FAIS
LEARNING GUIDE
MODULE 2
LESSON
5
Inter-Bank Compliance Training Project
Sponsored by BANKSETA
Representatives
Topics:
1
2
3
4
Differences between KIs and Representatives
Relationships: The FSP, KIs and Representatives
Fit and Proper and the Representative
Restrictions and conditions
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
INTRODUCTION
Link
A Representative is a person representing a FSP under contract of
employment or any other mandate (ie mandatory) in rendering
services or giving advice in relation to a Financial Product.
A “mandatory” could be a temporary member of staff, a casual, a
consultant or an outsourced person amongst others.
Representatives need not be licensed under FAIS. However, due
to the fact that they work for an FSP who is licensed, they need to
comply with the fit and proper requirements and be listed in the
FSP’s Representatives Register.
Relevance to you
You no doubt, presently represent your organisation in some way.
In your interaction with clients, what do you feel encourages your
clients to have more confidence and trust in you and your
organisation? What do you think makes a great Representative?
Note down your thoughts here and bear them in mind as you work
through this lesson.
Learning
outcomes
This lesson covers four important issues that have a direct impact
upon a Representative’s activities in the organisation:
1 Distinguish between a Key individual and a Representative
2 Describe the relationship between the Representative and the
FSP and the Representative and a KI
3 Specify how the Fit and Proper requirements impact on the
Representative
4 Explain the restrictions and conditions under which a
Representative may operate.
Page 2
Learner guide
Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #1 DIFFERENCES BETWEEN KIS & REPRESENTATIVES
L/O#1
Distinguish between a Key Individual and a Representative.
Key Individual
versus
Representative
The following table highlights the key differences between these
important individuals.
Representative
Key Individual
The Key Individual
Is the person responsible for
managing or overseeing the
activities of the FSP whenever
they offer any financial service
in relation to a financial
product.
The Representative
Is the person who interacts
directly with the client, and
offers financial services for or
on behalf of the FSP in
connection with a financial
product.
Is a senior executive appointed
by the FSP based upon
qualification and experience in
a specific financial product
category.
Is appointed by the FSP based
upon qualification and financial
product expertise.
Is appointed by the FSP based
upon management and
financial product expertise.
Is appointed by the FSP based
upon financial product
expertise.
Uses management skills,
product knowledge and codes
of conduct to ensure that the
business is run ethically and
that the client is treated fairly.
Uses product knowledge, skills
and codes of conduct to ensure
that the client is ethically
treated in terms of
understanding both client’s
needs and financial products.
Page 3
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Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #1 DIFFERENCES BETWEEN KIS & REPRESENTATIVES – cont.
Key Individual
versus
Representative cont.
The Key Individual
Can be a director, manager,
partner, etc.
The Representative
Can be an employee or a
mandatory.
KIs need to satisfy the
Registrar that they comply
with the Fit and Proper
requirements.
The FSP must be satisfied that
the Representative meets the
Fit and Proper requirements
and is competent and qualified
to act on their behalf.
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B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #2 RELATIONSHIPS: THE FSP, KIs & REPs
L/O #2
Describe the relationship between the Representative and the FSP
and the Representative and a KI.
Relationship
The boxes below indicate the relationship between the
Representative and the FSP as well as the relationship between
the Representative and the Key Individual.
FSP



Licenced
Employs Representatives
Appoints Key Individuals.
Key Individual




Responsible for the actions of Representatives
Can be anywhere in the country
Does not change Representatives’ reporting structure
Is Fit and Proper.
Line manager /
Supervisor

