Before you appoint a representative to work under supervision at your Financial Services Provider (FSP), take time to understand your responsibilities in terms of labour legislation, financial sector regulation and principles.
The individual you appoint must be honest, have integrity and be of good standing. Information that might affect their fit and proper status must be disclosed upfront. The individual should not be on the list of debarred representatives – this list can be viewed on the FSCA (the previous FSB) website. Representatives should be asked to sign a declaration when appointed and annually thereafter to confirm that they comply with the Fit and Proper requirements.
Deadlines to qualify
Representatives under supervision have a time limit in which to complete their qualification and Regulatory Examinations and meet the relevant Fit and Proper requirements. The time period starts with an individual’s date of first appointment (DOFA). A DOFA does not change, even if another FSP appoints the individual as a representative under supervision. The FSCA can confirm individuals’ DOFAs.
To be approved or appointed, representatives under supervision must pass the Regulatory Examinations by the 30th of June following 24 months from the DOFA. By the 30th of June following 72 months from the DOFA, they need to have completed the necessary qualification, or obtained a full qualification that is acceptable to the Authority.
As the different services linked to a financial product category each have specific experience requirements, you will need to decide in which products the representative under supervision will render financial services. The individual must have appropriate experience, as stipulated by the Fit and Proper requirements.
Product specific training
Representatives under supervision must also undergo product specific training in terms of the new Fit & Proper requirements. Individuals who were under supervision on 1 April 2018 or were appointed in April 2018 need to complete product specific training by 31 July 2018.
Those appointed after 30 April 2018 now need to complete product specific training before rendering financial services. In previous years, they could advise on and/or sell their products before completing product training and becoming accredited.
Class of business training
Another new requirement is class of business training. Representatives under supervision need to complete the training by 31 July 2019 for the different classes for which they are authorised. Individuals appointed after 31 July 2018 need to complete the training before rendering financial services. However, once the FSCA has reviewed the requirements for Representatives under supervision, there will be greater clarity as to whether they will be granted a period of time in which to complete the class of business training.
Continuous professional development (CPD)
Furthermore, representatives need to complete CPD activities between 1 June and 31 May every year. CPD requirements differ depending on the licence categories and sub categories for which they are registered. The minimum number of hours spent on CPD activities ranges from 6 to 18 hours per 12-month cycle, for example:
- 18 hours for representatives registered for more than one class of business (this applies for most Masthead members),
- 12 hours for representatives registered for more than one subclass of business within a single class of business,
- 6 hours for representatives registered for a single subclass within one class of business.
The exemption in respect of services under supervision  exempted representatives acting under supervision from CPD. However, the FSCA has indicated that they are busy reviewing the requirements relating to representatives under supervision which will provide clarity in respect of CPD for these representatives.
Look for exceptions that may apply to the above, including individuals being registered for certain product categories only. For example, representatives appointed only for Long-term Insurance subcategory A and/or Friendly Society Benefits are exempt from class of business training.
At appointment stage, individuals need to be clear about their responsibilities. It is also important to discuss and agree who will be paying for training and include this in the agreement between the FSP and the individual.
You also need a supervision agreement in place that sets out the responsibilities of the supervisor and the supervisee, and a supervision plan to record the supervision activities. Keep in mind that all representatives should be monitored and not only representatives under supervision. Record must also be kept of your monitoring activities.
In addition, the individual’s competence requirements must be recorded in a competence register. This must include qualifications, RE exams, class of business and product specific training and CPD. In addition, the FSP must keep a record of FICA training, training in respect of the FSP’s conflict of interest management policy and all other policies the FSP has implemented, regular monitoring of Fit and Proper status, identifying gaps in skills or training needed and ensuring that CPD is maintained.
Appointing a representative under supervision requires a lot of responsibility. Before making an appointment, consider if you have the capacity to perform the duties as required and still be able to effectively manage your FSP.
Key Individual Responsibilities – Understanding your Role and Obligations seminar
Register for this seminar and learn about:
- the importance of acting with due care, skill and diligence in the execution of all Key Individual duties
- acting within the standards and rules set by legislation, and
- be able to describe the role of the Key Individual and monitoring of Representatives and Services under supervision.