RE5 WORKBOOK v3 FEB 2019

REGULATORY EXAMINATION 5
Workbook
Copyright and Intellectual Property
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Regulatory Examination 5 - Workbook
TABLE OF CONTENTS
Contents
Introduction....................................................................................................................................................2
Topics......................................................................................................................................................2
Learning Outcomes ................................................................................................................................2
1. TASK 1: Demonstrate understanding of the FAIS Act as a regulatory framework .................................6
Topics......................................................................................................................................................6
Learning Outcomes ................................................................................................................................6
2. TASK 2: Contribute towards maintaining an FSP Licence.....................................................................16
Topics....................................................................................................................................................16
Learning Outcomes ..............................................................................................................................16
3. TASK 3: Define the role of the key individual in terms of the FAIS Act ................................................23
Topics....................................................................................................................................................23
4. TASK 4: Adhere to the specific Codes of Conduct ................................................................................25
Topics....................................................................................................................................................25
5. TASK 5: Comply with regulated record keeping requirements ............................................................31
Topics....................................................................................................................................................31
6. TASK 6: Comply with the requirements of the FIC Act and Money Laundering and Terrorist Financing
Control regulations, as it applies to the FSP ................................................................................................38
Topics....................................................................................................................................................38
7. TASK 7 : Dealing with complaints that have been submitted to the Ombud for FSPs .........................44
Topics....................................................................................................................................................44
8. TASK 8 : Operate as a representative in terms of the FAIS Act ............................................................46
Topics....................................................................................................................................................46
GTIB 2019-02-01 V3 1
Introduction
Topics
The topics in this chapter include:
 Role of a Representative
 Glossary of Terms
 The purpose of the FAIS Act
 The role of the Financial Sector Conduct Authority (FSCA)
 Types of FSP licences
 Reasons for suspension of an FSCA licence
Learning Outcomes
On completion of this chapter, you should be able to:
 List the eight tasks required of a representative.
 Discuss some events that led to the FAIS Act
 Explain the purpose of the FAIS Act
 Discuss the role of the Financial Sector Conduct Authority (FSCA) with regard
to the FAIS Act.
 Explain the following terms with regard to FAIS: representative, financial
products ,financial service provider, Ombud
 Describe the types of FSP licenses
 Understand what actions could lead to withdrawal of a licence.
GTIB 2019-02-01 V3 2
Activity 0.1
Match the definition with the term
DEFINITION TERM
Any recommendation, guidance or proposal of a financial nature to a
client about a financial product.
A person who renders financial services to a client on behalf of a financial
service provider, authorised either through an employment contract or a
mandate by the FSP.
Individuals who manage and oversee the activities of the FSP
Companies like Standard Bank, Old Mutual and Discovery Medical Aid who
have been authorised or licenced by the Financial Sector Conduct
Authority (FSCA) to provide a financial service in terms of the FAIS Act
The government-appointed regulator which is responsible for the
implementation and monitoring of the FAIS Act.
Representative; Financial Service Provider; Key Individual; Advice; Financial Sector Conduct
Authority (FSCA)
Activity 0.2
Match the definition with the term
DEFINITION TERM
The person appointed to resolve disputes between clients and financial
service providers.
Any person who issues a financial product.
Any service, other than the furnishing of advice, on behalf of a client or
product supplier which results in the client entering into (or offering to
enter into) a transaction with a financial product supplier.
Shares, debentures, money-market instruments , short term deposits,
insurance etc
Ombud for Financial Services; Intermediary Service; Financial products; Product Supplier
GTIB 2019-02-01 V3 3
Activity 0.3
State whether the following statements are True or False
True / False
The main purpose of the FAIS Act is to protect consumers in relation to financial
services and to professionalise the financial services industry
The department within the Financial Sector Conduct Authority (FSCA), which in
April 2018 took over from the Financial Services Board (FSB), that deals with the
administration of the FAIS Act is the Investment Institution Division
The executive officer of the Financial Sector Conduct Authority (FSCA) is the
Commissioner of financial services providers, previously (before April 2018) called
the FAIS Registrar.
A verbal approval or exemption granted by the Registrar is valid.
The Registrar appoints representatives to act on behalf of financial service
providers.
Activity 0.4
State whether the following statements are True or False
True/False
Until the introduction of the FAIS Act, anyone, even a person without any
relevant skills, knowledge or qualifications, could go into the business of financial
advice.
FAIS became effective on 30 September 2004
A person must have a licence in order to operate as a Financial Service Provider
The Mandate of the Enforcement Committee is to ensure all provisions of FAIS

are complied with.
Orders by the Enforcement Committee carry the same legal weight as if they
were judgments issued by the Supreme Court of South Africa
.
Activity 0.5
Fill in the blanks:
1. FAIS means: Financial ______________ and _____________ Services.
2. FSP stands for: Financial __________________
3. FSCA stands for: Financial ___________________
GTIB 2019-02-01 V3 4
Activity 0.6
Select one or more:
Which of the following actions constitutes Advice:
a. Providing a brochure which explains the features of a term deposit
b. Recommending a balanced growth fund for a retirement annuity
c. Encouraging the customer to switch medical aid policies
d. Explaining the potential upside of borrowing to invest
e. Presenting a comprehensive retirement plan
Activity 0.7
Select one or more:
Which of the following contraventions would be referred to the Enforcement Committee:
a. A development finance institution exempts its officers from conducting a FICA test on new
clients.
b. A large bank is late in filing a quarterly return to the FSCA.
c. An investment pyramid scheme is suspected of being operated in Limpopo
d. An insurance company fails to submit the details for new board members.
e. A consumer lending company charges loan interest rates above the allowable maximum.
Activity 0.8
In the space below, write a paragraph to explain the generic concept of “informed choice”, and a
second paragraph to explain how it can be applied by a representative.
GTIB 2019-02-01 V3 5
1
1. TASK 1: Demonstrate understanding of
the FAIS Act as a regulatory framework
Topics
 Describe the FAIS Act and subordinate legislation
 Provide an overview of the financial services and different types of products a
representative can deal with
 Apply knowledge of the financial products within the financial services
environment
 Describe the role and function of a Compliance officer.
Learning Outcomes
 Describe the purpose and scope of the FAIS Act
 Describe the roles, responsibilities and requirements regarding
representatives and key individuals as defined in the FAIS Act
 Explain the types of financial services and products a representative can deal
with
 Explain the role and function of the Compliance officer
GTIB 2019-02-01 V3 6
Activity 1.1
Identify whether the following statements are true or false
The FAIS Act is intended to provide the lowest cost financial products to the
public
The FAIS Act applies exclusively to banks and insurance companies
The Commissioner of the FSCA has replaced the Registrar of the FSB after April
2018
Prior to the introduction of the FAIS Act, customers of financial services
companies had to take their complaints to court. Now they can take them to
the FAIS Ombud
The Ombud can compel a FSP to return money to a customer if the customer
requests it
Among the financial products covered by the FAIS Act are shares and
debentures
In terms of the FAIS Act, the customer is always right
.
Activity 1.2
Which of the following is not a financial product covered by the FAIS Act?
a. Long-term insurance
b. Short-term insurance
c. Residential property
d. Shares and debentures
Activity 1.3
The following are considered financial products in term of FAIS: deposits,

Investments, Insurance, Loans.
Product Suppliers may not act as FSP’s
The definition of “Client” includes the general public
The FAIS Act states that a client must be offered a product that matches his
specific needs.
When information about a product supplied is provided to the client verbally,
this information must be confirmed within 45 days from date of the transaction.
.
GTIB 2019-02-01 V3 7
Activity 1.4
Comprehensive advice means that a full needs analysis of the client’s financial
situation was done.
In the above situation if the client chooses a different product to the one that
was recommended, the representative has no obligation toward the client.
A category II FSP is also known as a Hedge Fund FSP
A category III FSP is an Administrative FSP
When advising a client on a replacement product the service provider must

disclose to the client the financial implications, costs and consequences of
taking that product.
Activity 1.5
You are advising a friend to purchase a particular share on the stock exchange because of its growth
potential. Are you giving advice in terms of the FAIS Act?
a. Yes
b. No
Activity 1.6
You advise a client to replace one product with another. You do not have to disclose what
commission you are earning should the client switch products as you recommend.
a. True
b. False
Activity 1.7
You advise a client to replace one product with another. You have to explain the different risks of each
product.
a. True
b. False
Activity 1.8
A client is best defined as someone who:
a. Is the successor of the person to whom a product was sold by an FSP
b. A person who is or may become the subject to whom a financial service is rendered
intentionally, or the successor in title of such a person
c. Enquires about a financial service to a licensed FSP
d. A customer of the FSP
Activity 1.9
The procedure to be followed for giving advice that results in one product being replaced with another
is covered by:
a. The FAIS Act
b. FAIS’ General Code of Conduct
c. The FICA Act
d. The Long Term Insurance Act
GTIB 2019-02-01 V3 8
Activity 1.10
When a representative advises a client to replace one product with another, four of the following five
apply. Which does not?
a. The different tax implications between the two products
b. Differences in terms and conditions and exclusions of liabilities
c. Differences in terms of access to funds
d. The likelihood of the product provider going insolvent
e. Any commission or other cash benefit received by the FSP on both the terminated and
replacement product.
Activity 1.11
A representative must inform the product supplier of his advice to a client to replace one product with
another:
a. Immediately that such advice is given
b. On payment by the client for the new product
c. Both the suppliers of the terminated and the replacement product must be notified no later
than the date on which any transaction requirement is submitted to a product supplier
d. By the end of the month in which the transaction is concluded.
Activity 1.12
Financial services include:
a. Instructions on the development of products
b. The rendering of advice and/or intermediary services
c. The processing of policy applications
d. Overseeing of the compliance processes
Activity 1.13
The different types of advice include:
a. Comprehensive advice, advice on policy replacements and advice when no analysis is performed
b. Comprehensive advice and advice on financial products
c. Comprehensive advice and advice when no analysis is performed
d. Comprehensive advice and advice on second-hand policies
Activity 1.14
Which one of the following is not included in the steps that an FSP has to follow when providing
advice?
a. Obtain appropriate and available information from the client
b. Conduct an analysis based on the information obtained as a basis for advice
c. Inform the client who the product supplier is and by whom the recommended product was
developed
d. Identify the financial products that are suitable to the needs of the client
GTIB 2019-02-01 V3 9
Activity 1.15
FAIS defines a replacement as:
a. the replacement of a financial product with only a long-term policy
b. the replacement of a financial product with another financial product
c. the replacement of a long-term policy with only another long- term policy
d. the replacement of a financial product with only a funeral policy
Activity 1.16
A record of advice does not have to include:
a. a brief summary of the information and material on which the advice was based
b. the qualifications of the representative
c. the financial products considered
d. the financial products recommended and why these products are suitable for the client
Activity 1.17
Which of the following are not included in the definition of a financial product in terms of FAIS?
a. Shares and debentures
b. Money market instruments
c. Health service benefits
d. Property
Activity 1.18
If a client purchases a product from someone who is not an authorised FSP, then the agreement
between the product supplier and the client will be:
a. unenforceable
b. enforceable
c. cancelled
d. amended
Activity 1.19
Which of the following persons are not included in the FAIS definition of a "client"?
a. Specific person or group of persons to whom a financial service is rendered
b. The beneficiary of a financial service
c. The successor in title of a person to whom a financial service is rendered
d. Members of the general public
GTIB 2019-02-01 V3 10
Activity 1.20
Which of the following is not contained in the list of specific disclosures required for a replacement
product?
a. Fees and charges in respect of the replacement product
b. Special terms and conditions which may be applicable to the replacement product
c. The impact of age and health changes on the premium payable in the case of insurance
products
d. Who the product supplier of the replacement product is
Activity 1.21
Which of the following scenarios is not applicable when advice is given but no analysis is performed?
The adviser refused to do an analysis
a. The client has elected to conclude a transaction that differs from that recommended by the
provider
b. The client has not provided all the information requested
c. There was not sufficient time to conduct the analysis
Activity 1.22
Which one of the following statements is correct with reference to the relationship between FAIS
role-players?
a. A product supplier will always act as a financial services provider.
b. A representative will always be an employee or someone mandated by a financial services provider.
c. The compliance officer of a financial services provider will always be an employee.
d. A representative is always part of the administrative staff of a financial services provider.
Activity 1.23
Select the statement that correctly describes the involvement of all the relationships between
industry players with regard to financial products, as defined in FAIS.
a. The FSP requests a product supplier to design a product which can be sold to clients, and the
compliance officer oversees this process to ensure compliance with FAIS.
b. The product supplier designs products, tests their suitability with representatives of an FSP and
markets the products once they have been approved by the FSP's compliance officer.
c. The FSP designs its own products, asks a product provider to test the product for compliance with
the FAIS Act and then the FSP's representatives may sell the product to their clients.
d. The FSP/product supplier provides the product, which the representative sells to a client, the admin
staff will process the application and the compliance officer oversees the process to ensure
compliance with FAIS.
GTIB 2019-02-01 V3 11
Activity 1.24
The compliance officer is accountable for compliance of the FSP

The compliance officer is appointed by the FSP but is approved by the FAIS
registrar.
If the FSP is a sole proprietor, the compliance function is carried out by the sole
proprietor.
The compliance officer must be a natural person.
An FSP must appoint a Compliance Officer when it has more than one Key
Individual or one or more representatives.
The Registrar may withdraw the approval of a Compliance Officer if satisfied
on the basis of available facts and information that the compliance officer has
contravened or failed to comply with the provisions of the Act.
The obligations of a Compliance Officer stops when his or her appointment is
terminated by the FSP.
.
Activity 1.25
Which of the following is not a function of the compliance officer?
e. To assist the FSP to monitor, supervise and report on compliance issues
f. To offer advice on compliance issues
g. To ensure that the FAIS Act is complied with
h. To maintain a register of representatives.
Activity 1.26
Who appoints the Compliance officer?
a. The Registrar
b. The FSP
c. The Key Individual
d. The chief compliance executive
Activity 1.27
Who must approve the appointment of the Compliance officer?
a. The Registrar
b. The FSP
d. The chief compliance executive
GTIB 2019-02-01 V3 12
Activity 1.28
One of the following is not a function of the Compliance officer. Which is it?
a. The submission of reports to the Registrar in the manner and form required
b. Liaison with the Registrar
c. Monitor compliance with the FAIS Act
d. Supervise the compliance function
e. Make recommendations to the FSP as regards any aspect of compliance, monitoring or supervision
of the compliance function
f. Report accounting irregularities to the SA Institute of Chartered Accountants.
Activity 1.29
Choose the incorrect statement. An FSP must appoint a Compliance officer when:
a. There is one Key Individual
b. There are two Key Individuals
c. There are two representatives
d. There are one or more representatives
Activity 1.30
Can an FSP appoint another FSP to handle its compliance function?
a. Yes
b. No
Activity 1.31
Who is ultimately responsible for compliance with the FAIS Act?
a. The compliance officer

b. The FSP
d. The Registrar
Activity 1.32
The minimum qualifications for a compliance officer are:
a. Law degree, accounting qualification and 3 years’ experience in the financial services sector.
b. A recognised degree in financial services from an approved university.
c. A recognised university degree and Regulatory Exam Level 1.
d. Three years’ experience in the financial services sector.
GTIB 2019-02-01 V3 13
Activity 1.33
When a compliance officer suspects non-compliance of a material nature, he must:
a. Report the matter to the CEO of the FSP.
b. Report the matter to the Commercial Crimes unit of the SA Police Services.
c. Report the matter to the company auditors.
d. Report the matter to the Registrar.
Activity 1.34
An FSP has to appoint a Compliance Officer if:
a. it has more than one Key Individual or one or more representatives.
b. it has a Key Individual.
c. it has only representatives.
d. it has one or more representatives.
Activity 1.35
The appointment of the Compliance Officer has to be approved by:
a. the Ombud.
b. the FSP.
c. the managing director.
d. the Registrar.
Activity 1.36
Which of the following is not one of the main functions of a Compliance Officer?
a. Monitoring
b. Administrative services
c. Training
d. Support
Activity 1.37
Which one of the following tasks forms part of the monitoring function of the Compliance Officer?
a. Submission of compliance reports and other compliance-related reports to the Registrar
b. Performance evaluations of representatives
c. Drafting of job descriptions
d. Identifying training needs
Activity 1.38
Which one of the following tasks forms part of the training function of the Compliance Officer?
a. Supervision of the compliance function
b. Assisting with the creation of a compliance culture
c. Liaising with the Registrar
d. Identification of training needs
GTIB 2019-02-01 V3 14
Activity 1.39
Which one of the following tasks forms part of the support function of the Compliance Officer?
a. Creating, implementing and monitoring systems and procedures
b. Being accountable for the compliance function of the organisation
c. Assisting with the creation of a compliance culture
d. Organising training
Activity 1.40
The function of the Compliance Officer:
a. may be outsourced to an external Compliance Officer.
b. must be outsourced to an external Compliance Officer.
c. must only be performed by an internal staff member.
d. may not be outsourced to an external Compliance Officer.
Activity 1.41
ABC Brokers, a brokerage with 20 representatives, does not currently have a Compliance Officer.
Which of the following tasks will they not be able to perform?
a. Completing branch audits
b. Resolving customer service-related queries
c. Fulfilling required compliance functions
d. Meeting individual training needs
Activity 1.42
When Rafiq was appointed as the Compliance Officer of ABC Life, he decided to plan his quarterly
visit to each of the 39 ABC Life offices throughout the country. On what should he focus during these
visits?
a. Building rapport with all the branch managers and staff to foster a good working relationship
b. Training of the staff about the FAIS Act and its provisions and requirements for ABC Life
c. Checking the FAIS registers, required disclosures and fit and proper status of those giving advice
d. Comparing how this branch, and other branches in ABC Life and the rest of the industry comply
with FAIS
GTIB 2019-02-01 V3 15
2
2. TASK 2: Contribute towards maintaining
an FSP Licence
Topics
 The requirements that an FSP must meet to maintain a licence.
 Keeping updated with legislation and changes that will affect the FSP.
 Undesirable business practices.
 Licencing
 The Ombud for Financial Services providers.
Learning Outcomes
 Explain the requirements to maintain a licence.
 Explain how to remain updated with regards to legislation.
 Describe the implication for an FSP if the Registrar publishes a notice regarding an
“undesirable business practice”.
 Explain the penalties the Registrar can impose if an FSP continues with undesirable
business practices.
 Discuss the requirements of the Act regarding the display of licences.
 Explain the reasons why a licence can be suspended or withdrawn.
 Explain what recourse an FSP has in a case where its licence has been suspended
or withdrawn.
 Discuss the reasons why an FSP would lapse a licence.
 Describe how lapsing a licence differs from suspension or withdrawal.
 Describe the conditions under which a licence can be reinstated.
 Describe the role and powers of the Ombud.
GTIB 2019-02-01 V3 16
Activity 2.1
Drag and Drop the Correct FSP Category with the descriptions below:
A wealth management firm which invests the portfolios of their private

clients. To qualify, a client must have a portfolio worth R2 million or
more.
FSP Z offers Burial policies to their clients.
All Weather Capital is one of South Africa’s few black-owned hedge

fund firms
FSP X is a discount broker which buys and sells shares based on
instructions from the client.
FSP Y is an insurance company selling short term insurance cover on
movable assets
Category IIA Hedge Fund FSP; Category IV Assistance Business FSP; Category I FSP; Category II
Discretionary FSP; Category III Administrative FSP
Activity 2.2
An FSP may only render financial services for which it is authorised.
Once a licence has been granted, the Act requires that the licence must be
displayed in a durable and prominent manner within each of the FSP’s business
premises.
Once a FSP has its licence provisionally suspended or provisionally withdrawn it
can operate for a further 30 days.
A FSP is allowed to have one licence only.
Reference must be made to the licence (or that the FSP is authorised) in all
advertisements, business documentation and promotional material.
It is not necessary to refer to the licence number in promotional material
GTIB 2019-02-01 V3 17
Activity 2.3
Once a licence has been granted to an FSP, it is the task of the Financial Sector
Conduct Authority (FSCA) to keep the FSP up to date with any changes in
legislation.
The objective of disclosure is to ensure the client has adequate information to

make an informed decision.
If you disclose verbally you must then confirm the details in writing within sixty
days
A FSP may mix client funds in a combined account provided it clearly reflects
each amount received and paid to each individual client
The FSP is entitled to charge client for bank charges on this account
The FSP may keep all interest accumulated in the account
Activity 2.4
Which of the following must an FSP do to maintain its licence?
a. Adhere to the licence conditions.
b. Ensure there are systems and controls in place for the purpose of complying with its licence
conditions.
c. Maintain a register of debarred representatives.
d. Ensure there are internal controls to ensure representatives and key individuals are complying
with the terms of the conditions.
Activity 2.5
Licences contain standard as well as (possibly) specific conditions. Which of the following would be
a specific condition?
a. In order to remain licenced, the FSP must provide a financial guarantee to cover potential claims
from clients due to non-performance by the FSP
b. An insurance policy aimed at women may not be marketed to men.
c. The FSP must maintain branch offices in all major cities in South Africa,
Activity 2.6
How should a Representative assist the FSP to maintain its licence?
a. By only rendering financial services covered by the FSP’s licence conditions.
b. By operating under an employment or mandate agreement with the FSP.
c. By informing clients that they are operating under mandate (if not employed by the FSP).
d. By complying with the fit and proper requirements of the Act at all times and maintaining proof
of this.
e. By meeting and if possible exceeding sales target.
GTIB 2019-02-01 V3 18
Activity 2.7
Which statement best describes the purpose of the Code of Conduct of the FAIS Act?
a. To assist clients to make informed decisions.
b. To assist clients to make informed decisions about the financial service being rendered, fully
armed with knowledge of any conflicts of interest on the part of the FSP, and with the rules of
full disclosure being adhered to.
c. To assist clients to make informed decisions about the financial service being rendered, fully
armed with knowledge of any conflicts of interest on the part of the FSP, and with the rules of
full disclosure being adhered to, in pursuit of their best financial interests.
d. To assist clients to make informed financial decisions, which they can only do if the FSP is fully
transparent in disclosing conflicts of interest.
Activity 2.8
Which of the following statements best describes the duties of the FSP (in terms of the Code of
Conduct) when it comes to handling client documents?
a. Secure the documents in a safe in a separate file
b. Issue the client with a written receipt for the documents with a description of the documents
sufficient to identify them.
c. Separate the documents from other client documents.
d. Keep the documents for 60 days and then file them.
Activity 2.9
Jimmy Ndlovu is a Representative for an FSP and is paid in cash by Client Annie for her monthly
insurance premium. How must Jimmy reflect this transaction?
a. Immediately deposit it into his bank account.
b. Open a separate cash deposit box for the client and lock it in his safe.
c. Issue written confirmation that the money has been received.
d. Handle it the same way he does any other transaction, such as a bank wire.
Activity 2.10
The FAIS Ombud will not consider a complaint if the amount in question is more than:
a. R20,000
b. R800,000
c. R1 million
d. R500,000
Activity 2.11
Which of the following are not an undesirable business practice.
a. Harming the reputation of the CEO of the FSP
b. Selling products to the public without disclosing all the terms and conditions.
c. The FSP is an insurance company that keeps a manual instructing staff on how to avoid paying
out claims to customers.
d. The FSP has involved itself in bad-mouthing a competitor in order to win sales and drive
customers away from the competitor.
GTIB 2019-02-01 V3 19
Activity 2.12
The Registrar issues a directive that an FSP is committing an undesirable business practice and
orders it to stop selling a particular product immediately and repay money to clients within 60
days. The company fails to comply with this directive. The penalty for this is:
a. A fine of not more than R10 000 000 or imprisonment of not more than ten (10) years, or both.
b. 60 days in prison or a fine of R1 000 000.
c. A summons to the High Court of South Africa.
Activity 2.13
Which of the following does not constitute grounds for suspending or withdrawing a FSP’s licence.
a. The FSP no longer meets the fit and proper requirements of the FAIS Act.
b. The Registrar later finds out that the FSP did not disclose all relevant information when originally
applying for the licence.
c. The FSP owes a substantial sum of money to the FSCA in the form of levies.
d. The FSP has entered into a major court case with a client regarding a disputed payout on an
investment product.
Activity 2.14
Which of the following two conditions will result in a FSP’s licence lapsing.
a. The FSP is a single-man operation (ie. natural person) and has been sequestrated in court
b. The FSP has a bad credit rating
c. The FSP has passed away
d. The FSP appears in a press article which brings his firm into disrepute
Activity 2.15
The FSP is a juristic person (such as a company). Which of the following will not result in its licence
lapsing?
a. The FSP is issued with a summons to appear in Court for non-payment of its VAT
b. The FSP is finally liquidated or dissolved.
c. The business is dormant
d. The FSP decides it has had enough and decides to voluntarily surrender its licence
Activity 2.16
The difference between a suspended and a lapsed licence is:
a. The licence is suspended by the Registrar for non-compliance with the FAIS Act, while the
Registrar lapses a licence after repeated warnings of non-compliance.
b. Only the Registrar can suspend a licence for non-compliance with FAIS. Only the governor of
the Reserve Bank can declare a licence to be lapsed.
c. Only the Registrar can suspend a licence for non-compliance with FAIS. A licence can only lapse
through the actions or inactions of the FSP (not related to non-compliance with the FAIS Act)
such as death or voluntary surrender of the licence.
GTIB 2019-02-01 V3 20
Activity 2.17
Choose the incorrect statement.
Before the Ombud investigates a case, s/he must do the following.
a. In writing inform every other interested party to the complaint
b. Provide all interested parties with the specifics of the complaint so that each can respond
appropriately
c. Allow all parties an opportunity to respond
d. Refer the matter to the High Court.
Activity 2.18
Choose the incorrect statement.
The Ombud has considered a complaint from a client of a FSP and has been unable to get the
parties to agree to a solution. The Ombud is able to make which of the following determinations?
a. Dismiss the complaint
b. Uphold the complaint and instruct the FSP to pay the client a sum of money
c. Instruct the FSP to pay interest at the rate of 8% a year to the complainant
d. Withdraw the licence of the FSP
Activity 2.19
Which one of the following can be regarded as an undesirable business practice?
a. A client is advised to switch from one bank to another because the new bank charges lower
rates
b. A representative recommends that a client cancels a policy without a valid reason
c. A representative advises a client to change his Will to be in line with the client's wishes at that
stage
d. A representative informs a client about the improved performance of the product supplier's
investments over the past five years
Activity 2.20
The FSP licence is granted by: (Choose one)
a. the South African Reserve Bank.
b. the Insurance Institute.
c. the Banking Council.
d. the Financial Sector Conduct Authority (FSCA).
Activity 2.21
Which one of the following statements reflects all the actions with regard to complaints that are
within the power of the Ombud for Financial Services Providers (FAIS Ombud)?
a. The Ombud may dismiss a complaint or uphold it.
b. The Ombud may dismiss a complaint, uphold it or refer it to a court if more suitable to be heard
by the court.
c. The Ombud may dismiss a complaint, uphold it, decline it if it is received three years after the date
of the issue of the complaint or refer it to a court of law if more suitable to be heard by the court.
d. The Ombud may uphold a complaint or decline it if it is received three years after the date of the
issue of the complaint.
GTIB 2019-02-01 V3 21
Activity 2.22
If the Commissioner has directed that an FSP who carried on with an undesirable business practice
should reinstate any damages or loss caused, the FSP has to rectify the matter within:
a. 30 days
b. 90 days
c. 50 days
d. 60 days
Activity 2.23
When the Commissioner intends to suspend or withdraw a licence, the licensee is:
a. entitled to be given a reasonable opportunity to make a submission in this regard.
b. entitled to appeal against the decision.
c. not allowed the opportunity to make a submission in this regard.
d. allowed to continue working for another three months in order to conclude all outstanding
business.
Activity 2.24
Under which of the following circumstances may a licence lapse?
a. Only when the licensee has died
b. Only when the licensee voluntarily surrenders his licence
c. When the licensee has died, is sequestrated or voluntarily surrenders his licence
d. When the licence is withdrawn
Activity 2.25
The Ombud for Financial Services Providers (FAIS Ombud) is the person appointed to resolve disputes
between consumers and financial services providers relating to:
a. the quality or nature of the advice given.
b. the contract between the insurer and the client.
c. the performance of an investment.
d. the experience of the adviser.
Activity 2.26
If an FSP carries on with an undesirable business practice, the Commissioner may direct it to:
a. make up any loss caused by the practice, to the satisfaction of the Commissioner.
b. compensate the Commissioner, in an amount to the satisfaction of the Commissioner.
c. explain to the client that the practice is undesirable in a manner to the satisfaction of the
Commissioner.
d. stop the business practice immediately, and provide an undertaking to the satisfaction of the
Commissioner that this will be done.
GTIB 2019-02-01 V3 22
3
3. TASK 3: Define the role of the key
individual in terms of the FAIS Act
Topics
 Describe the roles and responsibilities of key individuals in terms of the FAIS
Act
 Describe the regulated management and oversight responsibilities of KIs
Learning Outcomes
 Understand the roles and responsibilities of key individuals in terms of the
FAIS Act
 Explain the management and oversight responsibilities of a key individual
Activity 3.1
A Key Individual (KI) never gives advice

KIs are employed by FSPs to manage and oversee the business and deal with
issues related to compliance with FAIS
Key individuals can be directors or managers within the business
A KI can also act as a Representative, provided s/he meets the Fit and Proper
requirements for both positions
A KI must comply with the Continuous Professional Development (CPD)
requirements of FAIS
Activity 3.2
GTIB 2019-02-01 V3 23
The key individual is the person who the Commissioner holds responsible for
compliance to the Act and other legislation
FSPs must maintain a register of all the representatives and key individuals
employed or mandated by the FSP
The Commissioner may withdraw or suspend the license of an FSP if it does
not have an approved Key Individual
In a small business, the KI can also operate as a Representative
Activity 3.3
Which of the following is not a function of a KI?
a. Record keeping
b. Financing the business
c. Managing the financial services aspects of the business
d. Making tea
e. Complying with FAIS
GTIB 2019-02-01 V3 24
4
4. TASK 4: Adhere to the specific Codes of
Conduct
Topics
 Introduction to the Code of Conduct
 Safe custody of funds and premiums
 Disclosures by FSPs and Product Suppliers
 Product Supplier Disclosures
 Financial Product / Service Disclosures
 Disclosures Regarding the Application Forms
 Disclosure on Fees and Commissions
 How to ensure transparency and manage conflicts of interest
 Conflict of Interest Management Policy
 Ethical conduct in the Financial Services Environment
 Complaints
 Steps when providing advice
 Recording the advice
 Various Provisions of the General Code of Conduct
Learning Outcomes
 Explain the obligations and requirements when client funds or premiums are
received.
 Explain conflicts of interest, disclosure requirements for representatives
before rendering as financial service in terms of the General Code of Conduct
 Disclosure requirements for FSPs and product suppliers
 The manner of handling complaints
 Explain the importance of disclosures.
 Discuss the impact and requirements regarding the disclosure rules on the
FSP.
 Discuss the effect of disclosure requirements on commission is explained with
reference to line of business and specific product/policy.
GTIB 2019-02-01 V3 25
 Describe the disclosure requirements regarding the FSP, product suppliers,

product suppliers acting as FSPs and financial services.
 Discuss how to ensure transparency and manage conflict of interests.
 Distinguish between actions regarded as advice and intermediary services in
terms of the Act.
 Describe the concept of ethical conduct in the financial services environment.
 Discuss your role in terms of ethical conduct in the financial services
environment.
 Explain the manner in which complaints are to be handled by the industry with
reference to the FAIS General Code of Conduct.
 Explain the steps that must be taken by an FSP/ representatives when
providing advice.
 Explain the provisions of the General Code relating to:
 custody
 complaints
 risk management
 insurance
 advertising
 termination.
Activity 4.1
When documents of title are lodged with an FSP on behalf of the client, the
FSP must immediately provide written confirmation of receipt thereof which
contains a description of the documents that is sufficient to identify them.
The FSP must have a separate bank account for each client’s funds.
The FSP is responsible for bank charges except the charges that relate to
deposit or withdrawal, which the client must pay
The FSP must pay all interest accumulating in the account to the clients or
owners of the funds
When the FSP receives funds from a client, without a bank being involved, it
must issue written confirmation that the money has been received
Activity 4.2
If an FSP advertises by telephone, then it is not essential to keep these

records
Category I or IV FSP who does not receive or hold financial products or funds
on behalf of clients should have suitable guarantees of a minimum R1 million
An FSP who stops operating must only notify the FSCA immediately.
when a representative conceals important information from a client he/she is
guilty of an offence and is on conviction liable to a fine not exceeding R1 000
000 or to imprisonment for a period not exceeding 10 years, or to both .
GTIB 2019-02-01 V3 26
Activity 4.3
Which of the following is not a disclosure category covered in the Code of Conduct.
f. General information
g. Product suppliers
h. Conflict of interest
i. Client’s work history
j. Replacement product
Activity 4.4
Samantha is keen to purchase an investment product from an FSP and attends her very first
meeting at the FSP’s office. The FSP is not required to disclose which of the following?
a. The FSP’s registration number
b. Address and other contact information
c. The fact that the FSP is acting under supervision by the FSCA.
d. The indemnity insurance policy of the FSP.
e. Any information about the legal relationship between the FSP, product supplier and
representative.
Activity 4.5
Samantha is shown a number of investment products that seem to suit her needs. She eventually
settles on one particular product provided by Sanlam. The FSP does not have to disclose which of
the following?
a. Sanlam’s name, address and contact details.
b. The fact that the FSP holds a 3% share in Sanlam.
c. The contractual relationship between the FSP and Sanlam.
d. The fact that the FSP has contractual relationships with other product suppliers.
e. Contact details for Sanlam’s compliance department.
Activity 4.6
Which one of the following is not a requirement of a conflict of interest policy?
a. The FSP must ensure that clients are given every opportunity to cancel a sale within 30 days of
purchase.
b. The conflict of interest policy has been put down in writing and complies with the provisions
of the Act.
c. The FSP’s employees and representatives are made aware of the contents of its conflict of
interest management policy.
d. Training is provided in the FSP’s conflict of interest policy.
e. The FSP must continuously monitor compliance with its conflict of interest management policy
and annually conduct a review of the policy.
GTIB 2019-02-01 V3 27
Activity 4.7
Which of the following is not considered a financial interest in terms of the Code of Conduct?
a. Cash
b. Voucher
c. Gift
d. Free literature on new products
e. Free car wash
f. Free weekend at Sun City
g. Discount on flights
h. Access to product supplier’s IT systems
Activity 4.8
Which of the following need not be disclosed when selling a product to a client?.
a. The type of financial product
b. What benefits the client can expect
c. Any “cooling off” period allowed for the product
d. The overall state of world financial markets
e. Any investment risks
Activity 4.9
One of the requirements of the General Code of Conduct with regard to the handling of clients’ funds
is that:
a. A separate account should be kept to deposit clients’ funds into.
b. Clients’ funds may be deposited in the provider's own account as long as a receipt has been issued
to the client.
c. Clients should have ready access to any amount paid into the provider's own account.
d. Funds should be paid into the client's account within five business days.
Activity 4.10
Disclosures that were supplied verbally must be confirmed in writing within:
a. 60 days
b. 10 days
c. 30 days
d. 5 days
Activity 4.11
Which of the following does NOT have to be disclosed by FSPs?
a. Name of the business and registration number
b. Information regarding indemnity insurance
c. Details about the compliance department of the FSP
d. Income from product sales in the previous year
GTIB 2019-02-01 V3 28
Activity 4.12
Which of the following does NOT have to be disclosed by product suppliers?
a. The types of products available from the product supplier
b. Contact details of the compliance department
c. Information about the complaints procedure of the product supplier
d. Whether the FSP holds more than a 10% share in the product supplier
Activity 4.13
Which of the following does NOT have to be disclosed about products?
a. Name, class and type of financial product
b. The extent of the benefits
c. The name of the product developer
d. Monetary obligations of the client in relation to the financial product
Activity 4.14
The purpose of disclosures is:
a. to enable the client to make an informed decision.
b. to enable the insurer to evaluate the risk.
c. to be used as an agenda for a discussion with the client.
d. to inform the representative of the attitude of the client towards the recommended product.
Activity 4.15
Which of the following is not included as a duty of a provider with regard to complaints?
a. Maintain an internal complaint resolution system and procedures.
b. The complaint resolution policy must be transparent and visible.
c. A policy for the process of internal resolutions should be included in the complaint resolution
system.
d. Staff have to be trained on the external resolution processes.
Activity 4.16
Where a complaint is not resolved to the satisfaction of the client, the provider has to:
a. inform the client of other alternatives in terms of the FAIS Act and law.
b. tell the client that nothing further can be done about it.
c. terminate the relationship with the client.
d. refer the client to another provider.
GTIB 2019-02-01 V3 29
Activity 4.17
When a provider provides advice, the following steps have to be followed:
a. Conduct an analysis and recommend suitable financial products.
b. Obtain information, conduct an analysis, identify suitable financial products and make the
necessary disclosures regarding product replacements.
c. Obtain information, identify suitable financial products and make the necessary disclosures
regarding product replacements (if applicable).
d. Identify suitable financial products and make the necessary recommendations.
Activity 4.18
If a client has a complaint against the provider, the provider:
a. has three months before he has to respond.
b. must maintain a record of such complaints for a period of ten years.
c. must request the client to lodge such a complaint in writing.
d. must maintain a record of such complaints for a period of three years.
Activity 4.19
Kyla, a representative of a bank, made the required disclosures to the customer in a telephonic
conversation. What else must she do to ensure compliance with the requirements of FAIS?
a. Confirm the details of the discussion to the customer in writing, within 30 days of the date of
the phone call.
b. Send an email, letter or fax to the customer within seven days of the phone call to confirm the
details of their conversation.
c. Immediately make an endorsement on his copy of the Record of Advice.
d. No further action is required.
Activity 4.20
Claude did not disclose the name of the product provider to his customer, because the customer just
informed him that she had a very bad experience with that particular product provider. He knows
that the policy is the best match for the customer’s need and trusts the integrity of the product
provider. Choose the option that reflects the FAIS perspective on this interaction:
a. Claude has acted in the best interest of his customer and the FSP by providing a well-matched
financial solution to the client.
b. Claude has acted without integrity by not being completely honest with his client, and he could
face disciplinary action or debarment.
c. Claude has not breached any FAIS requirements, since the client does not need to know the
name of a product supplier to make a decision.
d. Claude has breached a FAIS requirement in failing to provide his client with the opportunity to
make a fully informed decision.
GTIB 2019-02-01 V3 30
5
5. TASK 5: Comply with regulated record
keeping requirements
Topics
 Record-keeping Activities
 Record-keeping obligations in terms of the General Code of Conduct
 Record-keeping obligations in terms of FICA
Learning Outcomes
 Explain the record keeping activities in terms of the General Code of
Conduct, FICA and FAIS
 Execute the record keeping activities and responsibilities required under
these acts
Activity 5.1
A record of advice must be provided in writing.

Records may be kept in an appropriate electronic or recorded format, which are
accessible and readily reducible to written or printed format
A record of advice furnished to a client should contain a detailed summary of the
information and material on which the advice was based.
Confidential information acquired or obtained from a client or a product supplier may
not be disclosed unless the client is deceased
If the FAIS Commissioner requests to inspect stored records, the FSP must make them
available, whether stored by the FSP or a third party, within 24 hours.
Activity 5.2
GTIB 2019-02-01 V3 31
A record of advice is:

a. A brief written summary of the information and material on which the financial advice to a client
was based
b. The final written recommendation to the client
c. A voice recording of conversations between the representative and the client
d. An instruction from the Key Individual to the representatives.
Activity 5.3
When recommending a replacement product, the record of advice should contain four of the
following. Which is not required?
a. A comparison of fees between the terminated and the replacement product
b. A comparison of special terms and conditions
c. The fact that the replacement insurance policy does not cover household fire, whereas the old
policy does
d. A comparison of waiting periods and loadings
e. A comparison of the financial strength of the two product providers
Activity 5.4
How long must records be maintained?
a. For 5 years after termination of the product
b. 3 years
c. 10 years
Activity 5.5
One of the following is not required to be kept as a record by the FSP. Which is it?
a. Premature cancellations of products
b. Complaints by clients
c. Evidence of compliance with fit and proper requirements by the FSP
d. Instances of non-compliance with the Act
e. A register of staff complaints.
Activity 5.6
Within how many days must an FSP make records available to the Commissioner?
a. 5 days
b. 7 days
c. 10 days
d. 30 d
GTIB 2019-02-01 V3 32
Activity 5.7
The FSP may only disclose confidential client information in 2 of the following circumstances.
Which are they?
a. When it has written consent from the client
b. When required by law or when it is in the public interest
c. When instructed to do so by the Key Individual
d. When instructed to do so by a police office.
Activity 5.8
Which of the following is an example of a document that should be maintained in terms of the FAIS
Act?
a. A cancellation of an endowment policy one year before it pays out
b. An application for a retirement annuity
c. A record of premium payments towards a policy
d. A copy of a change of address received by a client
Activity 5.9
When Life Insurer A outsources their record-keeping function in terms of FAIS they have to ensure
that these documents can be accessed by the Commissioner for inspection within what number of
days?
a. Five
b. Seven
c. Six
d. Three
Activity 5.10
The industry standard for the method of storing and retrieving records is:
a. an appropriate electronic format which can easily be converted into a written or printed
format.
b. an appropriate written format.
c. an appropriate electronic or recorded format which can easily be converted into a written or
printed format.
d. an electronic format only.
Activity 5.11
If a provider wants to disclose any confidential information obtained from a client:
a. he has to obtain written consent from the client beforehand.
b. he does not need to obtain consent from the client.
c. he has to obtain verbal consent from the client beforehand.
d. he has to obtain verbal consent from the client at the time of the disclosure.
GTIB 2019-02-01 V3 33
Activity 5.12
FICA requires the FSP to keep records of:
a. proceeds of insurance products or investments that are paid out on maturity.
b. the number of representatives working for it.
c. documents used to identify and verify the client.
d. annual reports.
Activity 5.13
When an accountable institution outsources its record-keeping duty to a third party, it has to notify
the FIC of:
a. the date on which the outsourcing commences.
b. the particulars of the third party.
c. the time period for which this function will be outsourced.
d. the reasons for the outsourcing of this function.
Activity 5.14
If an accountable institution fails to provide assistance to the FIC to access its records, it is guilty of
an offence punishable as follows:
a. imprisonment for a maximum period of 15 years.
b. a fine not exceeding R10 million.
c. imprisonment for a maximum period of 15 years or a fine of a maximum amount of R100 million.
d. imprisonment for a maximum period of 30 years.
Activity 5.15
The Money laundering Reporting Officer has to report a suspicious transaction to the FIC within:
a. 15 working days of learning of it.
b. 15 working days of learning of it or from when the suspicion arose.
c. 15 working days from when the suspicion arose.
d. 30 working days of learning of it.
Activity 5.16
Where records of an accountable institution are not available to the public and a representative of
the FIC needs access to these records, a warrant issued by a judge or magistrate will only be issued
if:
a. it is uncertain whether the records will assist in identifying the proceeds of unlawful activities.
b. the records contain factual evidence of the proceeds of unlawful activities.
c. the records have been kept for two years only.
d. there are reasonable grounds to believe that the records will assist in identifying the proceeds of
unlawful activities.
GTIB 2019-02-01 V3 34
Activity 5.17
Which of the following is not a requirement in terms of The FAIS General Code of Conduct regarding
procedures and systems to keep records?
a. The records of verbal and written communications relating to a financial service rendered to a
client
b. The storage and retrieval of such records relating to the client or financial service rendered to the
client
c. The dispatch of documents to clients regarding a financial service rendered to the client
d. Keeping such client records and documentation safe from destruction and keeping it for a period
of five years after the rendering of the financial service
Activity 5.18
You have to advise a new financial services provider on the FAIS requirements for the maintenance
and accessibility of records. The financial services provider has limited space in his office and cannot
store the hard copy records that have to be kept for five years. What advice would you give him?
a. The financial services provider has to find space in his office as he is obliged to keep the hard copy
records on his premises for five years to ensure that they are available for inspection within seven
days of the Commissioner's request.
b. The financial services provider may outsource record-keeping, but it has to be available for
inspection within seven days of the Commissioner's request. The financial services provider may
also keep the records in appropriate electronic or recorded format if they are accessible and readily
reducible to written or printed format.
c. The financial services provider may not outsource recordkeeping and he should, therefore, convert
the records into appropriate electronic format, so that they will be available on his premises at all
times.
d. The financial services provider may outsource record-keeping on condition that the records are
stored in appropriate electronic or recorded format, and they should be readily reducible to written
or printed format.
GTIB 2019-02-01 V3 35
Activity 5.19
1. Charlie conducted a needs analysis for a client, after which the client purchased an
endowment policy. Charlie showed the client the quotation as well as his report, which
indicated that the client needs a savings plan to provide for his children’s studies. What
information should Charlie provide to the client in this instance?
a. The only information that Charlie has to give is that information regarding the financial product(s)
considered and recommended, with a reason for why the endowment meets his client's needs
and objectives.
b. The only information that Charlie has to give is a summary of his report, a copy of the quote and
the FAIS disclosures.
c. A brief summary of his report and a quote on which his advice was based, the financial
product(s) considered and recommended with a reason for why the endowment meets his needs
and objectives.
d. The only information that Charlie has to give is a brief summary of his report and a copy of the
quote and the completed application form for the endowment.
Activity 5.20
An FSP must have appropriate procedures and systems in place to fulfil its record-keeping obligations
in terms of FAIS. Which one of the following is NOT part of these record-keeping obligations?
a. Recording of verbal and written communications related to a financial service rendered to a client
b. Storing and retrieving of such records and any other material documentation relating to the client
or the financial service rendered to the client
c. Safe-keeping of such client documentation and records, to prevent its destruction, for a period of
five years after the rendering of the financial service
d. Safe-keeping of the compliance reports relating to client contact compiled by the compliance
officer and provided to the FSP every quarter
Activity 5.21
Which of the following records does not have to be kept by an Accountable institution?
a. The identity of the client
b. The manner in which the identity was established
c. The identity of the family members of the client
d. Documents used to identify the client
Activity 5.22
To verify a private company under FICA, which of the following is not required?.
a. Details of shareholders holding 10% of voting rights

b. Details of shareholders holding 25% or more of voting rights
c. Registered name and registration number
d. Physical address
e. SARS documentation and VAT number (if applicable)
f. Most recent Certificate of Incorporation
GTIB 2019-02-01 V3 36
Activity 5.23
Which of the following is not considered a reportable suspicious transactions?
a. Transactions that have no apparent business purpose

b. Transactions involving large cash amounts
c. A sudden withdrawal of cash
d. Surrendering of policies and second-hand (traded) policies shortly after they have been purchased
e. Loans against new-generation products (loans can then be repaid with "dirty" money in order to
"clean" the money)
Activity 5.24
Who do you tell if you suspect money laundering?
a. The client
b. The Money Laundering Reporting Officer of the FSP
c. The CEO
d. The police
Activity 5.25
Records must be kept for 5 years. This is a requirement of :
a. The FAIS Act

b. The General code of conduct
c. FICA
d. All of the above
e. b and c
GTIB 2019-02-01 V3 37
6
6. TASK 6: Comply with the requirements
of the FIC Act and Money Laundering and
Terrorist Financing Control regulations,
as it applies to the FSP
Topics
 Introduction to money laundering
 Three Stages of Money Laundering
 Background to anti-money laundering legislation
 The Prevention of Organised Crime Act (POCA)
 The Financial Intelligence Centre Act (FICA)
 Accountable institutions
 Financial Intelligence Centre
 What is the relationship between POCA and FICA?
 The impact of FICA on FSP’s
 The duties of an FSP relating to its employees in terms of FICA
 The duty of identification and verification of clients
 Documents required for identification and verification
 Exemptions
 The recording function
 Accessibility of information
 The duty to report certain transactions
 The role of the money laundering officer
 Possible indicators of a suspicious transaction
 Period for reporting suspicious or unusual transactions
 Reporting cash transactions
 The consequences of non-compliance
GTIB 2019-02-01 V3 38
Learning Outcomes
 Understand and explain money laundering and the purpose of the FIC Act
 Explain the different laws dealing with money laundering
 Give examples of Accountable Institutions and the rile of the Financial
Intelligence Centre
 The reporting requirements of FSPs, representatives and KIs
 The penalties for non-compliance with money laundering legislation
Activity 6.1
Drag and Drop the Term to the correct description:
Description Term
An example of a reporting institution
An example of an accountable institution
Financial Intelligence Centre Act, 2001

Any activity that has, or is likely to have, the effect of concealing or
disguising the nature, source, location, disposition or movement of the
proceeds of unlawful activities
Protection of Constitutional Democracy Against Terrorism and Related
Activities Act, 2004.
The Financial Action Task Force. An international task force set up by

governments to fight money laundering.
POCDATARA; Money laundering; FICA; A practising attorney; A motor car dealership; FAFT
Activity 6.2
FICA records can be kept in their original format or stored in electronic

format.
The prescribed limit for the reporting of cash transactions is R24, 999.99
If a third party stores records on behalf of an Accountable Institution, the
third party becomes liable for any failure to properly comply with the
requirements
A person who has reported a suspicious transaction may not inform the
client that such a report has been made
FICA require Accountable Institutions to keep documents used to verify
identity for a minimum of five years after the end of that business
relationship
GTIB 2019-02-01 V3 39
Disguising the origin, ownership and confusing the audit trail of money is
the first step in the money laundering process.
Failure to identify persons is an offence in terms of FICA and carries a
penalty of R100 million or 15 years’ imprisonment
You must obtain the ID of a client who takes a risk only long term policy
that will only pay out on death, disability, sickness or injury.
Activity 6.3
Which of the following activities can be seen as a money laundering activity?
a. Buying a house with funds generated by the sale of shares
b. Investing the proceeds of a life insurance policy in unit trusts
c. Buying unit trusts with cash that was generated by perlemoen smuggling
d. Buying a business with funds generated from the split up of a partnership
Activity 6.4
Which of the following can be seen as unlawful activities?
a. Selling fruit on the street
b. Driving a car with a learner's licence
c. Fraudulently acquiring land
d. Decreasing your taxable income in line with the relevant laws.
Activity 6.5
The focus of money laundering legislation is:
a. on the crime that generated illegal money.
b. on the proceeds of the crime that generated illegal money.
c. on drug trafficking.
d. on foreign exchange.
Activity 6.6
The main laws dealing with money laundering in South Africa are:
a. FICA + POCA
b. FICA + POCDATARA
c. POCDATARA + POCA + FICA
d. POCDATARA + POCA
Activity 6.7
Penalties for the contravention of POCA can be:
a. a maximum fine of R100 million or imprisonment for 15 years.
b. imprisonment for 30 years.
c. a maximum fine of R100 million or imprisonment for 30 years.
d. a maximum fine of R100 million.
GTIB 2019-02-01 V3 40
Activity 6.8
Which one of the following is not an accountable institution?
a. An attorney
b. A long-term insurance company
c. A representative of a long-term insurance company
d. A training organisation in the insurance industry
Activity 6.9
The main purpose of the FIC is to:
a. identify the proceeds of unlawful activities only.
b. combat money laundering activities only.
c. report information to all accountable institutions.
d. identify the proceeds of unlawful activities and to combat money laundering activities.
Activity 6.10
Which one of the following documents may be used to verify a client's residential address?
a. ID document
b. Bank statement
c. Passport
d. Air ticket
Activity 6.11
Which one of the following statements is true with regard to the record keeping function of records
regarding transactions?
a. Records may be kept in electronic form and should be kept for at least five years from conclusion
of the transaction.
b. Records may not be kept in electronic form as long as they are kept for at least five years from
conclusion of the transaction.
c. Records may not be kept in electronic form as long as they are kept for at least ten years from
conclusion of the transaction.
d. Records may be kept in electronic form and should be kept for at least ten years from conclusion
of the transaction.
Activity 6.12
Unlawful activity in the context of money laundering means conduct that constitutes a crime or
contravenes a law:
a. provided it took place after the introduction of POCA and FICA.
b. irrespective of whether it occurred before or after the introduction of POCA and FICA.
c. provided the activity occurred within the borders of South Africa.
d. provided it is regarded as an offence recognised by the Financial Action Task Force.
GTIB 2019-02-01 V3 41
Activity 6.13
The purpose of the Financial Intelligence Centre Act (FICA) is:
a. To provide intelligence on the financial institutions in the country
b. To assist in the identification of the proceeds of unlawful activities and to combat money
laundering
c. To make sure that financial institutions are not involved in crime
d. To enable the authorities to track the movement of money in the economy
Activity 6.14
An Accountable Institution is:
a. An institution that is accountable to the government
b. An institution of accounting practitioners
c. An institution or person that may be used to launder money
d. Another name for the Financial Sector Conduct Authority (FSCA)
Activity 6.15
Which of the following is not an accountable Institution under Schedule 1 of FICA.
a. An estate agent
b. A practising attorney
c. Someone who gives investment advice
d. A person who carries on gambling activities
e. A patron of the casinos.
Activity 6.16
FICA requires Accountable Institutions to do four of the following. Which is the odd one out?
a. Verify the client’s identity at the start of a business relationship
b. Once the relationship with the client has ended, keep documents used for identification for five
years
c. Train staff on product knowledge in preparation for Regulatory Exam Level 1
d. Train staff on FICA and money laundering
e. Report any suspicious financial transactions to the Financial Intelligence Centre.
Activity 6.17
What does the FIC Act define as a “Reporting Institution”? (Only two of the following are correct).
a. A person who carries on the business of dealing in motor vehicles.
b. A person who carries on the business of dealing in Kruger Rands.
c. An attorney who holds funds on behalf of clients.
d. A casino.
GTIB 2019-02-01 V3 42
Activity 6.18
Which of the following does not refer to one of the 3 stages of money laundering?.
a. Money that is obtained unlawfully is mixed with legal money
b. Disguising the origin and ownership of the dirty money to confuse the audit trail
c. Transactions which further remove the dirty money from its illegal origins
d. Hiding dirty money from the taxman and the police
GTIB 2019-02-01 V3 43
7
7. TASK 7 : Dealing with complaints that
have been submitted to the Ombud for
FSPs
Topics
 The Role and Powers of the Ombud
 Conditions for an investigation
 Procedures when investigating a complaint
Learning Outcomes
 Explain the functions and responsibilities of the Ombud
 Explain how complaints are handled
Activity 7.1
The purpose of the Ombud is to resolve personnel disputes in the financial services
sector
Provide a vehicle outside of the court system for people to complain about the banks
Provide a vehicle outside of the court system for customers to complain about
financial services providers where they are deemed to have violated the FAIS Act
The Ombud for Financial Services Providers (FAIS Ombud) acts independently and
objectively and takes no instructions from any person regarding the exercise of
authority.
Complaints must be for less than R800,000
GTIB 2019-02-01 V3 44
Activity 7.2
There are three conditions for launching an Ombud investigation. Three of the following are true.
Which one is false?
The FSP contravened or failed to comply with the provisions of the FAIS Act, resulting
in the complainant suffering financial prejudice or damage.
The FSP wilfully or negligently rendered a financial service to the complainant which
has caused prejudice or damage to the complainant or which is likely to result in such
damage.
The FSP was dismissive of the customer and did not reply to email messages
The FSP treated the complainant unfairly.
Activity 7.3
Three of the following procedures must be followed by the Ombud in investigating a complaint.
Which are they?
a. The Ombud must inform every interested party to the complaint that it has been received.
b. All parties must be afforded the opportunity to submit a response to the complaint.
c. The Ombud may refer the matter to the Supreme Court of Appeal
d. Where the parties accept the recommendation, it will have the effect of a final determination by
the Ombud as outlined in Section 28(1) of the FAIS Act.
Activity 7.4
The maximum size of money involved in an Ombud complaint is?
a. R1m.
b. R800,000
c. R600,000
d. R50,000
GTIB 2019-02-01 V3 45
8
8. TASK 8 : Operate as a representative in
terms of the FAIS Act
Topics
 The roles, responsibilities and requirements for representatives
 The fit and proper requirements for representatives and key individuals
 Qualities of honesty and integrity
 Competency requirements
 Continuous Professional Development (CPD)
 Experience Requirements
 Qualifications
 Key symbols and terms
 Appointment dates
 Pre-existing qualification requirements
 Previous experience and qualifications
 Regulatory Examinations
 Class of Business Training and Product Specific Training
 Record keeping and reporting requirements for Competence Register
 General CPD requirements
 Operational Ability
 Governance requirements
 Appointment of Representatives
 Operational Ability Requirements for Key Individuals
 Financial soundness for FSPs
 Distinction between advice and intermediary services
 What is an intermediary service?
 What is the difference between advice and intermediary services?
 Services under supervision
 Debarment of representatives
 Recourse for a representative after debarment
GTIB 2019-02-01 V3 46
 Regulatory Exams
Learning Outcomes
 Describe the roles, responsibilities and requirements regarding
Representatives and key individuals as defined in the FAIS Act.
 Explain the requirements for licensing by the FSCA for the role of the
representative.
 Explain when an individual is obliged to be registered as a representative in
terms of FAIS.
 Explain the “fit and proper” requirements that apply to the representatives.
 Distinguish between advice and intermediary services in terms of the Act.
 Explain when representatives can act under supervision.
 Describe the implications if a representative does not meet all the
requirements in terms of Fit and Proper by the relevant date. Explain what
FICA governs and requires.
 Describe how the FSP is impacted by FICA.
 Explain the impact of FICA on the FSP
 Explain the consequences of non-compliance
 Differentiate between a reporting institution and an accountable institution.
GTIB 2019-02-01 V3 47
Activity 8.1
The role of a Representative is to (only one the following is correct)?
a. provide financial services to clients on behalf of an FSP
b. develop financial products to sell to customers of the FSP
c. to manage the business of the FSP
Activity 8.2
Correctly complete the sentence: A representative is any person who…..
a. who offers financial advice
b. who renders financial advice and intermediary services as part of their employment or mandate
requirements
c. offers clerical services to an FSP
Activity 8.3
A Representative must be “fit and proper” as required by the FAIS Act

A Representative may work under supervision while obtaining the required experience
requirements, subject to certain conditions
Provided a Representative has experience in giving financial advice, s/he does not
need qualifications
The only law that applies to Representatives is the FAIS Act
If a Representative is debarred, s/he may not continue offering financial advice
Activity 8.4
One of the following is NOT required of Representatives. Which one?
a. To act honestly and fairly, and with due skill, care and diligence, in the interests of clients and the
integrity of the financial services industry.
b. To provide information to customers that is factually correct, and in plain language
c. To avoid conflicts of interest with clients
d. To make back-ups of the computer hard drive on a regular basis
Activity 8.5
One of the following is not a governance requirement in terms of Fit and Proper. Which is it?
d. a business plan setting out the aims and scope of the business, the business strategies and
related matters;
e. risk management policies, procedures and systems
f. adequate systems and procedures to safeguard the security, integrity and confidentiality of all
types of information
GTIB 2019-02-01 V3 48
g. processes to ensure accurate, complete and timeous processing of data, reporting of information
and the assurance of data integrity;
h. Rules and procedures for evacuation of the building in the event of a fire.
Activity 8.6
The Fit and Proper requirements of FAIS refer to “Honesty and Integrity”. People that fail this test
cannot be Representatives. In practical terms, this means 4 out of the following 5 are true. Which is
false?
Within a period of five years preceding the date of the application as a Representative,
a person been found guilty in any criminal or civil proceedings by a court of law
(whether in South Africa or elsewhere) of having acted fraudulently, dishonestly
A person has been found guilty of mismanagement by a professional services body
within the last 5 years
A person has had his/her licence suspended by a regulatory body for dishonesty in the
last 5 years
A person has been disqualified by a court from being a manager
A person has borrowed money from the company and not paid it back
Activity 8.7
Three of the following are Competency requirements in terms of Fit and Proper. Which is the odd one
out?
No-one may act as a Representative above the age of 65
A Representative must have minimum experience requirements.

A Representative must have the relevant qualifications, expertise and skills.
Must comply with Continuous Professional Development (CPD) requirements
Activity 8.8
Debarment happens when:
e. an FSP grants the authority to a representative to act on its behalf.
f. an FSP withdraws the authority granted to a representative to act on its behalf.
g. a representative retires.
h. a representative resigns.
Activity 8.9
Indicate if the statement is true or false:
A financial services provider appoints the representative and is responsible
for their actions and omissions
Representatives have to act honestly and fairly, and with due skill, care and
diligence, in the interests of clients and the integrity of the financial services
industry
The role of a Representative is to render advice only.
GTIB 2019-02-01 V3 49
Level 1 regulatory examination must be completed within two years from

the date of first appointment.
Level 2 regulatory examinations must be completed within five years from
the date of first appointment.
.
Activity 8.10
The FSCA must approve a key Individual prior to his or her appointment by
an FSP
Representatives can gain their experience requirements whilst providing
financial services under supervision
It is not a requirement for a representative working under supervision to
disclose this fact to a client
Representatives working in several different categories and sub-categories
must complete the experience requirements of one category or sub-
category before proceeding to the next.
Representatives need to meet the honesty and integrity requirement at
appointment stage
.
Activity 8.11
Identify the Fit and Proper requirements for each of the following, YES OR NO in each cell:
Fit and Proper FSP FSP (sole KI REP Compliance

requirements proprietor) officer
Honest and Integrity
Competence: Experience
Competence: Qualifications
Competence: RE Exams
Competence: CPD
Operational ability
Financial soundness
Activity 8.12
The purpose of debarment is for a FSP to exclude a representative from rendering

financial advice or intermediary services to clients on its behalf if he/she no longer
meets the fit and proper requirements of the FAIS Act; or has committed a material
contravention of the FAIS Act.
In most cases, it is the financial services provider who has mandated or employed the
representative to act on its behalf, that debars a representative?
Not completing Level One Regulatory Exam requirements within two years of
appointment is no reason to debar a representative.
When another FSP is informed by the Commissioner that a representative is debarred,
it has 7 days to remove the debarred representative from their register of
representatives?
GTIB 2019-02-01 V3 50
The Commissioner must also inform other FSPs who use the representative of his or
her debarment.
Activity 8.13
When offering to sell a financial product to a client, a Representative does not have
to disclose the costs associated with purchasing the product.
When selling a product to a client, a Representative must provide accurate
information relating to the product.
The Representative can provide information in writing or orally in any language he
chooses.
You are appointed as a clerk in a bank on Monday. By Tuesday you are a
Representative and can give financial advice to the banks’ clients.
As a Representative, you are obliged to gather as much information about the
client as possible, and make an analysis of the client’s needs based on this
information.
Activity 8.14
Choose the correct answer:
Jim has been with an FSP for a week. He has just passed his Matric. He is allowed to act as a
Representative and advise clients on which products are best suited for them.
a. True
b. False
c. Unknown
Activity 8.15
Which one of the following is not a Supervisory activity?
a. Jane is under supervision to become a Representative. The Supervisor, Jim, attends meetings
with Jane to see that she is giving sound advice to clients.
b. Jim is happy with the advice given by Jane and gives her a pre-transaction sign-off on her advice.
c. Jim calls for Jane to provide him samples of her work to see whether the transactions
concluded with clients are satisfactory in terms of the FAIS Act.
d. Jim meets regularly with Jane to mentor her and transfer skills.
e. Jim sends out an email to all staff advising them of the new company work schedule
Activity 8.16
Which of the following would qualify as a representative of an FSP in terms of the FAIS Act?
a. An accountant whose job does not lead clients to buying a financial product
b. A clerk who does not have to use judgement in performing his job functions
c. An admin manager who handles general admin queries only
d. A contractor who renders financial services
Activity 8.17
The FAIS General Code does not require representatives to:
a. make adequate disclosures.
GTIB 2019-02-01 V3 51
b. maintain adequate and appropriate record-keeping.

c. keep a log of all car expenses.
d. keep client's funds safe and separate
Activity 8.18
Which of the following activities do not qualify as CPD activities?
a. Courses
b. Conferences, workshops and seminars
c. Self-study programmes
d. Passing a Regulatory Examination
Activity 8.19
Which of the following items does not have to be contained in the FSP's register for representatives?
a. Representatives' names and business addresses
b. An indication whether the representative is employed by the FSP or works under mandate
c. Past experience of the representative in terms of financial services
d. The categories in which the representatives are competent to render financial services
Activity 8.20
Advice as defined in terms of FAIS does not include any recommendation with the intention of getting
the client to consider:
a. purchasing or investing in a financial product.
b. finalising a loan for a financial product.
c. changing or replacing a financial product or investment.
d. drafting a Will.
Activity 8.21
Select the correct answer.
Elise has been working as a long-term insurance broker for more than eight years. She is well-loved by
clients and colleagues due to her professional and friendly attitude. Elise has just finished Financial
Planning on NQF level 6; she has passed the level 1 Regulatory examination and would now like to
specialise in call-centre selling. What is Elise’s current status regarding fit and proper requirements?
a. Not applicable, she is not regarded as a representative, as defined in the FAIS Act.
b. She is working under supervision until she has passed the Regulatory Examination.
c. Not yet fit and proper at this time because, in terms of FAIS, she requires a qualification on a
higher level.
d. Regarded as fully fit and proper as she meets all the current requirement in terms of FAIS.
Activity 8.22
Which of the following must be included in the register of representatives and key individuals?
A person not employed by the FSP, but who:
a. has a verbal agreement to submit business to the FSP.
b. has signed an agreement to submit business only to the FSP and one other FSP.
c. operates on his own behalf by virtue of a verbal agreement with the FSP.
GTIB 2019-02-01 V3 52
d. operates on behalf of the FSP by virtue of a mandate from the FSP
Activity 8.23
Select the correct answer.
“Advice”, as defined in the FAIS Act, is given with a view to:
a. making a client aware of the benefits of the intermediary’s services.
b. making a client aware of the benefits of the product supplier’s services.
c. getting a client to consider acquiring or changing a financial product.
d. getting a client interested in financial planning.
Activity 8.24
Molo, who is a representative for an insurance company, wants to attend some courses and workshops
in his personal capacity and as part of his training plan at work. To establish with the providers which of
these would contribute towards his CPD hours, he must establish that the courses and workshops:
a. are verifiable and related to his work.
b. result in a number of NQF credits.
c. are presented by Accredited Learning Providers.
d. have been formally assessed.
Activity 8.25
Charne (a representative) is faced with a difficult choice: the FAIS Code of Conduct requires her to act in
the interests of the customer and the integrity of the financial services industry. If she tells her customer
about a certain feature of product A, she may lose the sale, but her company needs to boost sales of
product A in order to achieve their strategic objectives. Which one of the following options presents the
most appropriate course of action?
a. Charne tells the customer about the feature and, if he does not purchase product A, she must
work harder to attract suitable buyers.
b. Charne must first conclude the sale and then tell the customer about the features to make sure
that there are no undisclosed relevant facts.
c. Charne must encourage the customer to purchase the product that suits his needs, even if her
sales do not reflect the targets provided.
d. Charne must continue to promote the product, together with a service or other innovative
solution that overcomes the negative feature.
Activity 8.26
Three out of five of the following would result in a Representative failing the “fit and proper” test. What
are they?
a. Found guilty by a professional services body
b. Fired from previous employment
c. License refused by regulatory or supervisory body
d. Refused admission to professional body
e. Involved in disciplinary hearings at previous job
Activity 8.27
GTIB 2019-02-01 V3 53
Joe is a Representative with an FSP dealing in a single subclass of business, namely Short-term
insurance: Personal lines (Motor policies). How many hours of Continuous Professional Development
(CPD) is he required to complete in a CPD cycle (12 months)?
a. 6 hours
b. 12 hours
c. 18 hours
Activity 8.28
Only three of the following qualify for CPD. What are they?
a. Seminars
b. Workshops
c. Hours clocked up for your pilot’s licence
d. Internet-based study course
Activity 8.29
Jill is a Representative with an FSP dealing with more than one subclass of business, namely Short-term
insurance: Personal lines (Motor and health policies). How many hours of Continuous Professional
Development (CPD) is she required to complete in a CPD cycle (12 months)?
a. 6 hours
b. 12 hours
c. 18 hours
Activity 8.30
Jim is a Representative with an FSP dealing with more than one class of business, namely Short-term
insurance (Personal and Commercial lines). How many hours of Continuous Professional Development
(CPD) is he required to complete in a CPD cycle (12 months)?
a. 6 hours
b. 12 hours
c. 18 hours
Activity 8.31
One of the following does not qualify as competence training under the Fit and Proper requirements.
Which is it?
a. Class of Business training
b. B. Comm degree
c. Continuous Professional Development
d. Product specific training.
GTIB 2019-02-01 V3 54
Activity 8.32
Which of the following are not required to complete CPD training?
a. FSPs
b. Key Individuals
c. Representatives
d. Office administrators
Activity 8.34
Operational ability as defined in the Fit and Proper requirements does not apply to Representatives: true
or false?
a. True
b. False
Activity 8.35
The “Financial soundness” requirements of FAIS applies to Representatives and Key Individuals, true or
false?
a. True
b. False
Activity 8.36
Financial soundness for a Category I FSP is defined as:
a. Assets must exceed liabilities at all times
b. Liabilities must exceed assets at all times
c. Cash in the bank of R1m
Activity 8.37
Two of the following are early warning signs of a weakening in financial soundness. Which are they?
a. Assets exceed liabilities by less than 10%;
b. Current assets exceed current liabilities by less than 10%
c. Additional assets exceed minimum requirements by more than 25%
d. The office cleaner does not get paid his salary on time.
Activity 8.38
Once a representative is debarred, the FSP must properly conclude any outstanding
business of the representative.
GTIB 2019-02-01 V3 55
A representative may be re-appointed if at least twelve months has elapsed (except

where debarment arose solely based on failing to gain a qualification).
Once the Commissioner is informed of the debarment of a representative the
Commissioner must note the debarred status on its central register and make known
the debarment by publishing the debarment and any reasons in the Government
Gazette and any other appropriate public media.
The FAIS Commissioner must be informed of the debarment in writing together with
the reasons within seven days
Activity 8.39
Debarment happens when:
i. an FSP grants the authority to a representative to act on its behalf.
j. an FSP withdraws the authority granted to a representative to act on its behalf.
k. a representative retires.
l. a representative resigns.
Activity 8.40
The FSP must inform the Commissioner in writing of the removal of a representative's name from
its register:
e. within five days of the removal of the representative's name.
f. within 30 days of the removal of the representative's name.
g. within 10 days of the removal of the representative's name.
h. within 15 days of the removal of the representative's name.
Activity 8.41
The person responsible for the debarment of a representative is:
a. the FSP.
b. the Registrar of Banks.
c. the Compliance Officer.
d. the Money laundering Officer.
Activity 8.42
Which one of the following is a condition for reappointment after debarment as a result of causes
other than a lack of competence?
a. Six months must have elapsed since the debarment date.
b. Only the fit and proper requirement of competency must have been met.
c. 12 months must have elapsed since the debarment date.
d. Only the fit and proper requirement of honesty and integrity must have been met.
Activity 8.43
Reasons for debarment include:
a. Non-compliance with any of the relevant fit and proper requirements or if the representative has
contravened or failed to comply with any other provisions of the Act
b. Poor work performance
GTIB 2019-02-01 V3 56
c. Only if the representative has contravened or failed to comply with any provisions (other than the
fit and proper provisions) of the Act
d. Only non-compliance with any of the relevant fit and proper requirements
Activity 8.44
When an FSP removes a representative's name from its register for the purpose of debarment, the
FSP has to:
a. inform the representative in writing of the debarment only.
b. inform the representative in writing of the debarment, inform him of the reasons for the
debarment as well as the conditions for lifting it.
c. inform him of the reasons for the debarment only.
d. inform him of the conditions for lifting it only.
Activity 8.45
When a representative is linked to FSP A and FSP B and is debarred by FSP B, then FSP A will be
informed of the debarment by:
a. FSP B
b. the Commissioner.
c. the Compliance Officer.
d. the Ombud.
GTIB 2019-02-01 V3 57
Activity 8.46
The reason that the Commissioner is allowed to publish information on the debarment of
representatives is:
a. because it is an official duty of the Commissioner in terms of FICA.
b. because it is newsworthy.
c. because it is an official duty of the Commissioner in terms of FAIS.
d. to ensure that the public is informed of representatives who contravene the Act or who are no
longer licensed to operate.
Activity 8.47
Once an FSP has debarred a representative, the FSP has to take steps to ensure that:
a. unconcluded business of the debarred representative is cancelled.
b. clients of the debarred representative are informed that no further financial services could be
rendered to them.
c. clients of the debarred representative are not disadvantaged and that any unconcluded business
is properly concluded.
d. all records of the debarred representative's clients are destroyed.
Activity 8.48
An employment contract between an FSP and a representative should at least state non-compliance
with the following fit and proper requirements as possible reasons for debarment:
a. Honesty and integrity only
b. Competency only
c. Continuous professional development
d. Honesty and integrity and competency
Activity 8.49
Mia, an employee of Excel Life, did not make the necessary disclosures in a very lucrative deal, and
realised that her actions warranted dismissal. She immediately handed in her resignation, which was
accepted, and started working for Prudent Bank Ltd. When the client suffered huge losses and
complained to Excel Life, they could have responded as follows:
a. They are unable to proceed with debarment, as Mia is no longer in their employ, but they could
inform the Commissioner.
b. They could have collected and submitted evidence to the FSCA, recommending that Mia be
debarred.
c. They could have advised the client to lodge their complaint with the Ombud for Financial Services
Providers (FAIS Ombud) as Mia was no longer in their employment.
d. They could have provided Prudent bank Ltd with the evidence, recommending that they proceed
with her debarment.
GTIB 2019-02-01 V3 58
Activity 8.50
Jackie was debarred nine months ago due to incompetence, and has applied for reappointment. You
advise her that her debarment can be lifted if:
a. full competence has been achieved and all other requirements have been met.
b. full competence has been achieved and all fit and proper requirements have been met.
c. Twelve months have lapsed since the debarment date and she meets all the fit and proper
requirements.
d. Twelve months have lapsed since the debarment date and all unconcluded business has been
properly concluded.
Activity 8.51
Mary, a representative, was debarred in 2010 when her FSP discovered that she had not disclosed
the fact that she was found guilty on two counts of fraudulent behaviour in 2008. What was the basis
for Mary's debarment in terms of FAIS?
a. She did not meet the fit and proper requirement of competence.
b. She did not meet the requirements of reporting money laundering activities.
c. She did not meet the fit and proper requirement of honesty and integrity.
d. She was guilty of non-disclosure of information in terms of the FAIS Act.
GTIB 2019-02-01 V3 59
GTIB 2019-02-01 V3 60

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REGULATORY EXAMINATION 5

A person must have a licence in order to operate as a Financial Service Provider

The Mandate of the Enforcement Committee is to ensure all provisions of FAIS

1. FAIS means: Financial ______________ and _____________ Services.

2. FSP stands for: Financial __________________

3. FSCA stands for: Financial ___________________

The following are considered financial products in term of FAIS: deposits,

The definition of “Client” includes the general public

A category III FSP is an Administrative FSP

When advising a client on a replacement product the service provider must

The compliance officer is accountable for compliance of the FSP

a. The compliance officer

A wealth management firm which invests the portfolios of their private

All Weather Capital is one of South Africa’s few black-owned hedge

An FSP may only render financial services for which it is authorised.

A FSP is allowed to have one licence only.

The objective of disclosure is to ensure the client has adequate information to

The FSP may keep all interest accumulated in the account

A Key Individual (KI) never gives advice

 Describe the disclosure requirements regarding the FSP, product suppliers,

If an FSP advertises by telephone, then it is not essential to keep these

A record of advice must be provided in writing.

A record of advice is:

a. Details of shareholders holding 10% of voting rights

a. Transactions that have no apparent business purpose

a. The FAIS Act

Financial Intelligence Centre Act, 2001

The Financial Action Task Force. An international task force set up by

FICA records can be kept in their original format or stored in electronic

A Representative must be “fit and proper” as required by the FAIS Act

No-one may act as a Representative above the age of 65

A Representative must have minimum experience requirements.

Level 1 regulatory examination must be completed within two years from

Fit and Proper FSP FSP (sole KI REP Compliance

The purpose of debarment is for a FSP to exclude a representative from rendering

b. maintain adequate and appropriate record-keeping.

d. operates on behalf of the FSP by virtue of a mandate from the FSP

A representative may be re-appointed if at least twelve months has elapsed (except

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1. FAIS means: Financial __ and _ Services.