Manages the Representatives.
Representatives




Works for the FSP
Is Fit and Proper
Reports to Line Manager / Supervisor
May be an employee or mandatory.
Apply the
learning to your
environment
Place yourself into this diagram. Think about it in terms of your own
bank.
 How do you see these relationships impacting upon your
activities?
 What do you see as the key differences between a
Representative relationship with a KI and with a line manager?
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Learner guide
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B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #3 FIT AND PROPER AND THE REPRESENTATIVE
L/O #3
Specify how the Fit and Proper requirements impact on the
Representative.
Link
A common thread that runs through each module in this course is
the need to meet Fit and Proper requirements.
Fit & Proper:
Impact on
Representative
A Representative has to comply with the Fit and Proper
requirements laid down by FAIS.
This means that the Representative needs to meet
requirements of
 Honesty and Integrity
 Competence
for the financial product(s) s/he is representing.
Broad
consequences
the
FAIS imposes conditions and restrictions if the Representative
does not meet the Fit and Proper requirements. The table below
takes you through broad conditions and their consequences.
If
A person does not meet
minimum Fit and Proper
requirements.
Then
That person is prohibited from
functioning as a
Representative.
A person only meets the
minimum Fit and Proper
requirements.
That person has a specific
period of time in which to attain
the next level of competence.
Circumstances change for a
person who is a
Representative so that the “Fit
and Proper” status is in
question.
That Representative must
declare the changed
circumstances to the FSP.
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Learner guide
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Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #4 RESTRICTIONS AND CONDITIONS
L/O #4
Explain the restrictions
Representative operates.
Link
There are checks and balances in place which regulate FSPs, KIs,
financial products, etc. Representatives are no exception.
and
conditions
under
which
a
The restrictions and conditions, under which the Representatives
operate, form part of these checks and balances.
Representatives:
Restrictions and
Conditions
Representatives:
 May only represent a FSP
 Must maintain their Fit and Proper status
 Must provide clients with a certified copy of their authority to act
on behalf of the FSP if requested to do so.
 May not act as a Representative once debarred.
Tip: If your responsibilities as a Representative take you out of
the office, you’ll need to carry a certified copy of your authority.
FSPs:
 Have to be satisfied that their Representatives are Fit and
Proper
 Must check that their Representatives comply with the relevant
codes of conduct
 Must maintain an up to date register of all Representatives and
their current Fit and Proper status
 Must debar a representative who no longer complies with
and/or breaches any aspect of FAIS.
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Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #4 RESTRICTIONS AND CONDITIONS
Debarment:
A definition
In this context, debarment means that a Representative is
prohibited from performing his/her duties.
Debarment is a serious step to take. It means that once the
Representative’s name is removed from the FSP register s/he may
no longer act as a Representative.
The FSB must be notified within 30 days and will maintain records
of such debarments.
Debarment
A Representative can be debarred if s/he:
 No longer complies with the Fit and Proper requirements
 Has contravened or failed to comply with any provision of FAIS.
Debarment:
FSP’s
Responsibilities
Every FSP’s KI must at all times be satisfied that Representatives
are competent to act on its behalf.
The Representative must meet Fit and Proper requirements and
adhere to the various codes of conduct.
In particular, the FSP must view very seriously information related
to:
 Any infringement by the Representative of FAIS
 Any failure by the Representative to comply with any part of
FAIS.
Page 8
Learner guide
Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
L/O #4 RESTRICTIONS AND CONDITIONS
Consequences of
debarment
If a Representative is debarred, then the FSP must act in terms of
the debarment requirements.
If
The Representative’s
change of
circumstances means
that s/he is no longer
Fit and Proper.
If a Representative is
debarred
Apply the
learning to your
environment
Then
The FSP must remove the
Representative from the register
(debar the Representative), and must
notify the FSB within thirty days.
The FSP must:
 Prohibit the Representative from
offering any new financial service,
by withdrawing any authority to
act on its behalf
 Take immediate steps to ensure
that the debarment does not
prejudice the interests of the
clients
 Conclude all of the
Representative’s unfinished
business with clients
 Inform the Registrar that the
Representative’s name has been
removed from the register, within
the prescribed time limit.
By now you have a broad understanding of the impact that FAIS
has upon your work in a financial institution.
Within your context, what might prompt the FSP to debar a
Representative?
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Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
CONSOLIDATION
Summary
This is the end of the lesson on the Representatives of FSPs. You
should now be able to explain that a Representative:
 Is an employee or mandatory of the FSP
 Operates under the FSP’s license
 Is responsible to the KI for their actions in the course and scope
of their work
 Must produce a certified copy of the FSP’s license to clients,
when necessary
 Must comply with the Fit and Proper requirements of FAIS
 Can be debarred from the register of Representatives if they
contravene or fail to comply with any provision of the FAIS Act.
Apply the
learning to your
environment
Page back to the thoughts you noted down on page 1 of this
lesson. What are your views now of an excellent representative?
Have your ideas changed?
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Learner guide
Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
ASSESSMENT
Test your
knowledge &
understanding
Answer these short questions to test your knowledge and
understanding of this material. Choose the right answer.
Question 2.5.1
A Representative:
a Can be a temporary, a casual, a consultant or an
outsourced person
b Is responsible for attaining and maintaining their “Fit and
Proper” status for each product that they deal with
c Is a person who renders a financial service to a client on
behalf of a FSP
d Is listed on the FSPs register of representatives.
2.5.1.1
2.5.1.2
2.5.1.3
2.5.1.4
2.5.1.5
Question 2.5.2
All of the choices are true
None of the choices are true
Choices (a) and (b) are true
Choices (a) and (c) are true
Choices (b) and (c) are true.
A representative uses product knowledge, skills and codes of
conduct to:
a Sell as many products as possible to a client
b Earn as much commission as possible to increase their
bonuses
c Ensure that the client is ethically treated in terms of
understanding both client’s needs and financial products
d Ensure that clients understands the advice and makes
an informed decision.
2.5.2.1
2.5.2.2
2.5.2.3
2.5.2.4
2.5.2.5
All of the choices are true
Choices (a) and (b) are true
Choice (b) and (d) are true
Choices (c) and (d) applies
None of the choices are true.
Page 11
Learner guide
Developed by Gray Training 011 472 3516
Jan 2004
B A N K S E T A
S p o n s o r e d
P r o j e c t
Representatives
Module 2: Lesson 5
ASSESSMENT
Statement
2.5.3
True/False?
Ms Basson, who was a personal banker, accepts a
position in the training department. She can stay on the
FSP’s register as a representative.
2.5.4
Mr Radebe is found guilty of mismanagement of funds.
He is debarred as a representative. His employer, ABC
Bank, must contact all his clients and inform them that
Ms Dube, who is a qualified representative, will take over
all his accounts.
2.5.5
Ms Dube often travels to see clients in their offices. She
does not have a document authorising her to act on
behalf of ABC Bank at the office. This is not a problem.
Page 12
Learner guide
Developed by Gray Training 011 472 3516
Jan 2004