More than 11 000 FSPs in South Africa, their representatives and key individuals, have to comply with the FAIS “fit and proper” competency requirements to continue their advisory businesses. It's vital to complete these accreditations to avoid the risk of giving advice as an unaccredited and non-competent adviser.
FSCA Board Notice 194 lays out the “fit and proper” requirements advisers must meet. “I am very much in favour of the fit and proper regime as it goes a long way to professionalising financial services,” says Billy Seyffert, chief operations officer at Moonstone Compliance.
A key element of the fit and proper requirements is competency, which advisers are required to maintain while they are practising. This entails:
- Completing CPD
- Ensuring product training is up to date
- A certain number of hours must be completed annually, running from 1 June to 31 May each year.
- CPD hours depend on the class of business. For example, you need to complete 18 hours of CPD if you sell and advise on more than one class of business such as short-term and long-term insurance, and six hours if you only advise on one class of business.
- CPD for representatives may differ from CPD required for professional designations such as a CFP. Seyffert says you must be sure that your CPD hours are recognised as CPD for your FAIS designation.
- CPD is pro-rata’d if you are seriously ill (for example in hospital with COVID-19), or on maternity leave, or achieve competency during the 12-month cycle.
Product provider training
Product specific training is required for each product, and every time the product changes. Failure to complete product training will mean an adviser is no longer authorised or accredited to sell that product.
Step 2: Schedule and attend training
“Be proactive and manage your CPD and other requirements,” says Seyffert. “Don’t leave it to the last minute and make sure you enrol for qualifications so they can be completed in good time.”
Where to complete CPD
The FSCA conducts a number of webinars, industry bodies such as the FIA also offer webinars and conferences, and compliance officers and businesses such as Moonstone, Masthead and Compli-Serve offer a number of CPD courses and webinars.
Where to complete product training
Your product provider must offer training for new or updated products and new product features and will ensure certification of the additional training so that you are fully accredited for the new and/or updated products. Always check the time in which you have completed the training as product training may only be offered for a short period of time.
Step 3: Keep a competence register
Board notice 194 requires all advisers to keep a competence register with the details of which training has been completed when. This does not have to be submitted to the regulator, but if requested, must be available for the regulator to review.
Make it easy
Software is available that records and manages fit and proper requirements to make it easy for advisers to manage CPD.
Moonstone offers a system that reminds advisers of what training they need to complete, and when, for a cost of around R35 a month per representative. Masthead also offers their members a CPD tracker and goal setting tool, and FIA members have access to an online system to help them manage their CPD requirements. Your compliance officer will be able to help you with these systems and advise on any other systems available.
Don’t risk being debarred!
Advisers who do not meet these requirements can be, and have been, debarred and had their licences suspended and removed. Twenty-eight percent of FSPs referred to the FSCA for regulatory action in the 12 months 1 April 2020 to 31 March 2021 were referred to the regulator because of non-compliance with competence requirements.
Competency ensures appropriate advice
The aim of FAIS fit and proper requirements is to ensure clients receive suitable and appropriate advice that allows them to meet their financial goals without taking undue risk. Completing courses and training at events and webinars will achieve this. They are also a good place to network and connect with other advisers and discuss successes and challenges, which makes them well worth the time and forward planning!