1 a Brief Background to the Regulatory Examinations

EXAMINATION GUIDELINES

1 A Brief Background to the Regulatory Examinations

In 2003 the Financial Services Board published the Competency Requirements for Financial Services Providers, Key Individuals and Representatives as part of the Fit and Proper regulations (amended in 2006). These requirements included both an experience and qualification component. In addition to a minimum qualification, a further appropriate skills programme consisting of a particular number of credits (depending on the product subcategory) or, in some cases, a full qualification was required by a particular date, currently 31 December 2009.

Although the skills programmes and qualifications registered by the South African Qualifications Authority (SAQA) for the financial services industry briefly covered the legislative framework and the various regulated product categories, due to the structure of the qualifications, the training offered and the assessment of candidates by the various training providers differed considerably from one provider to the next. It therefore became clear to the FSB that in order to ensure that the industry was sufficiently competent in terms of the requirements of the FAIS Act that a national industry standard would need to be introduced.

It was with this goal in mind that the qualifying criteria were published in the Gazette in October 2008 as the basis for the development of the regulatory examinations.

2 Introduction to the Regulatory Examinations

The regulatory examinations consist of two levels:

2.1. Level 1

The content of these regulatory examinations is based on the regulatory framework and the regulatory role of the individual.

The Level 1 Regulatory Examinations are compulsory and must be completed by ALL Key Individuals and Representatives. Those individuals currently in the industry, appointed or approved between 2004 and 2009 must successfully complete these regulatory examinations by 31 December 2011. Those entering the industry from 2010 must successfully complete these regulatory examinations within 2 years of appointment or approval.

2.2. Level 2

The Level 2 Regulatory Examinations are product-specific and will focus on the applied knowledge of individuals in relation to the products for which they provide financial services. The examinations required will depend on the product categories for which the FSP is licensed.

Those individuals currently in the industry, appointed or approved between 2004 and 2009 must successfully complete these regulatory examinations by 31 December 2013. Those entering the industry from 2010 must successfully complete these regulatory examinations within 6 years of appointment or approval.

3 REGULATORY EXAMINATIONS – LEVEL 1

3.1 Exam 1: First Level Regulatory Examination: Sole Proprietors and/or Key Individuals in Category I, II, IIA, III and IV

All Sole Proprietors or Key Individuals who are responsible for managing and overseeing the business relating to the rendering financial services for FSPs in Category I, II, IIA, III and IV are required to write this examination.

This is a two hour examination and will consist of 80 multiple choice questions.

This examination will test, amongst others, the candidates’:

· Understanding of their role and responsibilities as a Key Individual as required by the FAIS Act,

· The roles and responsibilities of the Representatives they manage and oversee, including the Fit and Proper requirements and the maintenance of a register of representatives,

· Ability to apply their knowledge in terms of the supervision requirements for Representatives, Representatives’ ongoing training and development, their obligations in terms of the Code of Conduct and their debarment,

· Ability to apply their knowledge of compliance, auditing and record keeping, as well as advertising and adherence to FICA,

· Understanding of the complaints process, maintenance of the FSP license and suspension and withdrawal of an FSP license.

For a complete list of the qualifying criteria against which the candidate will be tested, please see Section 1 of Board Notice 105 of 2008.

Support Material

A list of legislation upon which this examination has been based is provided below.

1. Financial Intelligence Centre Act (FICA), Act 38 of 2001

2. Money Laundering and Terrorist Financing Control Regulations (GN R1595 of 2002)

3. FICA Schedule 1: List of Accountable Institutions

4. Financial Advisory and Intermediary Services Act (FAIS), Act 37 of 2002

5. Financial Advisory and Intermediary Services Regulations (GN879 of 2003)

6. Codes of Conduct for Administrative and Discretionary FSPs (Board Notice 79 of 2003)

7. General Code of Conduct for Authorised Financial Services Providers and Representatives (Board Notice 80 of 2003)

8. Rules on Proceedings of the Office of the Ombud for Financial Services Providers (Board Notice 81 of 2003)

9. Determination of Criteria and Guidelines for the Approval of Compliance Officers (Board Notice 84 of 2003)

10. Amendment of Code of Conduct for Administrative and Discretionary FSPs (Board Notice 3196 of 2003)

11. Code of Conduct for Authorised Financial Services Providers and their Representatives, involved in Forex Investment Business (Board Notice 39 of 2004)

12. Qualifications and Experience of Compliance Officers in respect of Financial Services Business (Board Notice 48 of 2008)

13. Notice of specific Code of Conduct for Authorised Financial Services Providers and Representatives conducting Short-Term Deposit Business (Board Notice 102 of 2004)

14. Exemption in respect of services under supervision in terms of Requirements and Conditions (Board Notice 104 of 2008)

15. Determination of Fit and Proper Requirements for Financial Services Providers (Board Notice 106 of 2008)

16. Amendment Notice on the General Code of Conduct for Authorised Financial Services Providers and Representatives (Board Notice 152 of 2008)

17. Hedge Fund Risk Disclosures (Board Notice 571 of 2008)

18. Notice on the Requirements for Professional Indemnity and Fidelity Insurance Cover for Providers (Board Notice 37 of 2009)

19. Determination of Compliance Report for Category I Authorised Financial Services Providers without a Compliance Officer 2009 (Board Notice 46 of 2009)

20. Notice on Requirements for Professional Indemnity and Fidelity Insurance Cover for Providers (Board Notice 123 of 2009)

21. Amendment of the General Code of Conduct for Authorised Financial Services Providers and Representatives (Board Notice 58 of 2010)

22. Amendment of Fit and Proper Requirements, Exemption of Services under Supervision, Continuous Professional Development and Determination of Qualifications and Qualifying Criteria (Board Notice 60 of 2010)

23. FSP Licensing Application Documentation

3.2 Exam 2: First Level Regulatory Examination: Sole Proprietors and/or Key Individuals in Category I , II, IIA , III and IV

All Sole Proprietors or Key Individuals who are responsible for managing and overseeing the business relating to the rendering of financial services for Category I subcategory 1.1. Long Term Insurance Category A and 1.19 Friendly Society Benefits ONLY are required to write this examination.

This is a two hour examination and will consist of 80 multiple choice questions.

This examination will test, amongst others, the candidates’:

· Understanding of their role and responsibilities as a Key Individual as required by the FAIS Act, the roles and responsibilities of the Representatives they manage and oversee, including the Fit and Proper requirements and the maintenance of a register of representatives,

· Ability to apply their knowledge of compliance, auditing and record keeping, as well as advertising and adherence to FICA,

· Understanding of the complaints process, maintenance of the FSP license and suspension and withdrawal of an FSP license.

Long Term Insurance Category A refers to assistance policies. (Life policies in which the aggregate of the policy benefits, other than an annuity, and the amount of the premium for which an annuity is provided, does not exceed R18 000. This includes reinsurance policies in respect of such a policies).

For a complete list of the qualifying criteria against which the candidate will be tested, please see Section 1 and Section 5 of Board Notice 105 of 2008.

Support Material

A list of legislation upon which this examination has been based is provided below.

1. Financial Intelligence Centre Act (FICA), Act 38 of 2001

2. Money Laundering and Terrorist Financing Control Regulations (GN R1595 of 2002)

3. FICA Schedule: List of Accountable Institutions