Here is a summarised version of FSCA FAIS Notice 86 of 2018

This Exemption comes into effect on 1 February 2019, except for certain conditions specified hereunder.

FSCA FAIS Notice 86 of 2018 now provides clarity on the Class of Business requirements for reps under supervision as outlined in the Fit and Proper Determination. It also gives relief in terms of the regulatory exams for reps currently working under supervision as far as the new deadlines are concerned.

Important definitions
 

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A "supervised representative" means a representative who does not meet one or more of the four competency requirements (experience, qualification, regulatory exam and class of business) and who renders financial services under supervision;

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"Supervision" means the guidance, instruction and oversight, by any means or medium, by a supervisor using a variety of assessment, observation and oversight methods or tools that are appropriate for the assessed level of competence of the supervised representative.

The exemption therefore applies to all supervised representatives rendering financial services under supervision and requires compliance with the conditions as set out in FSCA FAIS Notice 86 of 2018 which replaces Board Notice 104 of 2008, the previous “Supervision” Board Notice.
 
Unpacking the Notice

1. Entry level requirements

A supervised representative of a Category I or IV FSP

A Category I FSP that is appointed only to perform the execution of sales

A Category II, IIA or III FSP

(i) a Grade 12 National Certificate; or
(ii) a qualification equivalent to a Grade 12 National Certificate

(i) a Grade 10; or
(ii) an academic achievement equivalent to Grade 10

A qualification recognised in terms of section 24 of the Fit and Proper Requirements for a representative of a Category II, IIA or III FSP respectively.

Note: The entry level requirements do not apply to a supervised representative of a Category I FSP that is appointed to only render financial services in respect of the financial products: Long-term Insurance subcategory A and/or Friendly Society Benefits.

2. Specific compliance periods
 
Condition 2 of the FAIS Notice describes the specific compliance periods with regards to the following requirements:

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Regulatory Exams

A supervised representative has 2 years from date of first appointment to comply with the applicable regulatory examination requirements. The mid-year provision now falls away, but not for those currently working under supervision. In other words, if you were for instance appointed on 1 February 2017, you have until 30 June 2019 to pass the exam. Those who only render financial services for Tier 2 products or perform execution of sales functions only are exempt from the REs. Should this change, you will be obliged to write the REs.
 

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Class of Business Training

A supervised representative must within 12 months from the date on which he or she was first appointed as a representative in respect of a particular financial product comply with the class of business training requirements applicable to that financial product. Reps who are currently working under supervision also have 12 months to do so.
 

Qualification

A supervised representative has six years from the date of first appointment in respect of a particular financial product to comply with the qualification requirement.
 

CPD

A supervised representative must comply with the applicable CPD requirements from the date on which he or she meets the class of business training requirements, regulatory examination requirements and qualification requirements.
 

Experience

A supervised representative must remain under supervision until assessed as having the required experience in respect of the particular category financial services and financial products for which it is appointed. This period may not be shorter than the applicable prescribed minimum period.


3. Supervision agreement


It is now not only a requirement that a formal agreement is drawn up between the FSP and the rep – the details of such a contract is actually spelt out in detail in FAIS Notice 86. The table below outlines by when it must be in place.

Condition

Effective Date

Supervised reps appointed on or after 1 December 2018

1 March 2019

Supervised reps appointed before 1 December 2018

1 June 2019

In other words, existing reps under supervision has to have a supervision agreement in place by 1 June. For new appointments, this should form part of their employment contract.

4. Duties

The duties of the FSP, Supervisor and representative are clearly outlined in conditions 4 – 6. It is important that the different role players familiarise themselves with the required duties.

5. Intensity of supervision

Condition 7 places the onus on the FSP to ensure that the supervision arrangements are suitable in respect of the nature of the services rendered, the competency levels of reps and has regard for the risk to both clients and the FSP. It also requires regular review of the appropriateness, effectiveness and adequacy of these arrangements.

Please take time to study this document carefully. It is evident from the paragraph above that the onus is now on you to ensure that supervision gets the attention it deserves.

Please go to the following address for the FSCA FAIS Notice 86 of 2018

https://www.fsca.co.za/Notices/FSCA%20FAIS%20Notice%2086%20of%202018.pdf