Compliance with the Financial Advisory & Intermediary Services Act
description
Transcript of Compliance with the Financial Advisory & Intermediary Services Act
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Compliance with theFinancial Advisory &
Intermediary Services Act
Presented by
FAIS Department of the Financial Services Boardand
Compliance Institute of South Africa
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Compliance risk management
Presented by the Compliance Institute of South Africa
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Supervision of FSPs
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Supervision of FSPs FSPs will be supervised on a risk
based supervision approach
Risk based supervision is:
A supervision approach whereby the risk of entities on regulatory objectives are measured and managed while optimising the allocation of resources
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Risk based supervision
Risk RatingImpact x Probability
Intensity Supervision
Complaints
Financial Statements
Onsite reviews
Enquiries Public
Profile changes
Application ComplianceReports
Enquiries FSP
Inspection
Theme work
MediaInternet
Regular meetings
Audit reports
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Risks taken in consideration
External risks Internal risk – business & control risk Examples of type of internal risks
Financial soundness Nature of customer, services and products Treatment of customers Organisation structure Internal systems and controls Compliance culture
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Supervision of FSPs Dynamic process and risk rating will
change as FSPs’ internal and external risk factors changes
Risk rating will determine the level of supervision and type of interaction with FSPs
Risk based approached is being rolled out and FSPs will be informed of the progress
Ratings and information on it will be only communicated to FSPs and treated as confidential
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Obligations on FSPs
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Comply with the Act Sect 19 – Submission of financial
statements & audit reports Sect 11 – Lapsing of licence Sect 17 – Appointment of CO
Sect 8 – Disclose authorised FSP Sect 8 - Display licence certificate Sect 13 – Representatives Sect 14 – Debarment of representatives Sect 17 – Submission of reports Sect 18 – Recordkeeping
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Comply with the Act Submission of financial statements &
audit reports Annual financial statements – all FSPs Category I receive premiums and client
funds and Category II and III Audited financial statements Prepared in terms of general accepted
accounting practice Section 19(3) report if receive client
funds in a separate account (refer section 10 of General Code of Conduct)
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Comply with the Act Submission of financial statements &
audit reports Within 6 months after year-end Penalties late submission Receive acknowledgement of receipt Contact FSP only if there is a problem Method submission: E-mail in .pdf format,
post or deliver – do not fax Address to FAIS Financial Statements E-mail address: [email protected]
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Comply with the Act Lapsing of licence – section 11
Natural person – died Partnership – dissolve Close corporation or company –
Liquidated Trust –dissolved Voluntary request for lapsing licence
Address letter to Registrar and mark it FAIS Profile Changes provide reasons for request
Post or fax it
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Comply with the Act Appointment and resignation of
compliance officer – section 17 Duty of compliance officer to inform
Registrar of resignation FSP must immediately appoint a new
compliance officer (FSP6 form) Address letter for attention
FAIS Profile changesE-mail address: [email protected]
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Comply with Codes of Conduct
Recordkeeping Disclosure requirements Suitable advice Complaints Advertising Compliance function Client funds
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Comply with licensing conditions
Licensing conditions Annexure to licence Submit changes to application detail
(‘Profile changes’) Submit changes to representative register
(Electronically or FSP5 forms) E-mail correspondence [email protected] Posted addressed to FAIS Profile Changes Receive acknowledgement of receipt Final letter will be sent takes between 6 to
10 weeks – working on the backlog Questions 1 & 2 of the compliance report
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Comply with other legislation
Financial Services Board Act Payment of levies
Financial Intelligence Centre Act & other anti money laundering legislation
Financial Institutions (Protection of Funds) Act
Insurance Act Collective Investment Schemes Act Securities Services Act All other legislation applicable
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Compliance report2005
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Compliance report 2005
Usage of the report Format of the report Specific questions Reporting period Submitting the report Electronic submission Hardcopy submission
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Usage of the report Supervisory tool in RBS Identify areas in which FSPs are not
complying Commit FSPs to identify
developmental areas and to work on it
FSPs can use it as a minimum “checklist” compliance function
Source of information for onsite visits
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Format of the report Easy for keeping information Lead the person completing it YES/NO Questions Not applicable - Validation Sampling – Question 16
16. Provide a short description of the sampling or other methodology used in the monitoring procedures (testing) mentioned in this report in a separate schedule and list the number of the attachment in column 5
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Format of the report Development areas
Any control, process or compliance issue that has been identified during the monitoring of compliance as an area in respect of which the need for improvement of such control, process or compliance issues has been identified, and plans are in place to effect such improvements within a reasonable time
AttachmentsLimit the attachments to what is required in the report we do not want detail on all questions
Signing of the reportPerson completing report andKey individual must acknowledge report was sent
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Specific Questions Highlighted
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1.3 Financial Products in respect of which FSP renders financial services
Condition 5 imposed by the Registrar in terms of section 8(4) of the Act
1.3.1 Does the FSP have internal controls and procedures in place to ensure that any financial product in respect of which the provider intends to
render a financial service, qualifies as a financial product contemplated in the Act?
1.3.2 Did the FSP render financial services relating to financial products that do not qualify as
financial products as contemplated in the Act?
Question 1.3
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1.4 Financial Products in respect of which FSP renders financial services
Authorisation in terms of the licence of the FSP
1.4.1 Does the FSP have internal controls and procedures in place to ensure that any financial product in respect of which the provider intends to
render a financial service, qualifies as a financial product contemplated in the Act?
