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

Determination of Fit and Proper Requirements for Financial Services Providers, 2008

Part I : Definitions

 

 

1) In this Schedule-

 

"the Act"

means the Financial Advisory and Intermediary Services Act, 2002, including, unless the context indicates otherwise, any measure referred to in the definition of "this Act" in section 1(1) of the Act; and any word or expression shall have the meaning that it was assigned in the Act, and, unless the context indicates otherwise-

 

"ABET level 1"

means Adult Basic Education and Training which is aimed at adults learning to read, write and calculate, and is equivalent to grade 3 (standard 1) in public schools;

 

"administration of assistance policies"

means the range of activities connected with the organising of all activities relating to assistance policies, as defined in the Long-term Insurance Act, 1998, including work in connection with maintaining administrative records and the offsetting of claims or the processing of claims on behalf of the Insurer to the extent agreed to in terms of a written mandate between the insurer and the funeral business administrator;

 

"administrative FSP"

means an administrative FSP as defined in the Notice of Codes of Conduct for Administrative and Discretionary FSPs, 2003, as amended;

 

"annual expenditure"

means the expenditure set out in the latest set of financial statements of the provider for the year in question or, in the case of an applicant commencing business, the budgeted expenditure as expressed in its budget or other accounts, less staff bonuses, employees' and directors' or member's shares in profits, other appropriation of profits to the directors or members and emoluments of directors, members, partners or sole proprietor;

 

"applicant"

means the person who has submitted an application in terms of section 8(1) of the Act for authorisation to act as a financial services provider;

 

"application"

means an application by an applicant submitted in the form and manner determined by the Registrar in the Application by Financial Services Providers for Authorisation by the Financial Services Board, 2008;

 

"appointment date"

or "date of appointment" or "appointment as a representative" means the first date on which a representative was appointed by any financial services provider to render financial services in relation to a specific Category or subcategory;

 

"approval date"

or "date of approval" or "approval as a key individual" means the first date on which a key individual was first approved by the Registrar to manage and oversee the rendering of financial services for any financial services provider in relation to a specific Category or subcategory;

 

"Assistance Business FSP"

means an FSP that renders intermediary services in relation to the administration of assistance policies on behalf of the Insurer to the extent agreed to in terms of a written mandate between the Insurer and the Assistance Business FSP;

 

"authorisation"

or "date of authorisation" means the date on which an FSP (who is a sole proprietor) was authorised by the Registrar to render financial services in relation to a specific Category or subcategory;

 

"Category I"

in relation to a financial services provider, means all persons, other than persons referred to in Categories II, IIA, III and IV, who are authorised to render the financial services (other than financial services mentioned in Categories II, IIA, III and IV) as set out in the relevant application;

 

"Category II"

in relation to a financial services provider, means all persons who are authorised as discretionary FSPs as set out in the relevant application;

 

"Category IlA"

in relation to a financial services provider, means all persons who are authorised as hedge fund FSPs as set out in the relevant application;

 

"Category III"

in relation to a financial services provider, means all persons who are authorised as administrative FSPs as set out in the relevant application;

 

"Category IV"

in relation to a financial services provider, means all persons who require licences as Assistance Business FSP;

 

"continuous professional development"

or "CPD" means a process of learning and development, with the aim to enable the applicant, key individual or representative to maintain capabilities to perform competently within the Categories or subcategories they render financial services in;

 

"discretionary FSP"

means a discretionary FSP as defined in the Notice of Codes of Conduct for Administrative and Discretionary FSPs, 2003;

 

"examination body"

means a body that has been delegated, in terms of section 6 of the Act, the function of setting, administering and conducting regulatory examinations on behalf of the Registrar;

 

"forex investment business"

means forex investment business as defined in the Code of Conduct for Authorised Financial Services Providers and their Representatives, involved in Forex Investment Business, 2004;

 

"friendly society benefits"

means a benefit provided by a friendly society contemplated in paragraph (d)(ii) of the definition of "financial product" in section 1(1) of the Act;

