In December 2015 the Registrar published an invitation to comment on the proposed amendments which will be made to the current Professional Indemnity Requirements. The deadline date for submissions on the proposed amendments is set at 28 February 2016.
The Registrar of the FSB has published proposed amendments to the Professional Indemnity (PI) requirements for public comment. The proposed amendments to the PI requirements are applicable to the different categories of financial services providers.
The reasons given for the proposed amendments include; to enhance the PI requirements in order to achieve the objectives of the FAIS Act and to address the practice of FSPs obtaining unsuitable guarantees.
The proposals remove the option for FSPs to maintain suitable guarantees in place and only allow for professional indemnity and, where required, fidelity insurance issued by a registered insurer.
The proposed changes will mainly affect Category II, IIA and III FSPs who do not receive or hold clients’ financial products or funds as they will be required to maintain the same cover as those that do. The FSB is of the view that there are inherent risks associated with the activities of these FSPs, irrespective of whether or not they receive or hold clients’ funds and the fact that they may exercise some form of control over client assets.
Interested parties are invited to submit their written submission on the proposed amendments to FAIS.Consultation@fsb.co.za by 28 February 2015.
As always, Masthead will carefully consider the effect of the proposals on our members and provide appropriate submission to the FSB.