On 17 December 2015, the Registrar published the proposed amendments to the fit and proper requirements applicable to the different categories of FSPs, key individuals and representatives. Interested parties are to submit their comments on the proposed amendments to the FSB by 15 March 2016.
In December 2015, the Registrar of Financial Services Providers published the Explanatory Memorandum for Proposed Amendments of Fit and Proper Requirements for Financial Services Providers and Representatives, 2015. The proposed amendments are designed to meet the consumer protection objective of the FAIS Act and to provide clarity on the applicable requirements.
Currently the Fit and Proper Requirements consist of six categories.
- Interpretation, purpose and application (incl. definitions and categories of FSPs)
- Personal character
- Competency requirements ( incl. experience, qualifications and regulatory exams)
- Continuous Professional Development
- Operational ability
- Financial Soundness
While no new categories are being proposed there are some significant changes to the requirements under each category which FSPs will need to meet going forward.
In this edition we take a look at some of the changes proposed to the definitions. We will deal with the balance of the proposed amendments over the next few issues of this newsletter.
PROPOSED NEW DEFINITIONS
There are 3 new sub-categories of financial products proposed which will allow the FSB to set fit and proper requirements at different levels for these.
- Long Term Insurance Sub-Category B1-A – which will include only those long term insurance policies which currently fall into Long Term Insurance Sub-Category B1 which require no or limited underwriting.
- Long Term Insurance Sub-Category B2-A – proposed to be added and will mean those long term insurance policies which currently fall into the sub-category B2 but where the premiums are to be invested in an investment portfolio managed by the product supplier with no option by the policyholder to request a change or amendment to that portfolio.
- Short-Term Insurance Personal Lines A1 – proposed to be added as a new product category and will include the less complex type of short term insurance personal lines products. (Please refer to the draft Determination for the full definition of this proposed new sub-category)
IMPORTANT: If these new sub-categories are implemented, it will be very important for those FSPs who are currently licenced for Long Term Insurance Category B1, Long Term Insurance Category B2 or Short Term Personal Lines to submit an application to the FSB within 2 months after the commencement date of the new fit and proper requirements to include the applicable new product categories on the FSP’s licence and that of the applicable Key Individuals and Representatives.
With so many changes in the pipeline it is vitally important that financial advisors keep abreast of what they need to do in order to remain compliant and in business. As always, Masthead will continue to keep you informed of impending changes and help you to implement any new requirements.
Masthead will consider the impact that the proposed changes to the fit and proper requirements may have on independent financial advisors and their businesses and submit comments to the FSB by the deadline date of 15 March 2016. Your comments, views and opinions can be emailed to email@example.com to assist us in this process.