Presented by
FAIS Department of the Financial Services Board and
Compliance Institute of South Africa

 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

Application Enquiries
FSP
Enquiries
Public
Media
Internet
Complaints
Inspection
Risk Rating
Impact x Probability
Intensity Supervision
Theme work
Compliance
Reports
Financial
Statements
Audit reports
Profile changes
Onsite reviews
Regular meetings

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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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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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Sect 19 – Submission of financial statements & audit reports
Sect 11 – Lapsing of licence
Sect 17 – Appointment of CO
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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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Submission of financial statements & audit reports
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Annual financial statements – all FSPs
Category I receive premiums and client funds and Category II and III
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Audited financial statements
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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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Submission of financial statements & audit reports
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Within 6 months after year-end
Penalties late submission
Receive acknowledgement of receipt
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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: faisfins@fsb.co.za

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Lapsing of licence – section 11
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Natural person – died
Partnership – dissolve
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Close corporation or company –
Liquidated
Trust –dissolved
Voluntary request for lapsing licence
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Address letter to Registrar and mark it
FAIS Profile Changes provide reasons for request
Post or fax it

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Appointment and resignation of compliance officer – section 17
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Duty of compliance officer to inform
Registrar of resignation
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FSP must immediately appoint a new compliance officer (FSP6 form)
Address letter for attention
FAIS Profile changes
E-mail address: faispfc@fsb.co.za

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Recordkeeping
Disclosure requirements
Suitable advice
Complaints
Advertising
Compliance function
Client funds

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Licensing conditions Annexure to licence
Submit changes to application detail
(‘Profile changes’)
Submit changes to representative register
(Electronically or FSP5 forms)
E-mail correspondence faispfc@fsb.co.za
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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Financial Services Board Act
Payment of levies
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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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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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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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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
Attachments
Limit the attachments to what is required in the report we do not want detail on all questions
Signing of the report
Person completing report and
Key individual must acknowledge report was sent

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?

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?

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

4.5
Debarment of representatives
Section 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?

5.
Insurance cover
Sections 5(e) and 13 of the General Code of Conduct
5.1
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?

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?

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?

8.3.2.2 Does the FSP use a standardised computer programme to do the analysis?
8.7.1 Does the FSP act as a direct marketer?
9.1.2 Did the FSP during the period contemplated in the exemption comply with paragraph 4 of the exemption?

Year-end
January 2005
February 2005
March 2005
April 2005
May 2005
June to Dec 2005
Reporting period
AU - July 2005
AU – August 2005
AU – September 2005
AU – October 2005
AU – November 2005
AU – December 2005
AU – Authorisation date

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All year-ends 28 February
FSP licensed 15 July 2004
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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
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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
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No report will be submitted for 2005

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All year-ends 31 December
FSP licensed 15 July 2004
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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
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Authorisation date = 15 Sept 2005
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Reporting period = 15 Sept 05 – 31 Dec 05
Submission of report = before 28 Feb 06

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Preferred method - Electronically with special programme:
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Sign last page and scan in
Do not have scanner – submit per post
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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

Step 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

Step 5 Request FSPs details on website and upload it or capture manually (only have a few)
Can do as may times as necessary
It will only be the FSPs linked to compliance officer
Step 6 Complete the compliance report
Step 7 Attach the documents

Step 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 when successful upload and case no
Step 11 – We will contact you if necessary for additional information

Step 1 - Obtain the form
FSB website .pdf format or
Government Printers
Forms will not be e-mailed or posted to FSPs
Step 2 - Complete the form and mark attachments

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

Step 4 - Post the form
No acknowledgement will be given to hand delivered forms – it will be treated as a posted form
Step 5 - Receive acknowledgement
Without letter acknowledgement the report will be regarded as not submitted

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Penalties of up to a R1 000 per day will be charged for late submissions
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If we did not acknowledge the receipt of the report we did not receive the report and the FSP will be penalised
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Take 2 weeks acknowledgement of hardcopy after we received it – trace the progress on the website