Catherine Cooper, Regional Director of Compli-Serve KZN
Finding people that you work well with is no easy feat but beyond finding a good fit, are they correctly qualified for the position? Fit and Proper requirements add a new level of compliance to employment choices and can greatly impact representatives (reps) on a financial services licence, whether or not they are new to the firm.
There is only one date on which one is first appointed (DOFA). A rep can gain experience for additional licence categories but cannot exceed the six-year supervision requirement for qualifications. What this means is that if six years from their DOFA has passed, and they don’t have sufficient qualifications for any new licence categories, they need to first obtain the requisite qualifications before they can have the additional licence category added to their rep profile.
New reps have one year from DOFA to acquire Class of Business (COB) training, two years from DOFA RE exams, and six years from DOFA to reach the highest qualification required. They cannot commence with rendering advice on a particular licence category if they have not first passed their product specific exam. It’s important to note that CPD requirements commence once a rep has completed his/her RE exams, COB exams and full qualification, but they could theoretically still be under supervision.
Conducting a thorough questionnaire with each rep can ensure Fit and Proper compliance isn’t falling behind. An FSP must decide which licence categories it would like a rep to be qualified for, and this should be supplied to the HR department and set out as part of the questionnaire and due diligence process. The following should be considered:
- Are they out of supervision and- do they know when they were first licensed, and for which categories? This is to be checked against the DOFA report by the FSP and its compliance officer.
- Their DOFA on an FSP license after 2004. This must be checked against information from the FSCA. A full history must be requested, or the external check can’t be done, and their FSCA forms cannot be completed.
- Whether or not they have passed the RE exams, get a copy of this.
- Were they under supervision for any of the license categories for which you are licensing them, as of 1 April 2018? If not, you need to evidence the appropriate COB exams, which they should have passed. These also need to be supplied by an appropriately accredited provider.
- If they are either not licensed for the specific licence categories or are under supervision for them, there will be deadlines for COB and product specific exams. The deadline for COB exams is a year from the date it was added to their profile, so you need to ask for certified proof of either and all relevant qualifications, including matric and any post-graduate qualifications like an NGF level 5 qualification or degree, where applicable.
An incorrectly licensed representative is a big risk to an FSP
If somebody gives advice and there is a claim and that representative has either not been licensed or has been but is found not to meet the Fit and Proper requirements, the FSP will be at risk of being fined by the FSCA. The FSP may be held liable for a claim submitted to the Ombud’s office from an aggrieved party.
Be clear on where any changes to rep profiles must be sent and ensure you have all the required documents needed to make changes. There are 15 days within which to submit profile changes. The FSCA also audits the Fit and Proper competency of FSPs, so it’s not worth the financial or reputational risk of non-compliance.