This Consultation Paper was published by the FSCA on 31 July 2018 to obtain public commentary on the Draft Exemption of Services under Supervision. The Draft Exemption allows a Representative who does not fully meet the competency requirements to work under supervision subject to compliance with certain conditions. Masthead has published a short series of 4 articles based on the consultation paper, and this is the last article in the series.
In this article, we focus on Conditions 5 and 6 of the Draft Exemption of Services under Supervision. These Conditions set out the duties of the supervisor and the representative respectively.
1. Duties of the Supervisor
The duties of the Supervisors are about ensuring that there is proper development and supervision over Representatives for whom they are responsible. Briefly, they include the following:
a) To implement and ensure compliance with the supervision agreement; (This obviously means that an agreement should be in place and the Supervisor needs to follow it.)
b) To mentor and coach the Representative with regard to the categories of financial services and financial products for which the rep is appointed;
c) To review and assess the Representative;
d) Reporting of the Representatives actions to the FSP, in relation to the treatment of clients (one can pick up here the importance of TCF);
e) Record and document the supervision arrangement;
(It is our view that the Supervision Arrangement refers to the method, frequency and level of intensity of the supervision. The Draft Exemption does not prescribe what supervision arrangements must be applied. This is in line with the Regulator’s move to a more principle-based approach to regulation. Therefore, it is for the FSP to determine the supervision arrangements, taking into consideration the factors set out in the Draft Exemption.)
f) To create a supervision file containing records relating to the supervision.
2. Duties of the Representative
2.1 Where a Representative does not meet the Qualification Requirements:
a) Representatives (other than a specific representative) must enrol for a relevant recognised qualification within 2 years from date of appointment and provide their supervisor with proof of the enrolment. (Despite it being the responsibility of the Representative, we would advise that the Supervisor proactively ensures that this is done.)
b) A specific Representative (as defined in the Draft Exemption) must enrol for a relevant recognised qualification within 2 years from the date on which it was first appointed as a Representative to render financial services in respect of a Tier 1 financial product (other than the execution of sales in terms of section 22(b)(ii) of the Fit and Proper requirements) and provide their supervisor with proof of the enrolment. (Again, we would advise that the Supervisor proactively ensures that this is done.)
2.2 General duties:
In addition to the above responsibility on Representatives, they must –
a) Actively pursue the completion of the recognised qualification within the prescribed time limits;
b) Adhere to the provisions of the supervision agreement;
c) Disclose to clients that they are rendering financial services under supervision.
Masthead has submitted commentary to the FSCA on the proposed Exemption of Services under Supervision. While these are merely proposals at this stage, we advise that Supervision Plans, Arrangements, Agreements and all other records relating to supervision in your practice are reviewed with a consideration to the changes that will be brought about once the Exemption comes into operation.