The Financial Sector Conduct Authority (FSCA) recently published two notices on Continuous Professional Development (CPD). These are:
- FSCA Communication 2 of 2019 (FAIS) – Continuous Professional Development (CPD)
- FSCA FAIS Notice 40 of 2019: Exemption from Continuous Professional Development Requirements, 2019 – No. 2 of 2019
General CPD Guidance
The FSCA Communication 2 of 2019 (FAIS) – Continuous Professional Development (CPD) provides general guidance in respect of the requirements relating to CPD, and addresses frequently asked questions received from Industry.
Some of the issues discussed are:
- The Competence Register – The FSCA confirms that it has not yet prescribed the form, manner and intervals in which FSPs must submit the competence register to the FSCA. FSPs are advised to continue maintaining these registers as they will be required to submit the competence register once this information is requested by the FSCA.
- Embedding CPD – CPD must be planned, implemented, maintained and monitored by the FSP on an on-going basis to ensure that that it maintains, updates, and acquires new knowledge and skills that is appropriate to the activities and responsibilities of the individual.
- The type of CPD activities undertaken – These activities must, inter alia, be relevant to the role and function of the FSP, KI and Rep. It must also contribute to their knowledge and skill and address any identified gaps or needs.
- Frequently asked questions regarding the application of the CPD requirements and non-compliance with the CPD requirements.
FSPs are encouraged to read this communication thoroughly to make sure that in the 2019 CPD Cycle (i.e. 1 June 2019 – 31 May 2020) the type of CPD activities completed do not only “tick-the-box” of meeting the required number of hours but are also relevant and appropriate. This means that there should be a spread of topics covered that are relevant to the different classes of business, financial products and services that a KI or Rep is approved or appointed for, relevant regulation and any other identified gaps in knowledge, skill or expertise.
The other publication, FSCA FAIS Notice 40 of 2019: Exemption from Continuous Professional Development Requirements, 2019 – No. 2 of 2019, is an exemption that affords individuals who had not met the required number of CPD hours by 31 May 2019 a further 2 months to do so, i.e. until 31 July 2019.
Therefore, FSPs, KIs and Reps still have until 31 July 2019 to comply with the CPD requirements as set out in the Determination of Fit and Proper Requirements for Financial Services Providers, 2017, in respect of the 2018 CPD cycle (i.e. 1 June 2018 – 31 May 2019).
It should be noted that –
- the Exemption does not detract from the CPD hours required for the next CPD cycle, i.e. 1 June 2019 until 31 May 2020 (“2019 CPD cycle”);
- the Exemption does not affect the period of the 2019 CPD cycle. In other words, the 2019 CPD cycle still commenced on 1 June 2019 and will end on 31 May 2020;
- the CPD hours completed for the 2018 CPD cycle in the exemption period (1 June 2019 until 31 July 2019), cannot be calculated towards the 2019 CPD cycle; and
- CPD hours completed in the exemption period (1 June 2019 until 31 July 2019) by those who complied with the CPD requirements for the 2018 CPD cycle (i.e. met the required hours by 31 May 2019), will be awarded towards the 2019 CPD cycle.
The rationale for the Exemption has been explained in FSCA Communication 2 of 2019 and reads as follows:
“One of the objectives of the FAIS Act is to professionalise the financial services industry and to protect financial consumers. A careful balance must be struck between these duties of the Authority and the feedback received from the financial services industry stakeholders.
From the feedback received, it appeared that there was confusion regarding the manner of accumulation of CPD hours as well as sources of CPD training that complied with the requirements.
This is the first year of implementation and past experience has shown us that there is often a high level of non-compliance in the first period. Due to the fact that the consequences for non-compliance is removal from the register and thus an inability to earn income, or debarment which could result in job losses, the FSCA took the decision to mitigate this risk by affording an additional 2 months to comply with the CPD requirements.
The Authority was of the view that the dispensation granted would not conflict with the public interest, prejudice the interests of clients or frustrate the achievement of the objects of the FAIS Act.
It should be noted that this dispensation will not be repeated in future. FSPs, key individuals and representatives must ensure that in the next CPD cycle the proper policies, procedures and processes are in place to comply with the deadline of 31 May 2020.”