In terms of section 19(2) of the FAIS Act, all FSPs are required to submit financial statements to enable the FSB to determine if a FSP complies with the financial soundness requirement in terms of the Fit and Proper Requirements (BN 106 of 2008). These financial statements must be signed by the relevant person(s) before they are submitted.
All authorised FSPs must submit statutory returns on time to avoid penalties that might be imposed on them. The financial statements must be submitted within 4 months after the financial year end of such a business, e.g. if your year end is 28 February then the financials must be submitted before 30 June of that same year. It remains the responsibility of the FSP and Key Individual to ensure that these reports are submitted within the prescribed period.
A FSP must maintain a positive solvency level and this means that assets (excluding goodwill and other intangible assets) must exceed liabilities (excluding subordinated loans).
FSPs should ensure that where the statutory solvency levels have not been met, a letter explaining the reasons for the insolvency is submitted together with the financial statements to speed up the process. One of the reasons why a FSP’s assets may not exceed the liabilities is the fact that loan accounts owing to the directors / member or owners often lead to the liabilities exceeding the assets. The option to subordinate these loans should be discussed with the accountants / auditors and where appropriate such an agreement should be put in place as soon as possible and a copy sent with the financial statements.
For FSPs that have a separate bank account, for receiving client’s monies or premiums, an additional Audit report must be submitted in accordance with section 19(3) of the Act. Short Term insurance brokers who hold a valid IGF are exempted from this provision. Those FSPs who are only approved in the Long-term Insurance: Category A and Friendly Society Benefits subcategories must have their report signed off and submitted by their accounting officer, and not an auditor.
Penalty for late submission could be imposed and could also result in the suspension of the FSP’s licence until such time as the financial statements are submitted and analysed by the FSB. During this period of suspension the FSP is not allowed to trade and all commission payments are stopped by product providers. The FSB would endeavour to have the suspension lifted within 48 hours once all the documents are received and no other aspects of the financial statements raises questions. These outstanding documents can be emailed to the analyst allocated to the FSP’s account or Fais.Compliance@fsb.co.za.
Should the FSP require an extension the accountant/auditor or Key Individual can apply for such extension through the FAIS online system (once registered) or a request can be emailed to Faisfins2@fsb.co.za or Faisfins3@fsb.co.za. It is always recommended that these requests are sent to the FSB well before the deadline for submission is due.
The statements can only be submitted through the FAIS online system or hand delivered through courier or sending it to the FSB through registered post to: (NEVER FAX your statements)
The Registrar of Financial Services Providers
Attention: FAIS Supervision – Financial Statements
PO Box 35655
For more details on the manner and form, which documents should be included in your statutory returns or the process of submissions, visit the FSB website: