conditions attached such as: what types of services can be offered - - PowerPoint PPT Presentation

Requirements for an FSP to maintain a license

• Licensing condition
• Each license that is issued by the Registrar has

conditions attached such as:  what types of services can be offered  which category or subcategory the FSP can

• perate in.
• When applying for authorisation it must be

submitted in the form and manner as determined by the Registrar

• The application also needs to be accompanied by

sufficient information to satisfy the Registrar that the applicant is fit and proper.

• Licensing condition
• FSP’s should have adequate systems and processes

(internal controls) in place to ensure that they can comply with the conditions of their license.

• FSP’s can have more that one license so as to

expand what services or products they're allowed to offer.

• The Registrar may also request from the applicant

any additional information that he deems necessary.

• The Registrar may also take any other information

regarding the applicant or proposed key individual of the applicant into account, obtained from any source including the Ombud.

Requirements for an FSP to maintain a license

Requirement Responsibility No one may offer financial services to clients

• n behalf of an un-authorised FSP

Representatives must ensure that they don’t

• ffer services on behalf of an un-authorised

FSP Representatives must confirm to clients that they are acting on behalf of the FSP as an employee or under a mandate. Representatives should ensure that the relevant documentation is available and used to confirm the required information to clients All debarred Representatives must have followed the procedures for reappointment of a debarred rep before they can act as a rep again. The Representatives must ensure that the conditions of section 2 of BN82 of 2003 must have been met before applying for reappointment. The FSP must at all times ensure that Representatives and key individuals are fit and proper and comply with all applicable codes of conduct. The FSP is responsible for its Representatives & key individuals fit and proper status. The FSP can implement internal rules to promote compliance with the code of conduct but reps must ensure that they understand what is required of them, and obey

Remaining updated with legislation

• It is crucial for FSP’s to remain up to date with

legislation and there are three main areas that need to be observed:

• Security related legislation
• Insurance specific legislation
• Consumer protection legislation
• The FSP should ensure that they have the necessary

procedures and systems in place to identify and flag changes in legislation for E.g. a subscription to moonstones newsletter or risk SA magazine.

• Representatives should also actively seek

information about legislative changes

Undesirable business practices

• Any actions that lead directly or indirectly to the

below effects are considered undesirable business practises.

• Harm relations between FSP’s, clients or the

general public.

• Cause unreasonable prejudice to clients.
• Deceive clients.
• Unfairly affect clients.
• If allowed to continue will defeat one or more
• bjects of the FAIS Act.

The Process of Declaring a practise undesirable

• The registrar first published an intention to make a declaration

and allows the FSP a chance to respond.

• The registrar then officially publishes the declaration and the

FSP must legally stop with the undesirable practise from the date of the declaration going forward.

• If the FSP ignores the declaration and continues with the

undesirable practise then the registrar may inform the FSP to rectify or reinstate any damages or loss caused to other FSP’s or clients.

• Once issued with the order to rectify or reinstate any damages

the FSP has 60 days to do so.

• If the FSP does not rectify or reinstate the damages then they

could face a fine of not more than R10 million or imprisonment

• f not more than 10 years.

Displaying of Licenses

• All FSP licenses must be displayed in a durable and prominent

manner within each of the business premises.

• The license must always be available immediately or within a

reasonable time to any person who has a legal right to request it or wants to enter into a business relationship with the FSP.

• All advertisements, business documentation and promotional

material must make reference to the FSP’s license. NB!! It is not necessary to refer to the license number in promotional material

• The license must be available for production to anyone who

requests proof that the business is licensed.

• Certified copies of the license may be used for display purposes

Suspension or withdrawal of license

• Reasons for suspension or withdrawal:
• No longer meets the fit and proper

requirements.

• Didn’t disclose all required information when

applying for the license.

• Submitted false or misleading information

when applying for the license.

• Failed to comply with any aspects of the FAIS

act.

• Still owes levies, penalties or administrative

sanctions to the FSB.

• Doesn’t have a key individual.

Process of suspending or withdrawing a license

• When the registrar is planning on suspending or withdrawing a

license the following process is followed. Step 1: The registrar may consult a regulatory authority before taking action Step 2: The registrar must firstly inform the FSP of the intention to suspend or withdraw the license and provide the FSP with certain information and give them a chance to respond

• NB!! the registrar must provide the FSP with the following

information:

• the intended period of suspension.
• the terms and conditions attached to the suspension or

withdrawal.

