Page 89 - Profile's Unit Trusts & Collective Investments - March 2025

Legislation and Guidelines

The definition of “advice” under the FAIS Act is
Advice very broad, and includes advice about almost any
Advice is defined under FAIS as financial or investment activity. Even if advice is
“any recommendation, guidance or incidental to financial planning, and even if it does not
proposal of a financial nature result in a transaction, it falls under the auspices of
furnished, by any means or medium, to any the Act. The FAIS Act seeks to ensure that anyone
client or group of clients”. giving any kind of financial advice in a professional
Excluded from the definition of advice are the capacity is subject to its rules.
display of marketing material and conveying of
purely factual information, such as procedures Fit and Proper Requirements
for entering into transactions or answers to The Fit and Proper Requirements apply to both
routine administrative queries. Advice given by financial services providers and representatives. In
board members of pension funds or friendly terms of FAIS, no person may act as an FSP unless
societies to members about benefits is also licensed to do so in terms of Section 8 of the Act. In
specifically excluded.
order to licence a person, the FSCA must be satisfied
The definition of financial products under FAIS that applicants satisfy the requirements for “fit and
is also broad, and includes all collective proper” FSPs.
investment schemes, shares, debentures,
money market instruments, long or short-term There are three main requirements of fit and
insurance products, offshore investments and proper:
cryptocurrencies. Personal characteristics of honesty and integrity
The knowledge and skills to meet the obligations
imposed by the FAIS Act
Swedish Roots Financial soundness (ie, if you can’t look after
your own financial affairs, you shouldn’t be giving
The dictionary definition of an
ombud (originally ombudsman)is advice to others)
“an official appointed in Britain to Where a FSP is a company or other organisation,
investigate complaints against public the Fit and Proper Requirements apply to all “key
authorities”. The term is derived from a Swedish individuals”, defined in the Act as “any natural person
word meaning commissioner or legal responsible for managing or overseeing” the financial
representative. services activities of the company.
FAIS allows for different categories of FSPs, so
that in practice licenses are issued at different levels and for different areas of competence.
Once licensed, an authorised FSP must ensure that a certified copy of the license is displayed “in
a prominent and durable manner” in each of its offices. FSPs must also make sure that they refer to
the license in all official correspondence, brochures, other marketing material and advertisements.
Obviously an FSP must be able to produce the original copy of the licence on demand.
Although several FSCA notices that impacted on Fit and Proper were published after 2008
(when the first requirements were tabled), the requirements did not change substantively until
Board Notice 194 was published in December 2017 replacing earlier versions of the Registrar’s
Determination of Fit and Proper Requirements for Financial Service Providers (FSPs).
The new requirements which came into effect in April and May 2018 altered the way in which
FSPs, representatives and Key Individuals are evaluated against the Fit and Proper criteria. Some of
the main changes since 2008 include:
The requirement that FSPs ensure that KIs and representatives achieve the requisite
Continuous Professional Development (CPD) points (and verify and record CPD activities in a
register)
An adjustment in required CPD hours (now 6 to 18 hours annually depending on licence
category) linked to specific activities accredited by a professional body (such as the Financial
Planning Institute (FPI)) for CPD purposes
A stricter approach to determining if individuals live up to the “Honesty and Integrity”
provisions (which now also include the term “Good Standing“)
Significant modifications to the qualifying criteria for the Regulatory Exams
Inclusion of FSPs and Juristic Representatives in the Financial Soundness criteria

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