 

"FSP"

or "provider" means an authorised financial services provider as defined in section 1(1) of the Act or an applicant;

 

"fund member policy"

means a fund member policy as defined in Part 5A of the Regulations under the Long-term Insurance Act, 1998;

 

"grade"

means the level of education obtained in the course of attending formal schooling, or adult basic education and training provided by a registered or recognised education institution in the Republic, or the equivalent school leaving level obtained outside the Republic and the equivalence to the South African requirement can be established;

 

"hedge fund FSP"

means a hedge fund FSP as defined in the Notice of Codes of Conduct for Administrative and Discretionary FSPs, 2003, as amended;

 

"health service benefit"

means a benefit referred to in paragraph (g) of the definition of 'financial product' in section 1(1) of the Act;

 

"Higher Education Institution"

or "Institution of Higher Education" means a registered Higher Education Institution as defined in the Higher Education Act, 1997;

 

"industry association"

means a voluntary body, recognised by the Registrar, that is constituted to enable business or individuals with similar trades, occupations or services, to promote issues of common concern;

 

"Long-term Deposits"

means deposits as defined in section 1(1) of the Banks Act, 1990, including foreign currency deposits, with a term exceeding 12 months;

 

"Long-term Insurance subcategory A"

means assistance policies as defined in section 1(1) of the Long-term Insurance Act, 1998, but excludes policies referred to in the definitions of Long-term Insurance subcategories B1, B2 and C;

 

"Long-term Insurance subcategory B1"

means disability, health and life policies as defined in section 1(1) of the Long-term Insurance Act, 1998, which provide only risk benefits as contemplated in the Regulations under the Long-term Insurance Act, 1998, but excludes fund policies as defined in section 1(1) of the Long-term Insurance Act, 1998, fund member policies, investment policies as defined in Part 5B of the Regulations under the Long-term Insurance Act, 1998, and policies referred to in the definitions of Long-term Insurance subcategories A, B2 and C;

 

"Long-term Insurance subcategory B2"

means long-term policies as defined in section 1 of the Long-term Insurance Act, 1998, which are-

a) investment policies as defined in Part 5B of the Regulations under the Long-term Insurance Act, 1998, which guarantee a minimum return of any premium paid at a specified future date or dates, and where such minimum is ascertainable in Rand terms at inception;
b) disability, health and life policies that provide risk benefits as contemplated in the Regulations under the Long-term Insurance Act, 1998,and have a guaranteed investment value or a materially equivalent value;
c) annuities which guarantee a minimum annuity for the term of the policy which annuity is ascertainable in Rand terms at inception; or
d) any policy which combines the policy features included in paragraphs (a) to (c),

but excludes fund policies, fund member policies and policies referred to in the definitions of Long-term Insurance subcategories A, B1 and C;

 

"Long-term Insurance subcategory C"

means long-term policies as defined in section 1(1) of the Long-term Insurance Act, 1998, excluding fund policies as defined in section 1(1) of the Long-term Insurance Act, 1998, fund member policies and policies referred to in the definitions of Long-term Insurance subcategories A, B1 and B2;

 

"liquid assets"

means cash or cash equivalents that can be liquidated within seven (7) days without realising a loss on liquidation;

 

"National Learner Record Database (NLRD)"

means an information system used and managed by SAQA to record the achievement of individuals in terms of qualifications, unit standards, professional designations and other information in order to manage the National Qualifications Framework;

 

"National Qualifications Framework"

or "NQF" means the National Qualifications Framework of SAQA;

 

"offsetting of claims"

means the payment of policyholders' claims and the offsetting of such claims against premium received from policyholders for remittal to the long-term insurer;

 

"pension fund benefits"

means financial products contemplated in paragraph (d) (i) of the definition of "financial product" in section 1(1) of the Act, including fund policies, but excluding retail pension benefits;

 

"qualification"

means a qualification that is--

a) registered by SAQA;
b) an extracurricular specialist programme offered at a post-graduate level by an Institution of Higher Education;
c) an industry or professional programme offered through a professional body recognised by the Registrar or accredited training provider; or
d) a foreign qualification similar to qualifications in (a) to (c) above,

and has been evaluated against the qualifying criteria and is recognized by the Registrar, after consultation with the Advisory Committee;

 

"qualifying criteria"

means the criteria set by the Registrar, after consultation with the Advisory Committee, by notice in the Gazette against which regulatory examinations will be set and qualifications will be evaluated and recognised for inclusion on the list of recognized qualifications; to ensure that it will enable the applicants, key individuals and representatives concerned to meet the competency requirements for the applicable categories or subcategories;

 

"qualification list"

or "list of recognised qualifications" means the list of qualifications that have been evaluated against the qualifying criteria and recognised as appropriate by the Registrar, after consultation with the Advisory Committee, by notice in the Gazette;

 

"quality assurance"

means the process of ensuring that the degree of excellence specified is achieved;

 

"regulatory examinations"

means examinations prescribed by the Registrar, set in accordance with the qualifying criteria for the purpose of meeting the competency requirements of this Determination;

 

"related parties"

means related parties as defined in International Accounting Standard (lAS 24) issued by the South African Institute of Chartered Accountants;

 

"retail pension benefits"

means benefits provided by retirement annuity and/or preservation pension and/or preservation provident funds, as defined by the Income Tax Act, 1962, and includes such benefits provided by fund member policies, as defined in the Regulations to the Long-term Insurance Act, 1998, but excluding pension fund benefits;

 

"SAQA Act"

means the South African Qualifications Authority Act, 1995, including any regulations promulgated thereunder;

 

"SAQA"

means the South African Qualifications Authority established in terms of the provisions of the SAQA Act;

 

"services under supervision"

means financial services rendered by a representative who does not meet the prescribed experience, qualification and/or regulatory examination requirements and which services are rendered under the guidance, instruction and supervision of a supervisor in terms of an exemption granted by the Registrar under section 44 of the Act;

 

"Short-term Deposits"

means deposits as defined in section 1(1) of the Banks Act, 1990, including foreign currency deposits, with a term not exceeding 12 months;

 

"Short-term Insurance Commercial Lines"

means short-term insurance contracts or policies referred to in the Short-term Insurance Act, 1998, purchased by juristic persons and natural persons acting in a business capacity;

 

"Short-term Insurance Personal Lines"

means short-term insurance contracts or policies referred to in the Short-term Insurance Act, 1998 purchased by natural persons acting otherwise than in a business capacity;

 

"sole proprietor"

means an FSP who is a natural person;

 

"statutory professional body"

means a statutory body that governs a specific profession, and is registered as such in terms of the legislation applicable to such bodies;

 

"subcategory"

means, in relation to-

a) Category I, a subcategory of financial products as it appears in Table A in paragraph 4(1) of this Determination; and/or
b) Category II and III, subcategories referred to in Table B in paragraph 4(2) of this Determination;

 

"supervisor"

means -

a) an authorised financial services provider that is a natural person;
b) a representative of the provider who meets, to the satisfaction of the provider, the relevant requirements of this Determination; or
c) a key individual of the financial services provider who meets, to the satisfaction of the provider, the relevant requirements of this Determination;

 

"training provider"

means a training provider as defined in the SAQA Act;

 

"voluntary professional body"

means a body, recognised by the Registrar, that governs a profession in a similar manner to a statutory professional body, but in respect of which membership is voluntary and not prescribed by legislation.

 

 

2) Unless the context indicates otherwise, a reference in this Determination to Category I, II, IIA, III or IV, or to any subcategory, shall not be construed as preventing an applicant from applying for a licence in respect of one or more Categories or subcategories, subject to compliance with the requirements of this Determination as regards each such Category or subcategory.

 

3) A reference in this Determination to any key individual or any representative of a financial services provider will include any new key individual and representative appointed after the date of the provider's authorisation.