FAIS exemption dates extended

The Financial Sector Conduct Authority (FSCA) has published the following amendments to the respective exemptions on its website in order to extend the dates of expiry thereof:

1. Amendment of the Notice on Exemption of Particular FSPs from s 13 of the General Code of Conduct, 2019

• FSCA FAIS Notice 86 of 2019 - This exemption date has now been amended to 28 February 2021.

Category I or IV FSPs that are underwriting managers and only render specific services referred to in the definition of ‘underwriting manager’ in the Long-term and Short-term Insurance Regulations, are exempted from the requirement to maintain suitable guarantees or professional indemnity or fidelity insurance cover, subject to certain conditions being met.

2. Amendment of the Notice on Exemption of Particular FSPs from s 19(3) Audit Report and Liquidity Requirements, 2019

• FSCA FAIS Notice 87 of 2019 - This exemption date has now been amended to 28 February 2021.

Category I FSPs that only collect, account, receive or hold premiums on behalf of an insurer in respect of a financial product of that insurer are exempted from s 19(3) of the FAIS Act and from s 9(3)(b) and (c) of the Fit and Proper Requirements, subject to certain conditions being met. This means that if these FSPs comply with the conditions of the exemptions, they:

• will not be required to submit the s 19(3) report, which is also known as the auditor’s report of the separate banking account into which premiums are paid; and
• they will not have to maintain current assets that are at least sufficient to equal current liabilities or liquid assets as prescribed.

3. Amendment of the Notice on Exemption of Juristic Representatives from s 13(1)(c) of the Act, 2019

• FSCA FAIS Notice 88 of 2019 - This exemption date has now been amended to 28 February 2021.

Juristic representatives, of Category I or IV FSPs that are also insurers, who collect, account for, receive or hold premiums on behalf of that insurer in respect of financial products of that insurer, are exempted from the requirements of s 13(1)(c) of the FAIS Act. Section 13(1)(c) prohibits any person from contracting in respect of a financial service or rendering a financial service other than in the name of the FSP of which that person is a representative. It is important to note that both the insurer and the juristic representative must meet certain terms and conditions for the exemption to apply.

4. Amendment of the Notice on Exemption of Compliance Officers from s 4(4) of the Notice on Compliance Officers, 2019

• FSCA FAIS Notice 89 of 2019 - This exemption date has now been amended to 28 February 2021.

Contains details of changes to the minimum prescribed intervals of visits and reports by compliance officers as contained in s 4(4) of the Notice on Compliance Officers. These changes are as a result of feedback from the industry in response to an invitation by the Regulator.

The continued exemption places the onus for determining the number of branch visits and reports on the compliance officer, who has to have due regard for a FSP’s specific circumstances which include:

• the nature, scale and complexity of the provider’s business and nature and range of financial services, activities and ancillary services offered;
• compliance risks of the provider having regard to the financial services, activities and ancillary services offered, as well as the types of financial products in respect of which the services are rendered and the market in which it operates;
• availability and adequacy of off-site monitoring tools; and
• off-site access to data from the business premises, business units and/or branches of the provider;

The CO is also obliged to establish and implement a monitoring programme that takes into consideration all areas of the provider’s financial services, activities and any relevant ancillary services to ensure that compliance risks and changes to those risks are comprehensively monitored;

The CO should also review the monitoring programme on a regular basis, as well as ad-hoc when necessary, to ensure that emerging risks are taken into consideration and, on a regular basis, report to the provider on at least the following:

• adequacy and effectiveness of the overall control environment for financial services and activities, including systems, policies, controls and procedures;
• the risks and deficiencies that have been identified; and
• the remedies undertaken or to be undertaken.

The CO must inform the provider to whom the compliance officer renders compliance services of the applicability of this exemption to such services.