Page 90 - Profile's Unit Trusts & Collective Investments - March 2025

CHAPTER 5

Introduction of a “liquidity calculation form”
Greater emphasis on staff competency
Splitting of products into two tiers which affect competency requirements (ie, Tier 2
products are considered less complex and compliance requirements are less onerous, but
collective investments fall under Tier 1)
The introduction of six new product categories
Expanded requirements for companies offering automated advice
Many of the revised Fit and Proper Requirements impacted the training needs of KIs and
representatives.
Further amendments to the Fit and Proper requirements (GN707) that were published on
26 June 2020 were primarily introduced to align the terminology in Fit and Proper with the new
insurance acts.
One point worth noting is that the revised definition of a “CPD activity” stipulates that a
professional body may only approve an activity that is verifiable.

Duties of Authorised FSPs and FSPRs
Once licensed, an authorised FSP has a number of duties and obligations. These are aimed at
ensuring that the FSP continues to meet the FAIS requirements and deals with clients in a “fit and
proper” manner.
Amongst the duties imposed by the Act, the FSP must:
Appoint a compliance officer (unless there is only one “key individual” and no
representatives are employed)
Maintain records for at least five years. These records must include:
Information about all premature cancellations of financial products (this applies to
products with a defined term, like endowments)
Details of all complaints received from clients, with information about how the
complaint was resolved
Details of any cases of non-compliance with the FAIS requirements, and reasons for
non-compliance
Maintain full and proper accounting records, which should be updated continuously and
reconciled and checked on at least a monthly basis
Prepare detailed annual financial statements according to generally accepted accounting
practice
Representatives (FSPRs) have specific duties and obligations in terms of FAIS, and the Act also
places certain obligations on FSPs in relation to the FSPRs which they employ. In terms of FAIS:
A representative must be able to provide confirmation to clients (ie, a certified
documentation from the FSP) which shows that the representative has a service contract
with the FSP.
It must be clear that the FSP accepts responsibility for the representative’s activities within
the scope of the service contract.
In turn, the FSP must be satisfied that all representatives in its employ (and this includes “key
individuals” of the FSP if the latter is also a firm) are competent to provide the services offered by the
FSP. While representatives must comply with the Fit and Proper Requirements, the FSP must also
take some responsibility, in terms of the Act, for ensuring that FSPRs comply with the FAIS code of
conduct and the internal rules of the FSP. FSPs must maintain registers of representatives and key
individuals, which must be regularly updated and must be available to the Registrar.

88 Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts