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Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)

Exemption in respect of Services under Supervision rendered by Compliance Officers, 2010

4. Requirements and conditions

 

 

1) A compliance officer or compliance practice that provides a supervisee with the opportunity to render services under supervision, must satisfy the registrar that the compliance officer or compliance practice-
a) has the operational ability to monitor the rendering of services under supervision; and
b) can through or as an approved compliance officer act as supervisor of the supervisee that renders services under supervision.

 

2) A compliance officer or compliance practice that intends to provide a supervisee with the opportunity to render services under supervision must-
a) ensure that the supervisee is co-appointed with the supervisor as compliance officer of the FSP concerned;
b) ensure that the supervisee is monitored under the direct supervision and ongoing level of supervision of the supervisor concerned.

 

3) A supervisee that only meets the required qualification requirements on approval may render services under supervision whilst obtaining the required experience and regulatory examination.

 

4) The following will apply to the period a supervisee renders services under supervision:
a) The maximum period any supervisee may render services under supervision is three years from date of approval;
b) the relevant period commences on the date the supervisee is approved to render services under supervision; and
c) any significant interruption (six consecutive weeks or longer) while obtaining the required experience and regulatory examination must be compensated for by arranging for an additional period for monitoring the rendering of services under supervision, equal to the period interrupted.

 

5) Supervision may include one or more of the following activities:
a) Sign-off by a supervisor on services rendered under supervision;
b) pre-reporting sign-off by a supervisor where services are rendered under supervision;
c) attending meetings with supervisee where the purpose of the meeting is the rendering of services under supervision;
d) appropriate post-monitoring sampling;
e) follow-up calls to confirm certain aspects of the rendering of services under supervision;
f) any other activity that enables the supervisor to scrutinise the activities of the supervisee in respect of the rendering of services under supervision.

 

6) In the case of Categories II and IIA providers, the supervisor must check and sign-off that the supervisee has monitored mandate compliance controls implemented by the FSP.

 

7) Supervision arrangements must be arranged in accordance with the following specific requirements:

 

a) Selection of the supervisor:

The FSP, compliance practice or compliance officer must ensure that the normal working relationship between the supervisee and supervisor allows the supervisor oversight of the activities performed by the supervisee as per supervision agreement, and that there is regular contact that enables the transfer of skills, which may include face-to-face contact or contact via electronic means, between the supervisee and supervisor in the execution of duties.

 

b) Supervision agreement:

There must be an agreement that details the procedures regarding the rendering of services under supervision.

 

c) Supervisor responsibilities:
i) The supervisor must supervise at all times the proper execution of duties by the supervisee;
ii) the supervisor must ensure that the supervisee has a good understanding of duties in the rendering of services under supervision which must include but, not be limited to-
aa) conducting a risk assessment of the business;
bb) compilation of an appropriate risk management plan; and
cc) implementation of appropriate processes and procedures;
iii) the supervisor must observe selected meetings by the supervisee in the rendering of services under supervision, the frequency of which may vary according to the complexity of the financial service rendered by the financial services provider; the complexity of the financial products offered; the experience of the supervisee; or the qualifications of the supervisee;
iv) the supervisor must be able to provide evidence of the supervision actions undertaken and such evidence must be available for scrutiny by the registrar;
v) the supervisor must assess the compliance related advice given by the supervisee for appropriateness; and
vi) the supervisor and supervisee must have documented properly evidence of rendering services under supervision, the method followed and frequency thereof that took place during the period under supervision.

 

d) The supervisee must-
i) adhere to the requirements of the supervision agreement;
ii) provide the supervisor with any records and or documents regarding the rendering of services under supervision;
iii) where such supervisee is a compliance officer other than an internal compliance officer, in interaction with FSPs, disclose that the supervisee acts under supervision;
iv) request guidance from the supervisor if in doubt when performing any duties in relation to the rendering of services under supervision.

 

e) Supervision applicable to compliance officers of Categories I and IV providers:
i) A supervisee rendering services under supervision is not allowed to conduct any unaccompanied monitoring of financial services rendered to clients during the first year under supervision;
ii) A supervisee rendering services under supervision may conduct unaccompanied monitoring reviews during the second and third year under supervision, but is not allowed to provide the final sign-off on compliance reports submitted to senior management and the registrar in respect of the rendering of financial services to clients;
iii) A supervisee rendering services under supervision is not allowed to complete the annual compliance report on behalf of a financial services provider.

 

f) Supervision applicable to compliance officers of Categories II, IIA and Ill providers:
i) The supervisor must, where the supervisee is rendering services under supervision with respect to Categories II and IIA providers, review and approve in writing the rendering of such services prior to conclusion of any review;
ii) a supervisee rendering services under supervision is not allowed to conduct any unaccompanied monitoring of financial services rendered to clients during the first two years under supervision;
iii) a supervisee rendering services under supervision may conduct unaccompanied monitoring reviews during the third year under supervision, but is not allowed to provide the final sign-off on compliance reports submitted to senior management and the registrar in respect of the rendering of financial services to clients;
iv) a supervisee rendering services under supervision is not allowed to complete the annual compliance report on behalf of a financial services provider.