| (1) |
An FSP must ensure that where it appoints a person as a representative— |
| (i) |
is not an unrehabilitated insolvent; |
[Section 40(1)(a)(i) substituted by section 5(a) of Notice No. 707, GG43474, dated 26 June 2020]
| (ii) |
is not under liquidation, provisional liquidation or business rescue; and |
| (iii) |
is not subject to any pending proceedings which may lead to an outcome referred to in subparagraph (i) to (ii); |
| (b) |
the person, in the case of a juristic representative, has sufficient operational ability and financial resources to perform the activities for which it is appointed as a representative; and |
| (c) |
such appointment does not— |
| (i) |
materially increase any risk to the FSP or to the fair treatment of its clients; |
| (ii) |
materially impair the quality of the governance framework of the FSP, including the FSP’s ability to manage its risks and meet its legal and regulatory obligations; |
| (iii) |
compromise the fair treatment of or continuous and satisfactory service to clients; |
| (iv) |
prevent the FSP from acting in the best interests of its clients; or |
| (v) |
result in key decision making responsibilities being removed from the FSP. |
| (2) |
An FSP must ensure that any remuneration or fee paid in respect of an activity or function for which a person is appointed as a representative— |
| (a) |
is reasonable and commensurate with the actual function or activity; and |
| (b) |
is not structured in a manner that may increase the risk of unfair treatment of clients. |
| (3) |
An FSP must develop appropriate contingency plans to ensure the continued function of the FSP’s business and continued service to its clients in the event that the appointment of the representative is terminated or becomes ineffective. |
| (4) |
An FSP may not permit a representative to outsource or sub-delegate any activity or part thereof relating to the rendering of financial services that that representative performs on behalf of the FSP. |
| (5) |
If a representative who is a natural person is sequestrated after the appointment referred to in subsection (1), the FSP who appointed the representative may only allow such representative to continue to act on behalf of the FSP as a representative if the FSP implements appropriate measures to mitigate any risks that may arise for clients or the FSP as a result of the representative being sequestrated. |
[Section 40(5) inserted by section 5(b) of Notice No. 707, GG43474, dated 26 June 2020]
Contingency Fees Act, 1997
