by a person a) the result of which is that a client may enter into offers to enter into or enters into any transaction in respect of a financial product or b) with a view to 1) buying, selling or otherwise dealing in with on a discretionary or non-discretionary basis, managing, administering, keeping in safe custody, maintaining or servicing a financial product 2) collecting or accounting for premiums or other monies payable by the client in respect of a financial product or 3) receiving, submitting, processing or settling the claims of a client in respect of a financial product
• Requirements for a person to act as a representative


  • Have confirmation certified by the FSP that the representative has an assigned contract and/or mandate to represent and act on behalf of the FSP 2) The FSP accepts responsibility and is liable for the activities of the representative within the scope of the contract and/or mandate 3) Meet the fit and proper requirements 4) If previously the board, have complied with the requirements of the Registrar to be reinstated 5) Not render financial services or contracts in the name of anyone else other than the FSP they are a representative of
• Duties of the FSP regarding representatives

  • Be satisfied at all times that the representatives and key individuals are competent, comply and meet the fit and proper requirements 2) If the representative was previously the board, have complied with the requirements of the Registrar to be reinstated 3) Take steps to ensure representatives comply with the code of conduct and all other applicable laws
• FSP's duties regarding maintaining a register of representatives

  • Maintain a register of representatives and key individuals 2) Include specific details in the register 3) Regularly update the register and make it available for inspection to the Registrar 4) Update the register within 5 days of being informed of a change 5) Remove the name from the register when a representative departs
• Guidance on when a person providing intermediary services is considered a representative


  • If the person provides clerical, technical, administrative duties and also provides advice, they are considered a representative 2) If the person only provides clerical, technical, administrative, legal, accounting or other services in a subsidiary or subordinate capacity that do not require judgment or lead to a specific financial product transaction, they are not considered a representative
• Guidance on furniture and motor car dealers providing financial services

  • If the salesperson only issues forms for the client to complete and send to the FSP, they are not considered a representative 2) If the salesperson actively encourages or requires the client to enter into an insurance or financial product agreement, and needs to explain details of the policy, they are considered a representative
• General duties of a provider when rendering financial services

  • Be honest 2) Be fair 3) Be skilled 4) Act with care and diligence 5) Act in the interest of the client 6) Act in a manner that maintains the integrity of the financial service industry
• Scenarios for furniture/motor car dealers

  • Scenario 1: Dealer issues forms for client to complete and send to FSP - Salesperson not considered a representative

  Scenario 2: Salesperson actively encourages/requires client to enter insurance/financial product, explains policy details - Salesperson considered a representative
• Representative


  Any person including a person employed or mandated by such first mentioned person who renders a financial service to a client for or on behalf of a financial services provider in terms of conditions of employment or any other mandate, but excludes a person rendering clerical technical back office work administrative legal accounting or other service in a subsidiary or subordinate capacity which service a) does not require judgment on the part of the latter person or b) does not lead a client to any specific transaction in respect of a financial product in response to general inquiries
• Intermediary service


  Any act other than the furnishing of advice performed by a person a) the result of which is that a client may enter into, offers to enter into or enters into any transaction in respect of a financial product or b) with a view to i) buying, selling or otherwise dealing in on a discretionary or non-discretionary basis, managing, administering, keeping in safe custody, maintaining or servicing a financial product ii) collecting or accounting for premiums or other monies payable by the client in respect of a financial product or iii) receiving, submitting, processing or saving the claims of a client in respect of a financial product
• Person


  Any natural person, partnership, trust, organ of state, company or body of persons (corporate or unincorporate)
• Furnishing or giving of advice, rendering of an intermediary service, or a combination of the two constitutes a financial service
• The furnishing or giving of advice will always be conducted by a representative as it requires judgment
• If a person provides clerical, technical, administrative, legal, accounting or other services that do not require judgment or lead to a specific financial product transaction, they are not considered a representative
• If a person provides advice or intermediary services beyond just administrative tasks, they are considered a representative and must meet fit and proper requirements
• Furniture and motor car dealers providing financial services

  • Scenario 1: Issuing forms for insurance policy, no interaction requiring judgment - not a representative

  Scenario 2: Salesperson actively encouraging/requiring insurance purchase, explaining policy details - considered a representative
• Representative


  Any person including a person employed or mandated by such first mentioned person who renders a financial service to a client for or on behalf of a financial services provider in terms of conditions of employment or any other mandate
• Person


  Any natural person, partnership, trust, organ of state, company, or body of persons
• Juristic representative


  A representative that is not a natural person, but is organized under some agreement or cooperation
• Fit and proper requirements for representatives

  • Honesty, integrity and good standing
  • Competence
  • Continuous professional development (CPD)
  • Operational ability
  • Financial soundness
• Honesty, integrity and good standing

  Being truthful, sincere and free of deceit; doing the right thing in a reliable way; complying with all obligations of membership and not being suspended or debarred
• The FSP will evaluate honesty, integrity and good standing based on available information, not just what the representative provides
• Examples of not meeting honesty, integrity and good standing requirements include being found guilty of criminal/civil proceedings, convicted with imprisonment/significant fine, accepted civil liability, subject to frequent enforcement actions, removal from office of trust, breach of fiduciary duties, or suspension/dismissal/disqualification
• Competence


  The ability to do something successfully or efficiently, including minimum experience, qualifications, regulatory exams, class of business training, and product-specific training
• Competence is linked to financial categories and products, and is considered lapsed if a representative has not rendered a financial service for a product in a category for 5 consecutive years
• Minimum experience requirements for representatives

  • Varies based on financial product, category, and whether providing advice or intermediary services
• Qualification


  An educational, professional, or foreign qualification that meets certain criteria
• Representatives working for Category 1 FSPs are excluded from qualification requirements in certain cases
• Regulatory Exam (RE5)


  An exam set and delivered by approved examination bodies, required for representatives except in certain cases for Category 1 FSPs
• Class of business training

  Training on different classes of financial products, required for representatives except in certain cases for Category 1 FSPs
• Product-specific training


  Training on specific financial products, required for representatives working for Category 1 and 4 FSPs
• Continuous Professional Development (CPD)


  Ongoing training and development to maintain competence, with minimum hours required based on number of classes and sub-classes of business
• Operational ability


  The tools and structures needed by a juristic representative to carry out its functions, such as policies, bank accounts, and premises
• Financial soundness


  The financial requirements for juristic representatives, including maintaining assets exceeding liabilities, liquidity ratios, and reporting
• Financial soundness requirements vary based on the category of the FSP and whether the representative holds client assets/funds
• Ratio requirements, six monthly reporting and early warning notifications
• Category 2a and 3 representatives


  • Assets must exceed liabilities by at least 3 million rand
  • All representatives' current assets must exceed current liabilities
  • Specific liquidity requirements in terms of liquid assets covering annual expenditure
• Six-monthly reporting


  1. Representatives must complete reporting on assets, liabilities and additional requirements

  2. Reporting must be submitted within 45 days after the end of the six-month cycle
• Early warning notification


  • Notice from the juristic representative to the FSP
  • Sent when assets are more than liabilities by less than 10% or current assets are more than current liabilities by less than 10% or for category 2 and 3 representatives when assets exceed liabilities by less than 3 million rand
  • Also sent if aware of something that may result in the above happening
  • Must be certified by the CEO, controlling member, manager or trustees