Step 3: the registrar must then consider the response received from the FSP and decide whether or not to suspend or withdraw the license Step 4: if the registrar decided to suspend or withdraw a license then he must publish the suspension or withdrawal with reasons and conditions on the official website and public media. NB!! If the FSP’s license gets withdrawn then the licensee will be debarred from applying for a new license for a period specified by the registrar

• Suspensions and withdrawals of licenses are the result of non-

compliance with requirements of the FAIS Act NB!! such terms and conditions may include

• the prohibiting of new business and protection of

client interests regarding un-concluded business

• what terms need to be met to lift the suspension.

Process of suspending or withdrawing a license

Suspension and withdrawal

• Recourse for the FSP:
• The FSP is given an opportunity to respond to the registrar

following which the registrar then makes a final decision on whether or not to suspend or withdraw the license.

• In the case of a provisional suspension or withdrawal after

considering the FSP’s response the registrar will then decide

• n whether or not to:

 lift the provisional suspension or withdrawal or  to make it final.

• NB!! If the license has been suspended or withdrawn either

provisionally or finally the FSP can no longer act as a FSP until the suspension has been lifted or a new license is approved by the registrar.

Lapsing of a license

• The license of an FSP who is a natural person may

lapse in the following instances:

• The licensee is finally sequestrated
• The licensee dies
• The licensee becomes permanently unable to

carry on business because of physical or mental disease or serious injury

• The license of an FSP who is a juristic person may

lapse in the following instances.

• The FSP is liquidated or dissolved
• The business has become dormant
• The FSP’s license is surrendered to the registrar

• The licensee, key individual or any other person in

control of the affairs of the licensee must advise the registrar in writing of the lapsing of the license and reasons therefore.

• The registrar may publish the lapsing of a license on

the official website or in any other public media. Lapsing of a license

The Roles, Powers & Requirements of the FAIS Ombud

• The role of the FAIS Ombud is to resolve disputes relating to the

rendering of financial services by providers where they:

• Either failed to comply with the FAIS act or
• Have due to wilful or negligent conduct caused the client to

suffer or

• will potentially cause clients to suffer prejudice or damage.
• The FAIS Ombud acts independently and objectively and takes

no instructions from any person regarding the exercise of authority.

• The services provided by the Ombud are not the same as a legal

advisor but are instead limited to investigation and determination of complaints relating to the FAIS Act.

• The Objective of the FAIS Ombud is to consider and dispose of

complaints in a procedurally fair, informal, economical and expeditious manner and according to what is fair in all circumstance.

The Powers of the FAIS Ombud

The FAIS Ombud is authorised to investigate and adjudicate(make a decision on) complaints by clients against FSP’s and Representatives.

• Complaints could relate to:
• Areas of non-compliance by the FSP
• Financial services being offered negligently
• Wilfully committing misconduct whilst offering a financial

service.

• Compensation could vary from:
• Ordering the complainant to be placed in the position that

he or she would have been, had it not been for the misconduct of the representative.

• Simply correcting a misunderstanding.

The Jurisdiction of the FAIS Ombud

• The Ombud must decline to investigate any compliant that relates to an

act or omission that occurred more than 3 years ago,

• But the three year period only starts when the client became

aware or should have reasonably become aware of the problem.

• The Ombud must decline to investigate any complaint where

proceedings have already started in any court.

• If the Ombud decides that it is more appropriate for the complaint to

be dealt with by a court or through any other available dispute resolutions process then he can decline to entertain the complaint.

• The FAIS Ombud can not entertain any claims with a value in excess of

R800 000 unless the FSP agrees in writing to the limit being exceeded

• r the client is willing to abandon the excess amount.
• The FAIS Ombud’s determination has the same legal effect as a

judgment of a court.

Procedures when investigating a complaint

• The FAIS Ombud can use various methods to resolve

complaints and disputes. He can use:

• conciliation
• negotiation
• mediation
• He will first try to find an acceptable solution that is

agreed to by both parties which he does by making

• recommendations. If the two parties do not both

agree then the Ombud will need to make a determination.

• For the detailed process of how the Ombud deals

with complaints see pg 92 of the Inseta manual.