1.4.2 Did you (compliance officer) perform monitoring procedures (testing) on a sample basis during
the monitoring process to ensure that the financial services rendered are in terms of limitations on
the category and subcategory for which the licence is issued?
Question 1.4
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3.3 Is a reference to the fact that a licence is held contained in all business documentation and advertisements?
4.2.1 Does the FSP have procedures in place to ensure that representatives and key individuals of
representatives of the FSP are competent to render financial services to clients taking in account the requirements stipulated in the Determination of Fit and Proper Requirements of Financial Services Providers relating to
4.2.1.1 personal character qualities of honesty and integrity; and
4.2.1.2 competence and operational ability
Question 3 & 4
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4.5 Debarment of representativesSection 14 of the Act
4.5.1 Did the FSP during the reporting period debar any representatives in terms of section 14(1) of the Act?
4.5.2 Did the FSP remove the names of the representatives and its key individuals from the register?
4.5.3 Did the FSP inform the Registrar accordingly in terms of section 14(3) of the Act?
Question 4
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5. Insurance coverSections 5(e) and 13 of the General Code of
Conduct5.1 Does the FSP have professional indemnity cover?
Provide the extent of the cover in column 5
5.2 Does the FSP have fidelity insurance cover?Provide the extent of the cover in column 5
5.3 Does the FSP have guarantees in place as contemplated in section 13 of the General Code?
Provide the extent of the guarantees in column 5
5.4 Does the FSP disclose to clients in terms of section 5(e) of the General Code whether it holds
guarantees or professional indemnity of fidelity insurance cover?
Question 5
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6.1 Is the compliance function established as part of the risk management framework of the business of the FSP?
6.4 Do you (compliance officer) have any comments to make on the procedures contemplated in section 17(3) of the Act which the FSP has established as regards their maintenance and efficacy?
Question 6 & 7
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8.1.1 Did the FSP or its representatives during the reporting period receive non-cash incentives and / or other indirect considerations for the rendering of financial services from another provider, product supplier or other person?
8.2.2 Did you (compliance officer) perform monitoring procedures on a sample basis to ensure that the FSP disclosed relevant information in terms of sections 4, 5 and 7 of the General Code of Conduct to its clients where applicable?
Question 8
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9.1.2 Did the FSP during the period contemplated in the exemption comply with paragraph 4 of the
exemption?
Question 9.1.28.3.2.2 Does the FSP use a standardised computer
programme to do the analysis?
8.7.1 Does the FSP act as a direct marketer?
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Reporting periodYear-end
January 2005February 2005
March 2005April 2005May 2005
June to Dec 2005
Reporting periodAU - July 2005AU – August 2005AU – September 2005AU – October 2005AU – November 2005AU – December 2005
AU – Authorisation date
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Reporting periodAll year-ends 28 February
FSP licensed 15 July 2004 Authorisation date = 30 September 2004 Reporting period = 30 Sept 04 – 31 Aug 05 Submission of report = before 31 Oct 05
FSP licensed 15 March 2005 Authorisation date = 15 March 2005 Reporting period = 15 March 05 – 31 Aug 05 Submission of report = before 31 Oct 05
FSP licensed 1 September 2005 No report will be submitted for 2005
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Reporting periodAll year-ends 31 December
FSP licensed 15 July 2004 Authorisation date = 30 September 2004 Reporting period = 30 Sept 04 – 31 Dec 05 Submission of report = before 28 Feb 06
FSP licensed 15 Sept 2005 Authorisation date = 15 Sept 2005 Reporting period = 15 Sept 05 – 31 Dec 05 Submission of report = before 28 Feb 06
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Submitting the report Preferred method - Electronically
with special programme: Sign last page and scan in Do not have scanner – submit per post Attachments in Microsoft can be electronically
attached when submitting the report Compliance officer can use programme for
multiple FSPs
Hard copy – only be accepted per post or hand delivered
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Electronic submissionStep 1 – Register online
www.fsb.co.za /FAIS/Compliance report
Step 2 -Receive an e-mail with instructions
Step 3 -Install programme according the instructions on PC automatically
Step 4 -Complete Compliance officer’s / FSP’s (if no CO required) details
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Electronic submissionStep 5 - Request FSPs details on
website and upload it orcapture manually (only have a few)Can do as may times as necessaryIt will only be the FSPs linked to compliance officer
Step 6 - Complete the compliance report
Step 7 - Attach the documents
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Electronic submissionStep 8 - Validate the report
Step 9 - Export the report and sent to FSB via e-mail (it will be done automatically)
Step 10 - Receive confirmation whensuccessful upload and case no
Step 11 – We will contact you if necessary for additional information
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Hardcopy submissionStep 1 - Obtain the form
FSB website .pdf format orGovernment PrintersForms will not be e-mailedor posted to FSPs
Step 2 - Complete the form andmark attachments
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Hardcopy submission
Step 3 - Ensure that the form correctly completed
Do not fill in anything on grey areas
If the form is incorrectly completed it will be returned and penalties will be charged for late submission
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Hardcopy submissionStep 4 - Post the form
No acknowledgement will begiven to hand delivered forms –
it will be treated as a posted form
Step 5 - Receive acknowledgementWithout letter acknowledgementthe report will be regarded as not submitted
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Late submissions Penalties of up to a R1 000 per day
will be charged for late submissions
If we did not acknowledge the receipt of the report we did not receive the report and the FSP will be penalised
Take 2 weeks acknowledgement of hardcopy after we received it – trace the progress on the website
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Thank you