Page 86 - Profile's Unit Trusts & Collective Investments - March 2026

Chapter 5 Legislation and guidelines

R The knowledge and skills to meet the obligations
Advice imposed by the FAIS Act
Advice is defined under the FAIS Act R Financial soundness (ie, if you can’t look after
as “any recommendation, guidance your own financial affairs, you shouldn’t be giving
or proposal of a financial nature advice to others)
furnished, by any means or medium, to any client or Where a FSP is a company or other organisation, the Fit
group of clients”. and Proper Requirements apply to all “key individuals”,
Excluded from the definition of advice are the display defined in the Act as “any natural person responsible for
of marketing material and conveying of purely factual managing or overseeing” the financial services activities
information, such as procedures for entering into of the company.
transactions or answers to routine administrative The FAIS Act allows for different categories of FSPs,
queries. Advice given by board members of pension so that in practice licenses are issued at different levels
funds or friendly societies to members about benefits and for different areas of competence.
is also specifically excluded. Once licensed, an authorised FSP must ensure that a
The definition of financial products under the FAIS Act certified copy of the license is displayed “in a prominent
is also broad, and includes all collective investment and durable manner” in each of its offices. FSPs must
schemes, shares, debentures, money market also make sure that they refer to the license in all official
instruments, long or short term insurance products, correspondence, brochures, other marketing material
offshore investments and cryptocurrencies. 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
Swedish roots Fit and Proper were published after 2008 (when the
The dictionary definition of an Ombud first requirements were tabled), the requirements did
(originally Ombudsman) is “an official not change substantively until Board Notice 194 was
appointed in Britain to investigate published in December 2017 replacing earlier versions
complaints against public authorities”. The term is of the Registrar’s Determination of Fit and Proper
derived from a Swedish word meaning commissioner Requirements for FSPs.
or legal representative. 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)
R 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
R A stricter approach to determining if individuals live up to the “honesty and integrity” provisions
(which now also include the term “good standing“)
R Significant modifications to the qualifying criteria for the regulatory exams
R Inclusion of FSPs and juristic representatives in the financial soundness criteria
R Introduction of a “liquidity calculation form”
R Greater emphasis on staff competency
R 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)
R The introduction of six new product categories
R Expanded requirements for companies offering automated advice
Many of the revised Fit and Proper Requirements impacted the training needs of KIs and
representatives.

84 Profile’s Unit Trusts & Collective Investments March 2026