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

Legislation and guidelines Chapter 5

The Act requires all FSPs and FSPRs to meet certain
standards (the Fit and Proper Requirements) in terms of Advice
knowledge, skills and ethics in order to be licensed. The Advice is defined under the FAIS Act
Act also requires FSPs to appoint compliance officers,
who must ensure that organisations comply with the as “any recommendation, guidance
or proposal of a financial nature
FAIS Act. It also establishes an Ombud, who provides a
formal mechanism for dealing with complaints. furnished, by any means or medium, to any client or
group of clients”.
The FAIS Act makes it illegal for any person to act as an
FSP unless that person has been granted a license. An Excluded from the definition of advice are the display
FSP, among other things, is any person who gives advice of marketing material and conveying of purely factual
on financial matters and/or provides an intermediary information, such as procedures for entering into
service as part of his or her regular business. transactions or answers to routine administrative
queries. Advice given by board members of pension
The definition of “advice” under the FAIS Act is very funds or friendly societies to members about benefits
broad, and includes advice about almost any financial or is also specifically excluded.
investment activity. Even if advice is incidental to financial
planning, and even if it does not result in a transaction, it The definition of financial products under the FAIS Act
falls under the auspices of the Act. The FAIS Act seeks to is also broad, and includes all collective investment
ensure that anyone giving any kind of financial advice in schemes, shares, debentures, money market
a professional capacity is subject to its rules. instruments, long or short term insurance products,
offshore investments and cryptocurrencies.
Fit and Proper Requirements
The Fit and Proper Requirements apply to both
financial services providers and representatives. In Swedish roots
terms of the FAIS Act, no person may act as an FSP The dictionary definition of an Ombud
unless licensed to do so in terms of Section 8 of the Act. (originally Ombudsman) is “an official
In order to licence a person, the FSCA must be satisfied appointed in Britain to investigate
that applicants satisfy the requirements for “fit and complaints against public authorities”. The term is
proper” FSPs. derived from a Swedish word meaning commissioner
There are three main requirements of fit and proper: or legal representative.
R Personal characteristics of honesty and integrity
R The knowledge and skills to meet the obligations imposed by the FAIS Act
R Financial soundness (ie, if you can’t look after your own financial affairs, you shouldn’t be
giving advice to others)
Where a FSP is a company or other organisation, the Fit and Proper Requirements apply to all
“key individuals”, defined in the Act as “any natural person responsible for managing or overseeing”
the financial services activities of the company.
The FAIS Act 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 FSPs.
The new requirements which came into effect in April and May 2018 altered the way in which
FSPs, representatives and key individuals (KIs) are evaluated against the Fit and Proper criteria.
Some of the main changes since 2008 include:
R 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)

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