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Moonstone Monitor - 11 January 2018 |
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Paul Kruger
Author/Editor |
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The only way of finding the limits of the possible is by going beyond them
into the impossible – Arthur C Clarke |
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Distributed to 49,050 subscribers.
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From the Crow's Nest |
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Appeal Board Reduces Debarment Period |
A recent case before the FSB Appeal Board saw the period of debarment
halved which is an interesting deviation from previous views held by the Board
on its powers to interfere in decisions by the Registrar.
In May last year we published an article in which we discussed this very matter:
Appeal Board and powers of the Registrar to debar.
The Appeal Board makes it very clear that the FAIS Act entitles the Registrar to
debar a contravening FSP and that the period of debarment is “…clearly a matter
for the Registrar’s discretion.”
It does note that the Regulator must act judiciously in this regard, and that
the appropriateness of the sanction will be determined by facts applicable to
each case. The severity of the contravention will determine the period of
debarment.
“When exercising this discretion, the Registrar must take into account, inter
alia, public interest and the severity of the transgression, while also bearing
in mind mitigating circumstances.”
“The Board will not interfere with such discretion lightly.”
In the Chipa Kingsley Baloyi appeal, published on 6 December 2017, the
Appeal Board found that there were extenuating circumstances and reduced the
debarment period from five to two and a half years.
Background of the case
In response to a request from the Financial Planning Institute (fpi), a duly
authorised examination body, the FSB conducted an investigation which revealed
that certain employees from the fpi assisted a number of candidates to
unlawfully pass their regulatory examinations in an improper, fraudulent and
dishonest manner by intercepting and manipulating their exam answer sheets in
return for payment.
The appellant was debarred after having been found guilty of bribing an exam
official on 26 May 2012 to manipulate his results by paying an amount of R3 000
directly into her personal account.
The Appellant appealed against the Registrar's decision to withdraw his licence
and debar him for a period of five years for failing to comply with the Fit and
Proper requirements of the General Code of Conduct.
Findings of the Appeal Board
A precedent was set in the Mondisa Cindi decision, which also considered the
discretionary powers of the Registrar and actually found grounds for reducing
the period of debarment from 5 to 3 years. The Board found, in this case, that
time considerations should have played a bigger role, and noted: “The primary
consideration which remains is fairness to all.”
In the Baloyi case, the Board noted: “The severity of the transgression is a
primary factor to consider. However, the mitigating and aggravating
circumstances have to be weighed up as well. This Panel is also mindful not to
interfere with the Registrar's decision unless there is just reason to do so.”
“However, in exceptional cases, it may depart from the Registrar's decision. The
question whether a departure is justified must be considered with reference to
the entire context of the case.”
The Board considered the following factors in reviewing the debarment period in
the Baloyi case:
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Whether the period of suspension will be sufficiently correct to avoid
recurrence;
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Whether the Appellant has shown remorse and
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Whether his private life has been affected
“Having considered the facts before it, and the fairness principle, the Board
found that the sanction of 5 years was harsh, and that a more appropriate
sanction in light of the mitigating facts is 2.5 years. Such period of
suspension would be sufficient to avoid a recurrence.”
This despite noting the following:
“He has been operating in an industry, and in all probability knowing that his
qualifications were not genuine. Even if this Panel gives him the benefit of the
doubt that he was misled initially (namely that he was advised that the payment
was to ensure that his paper received the attention), the glaring
improbabilities shall persist. For instance, by paying the amount into a
personal bank account is irregular and should have raised concern. Moreover, his
submission that he trusted that this arrangement was part and parcel of the
FPI's duties is ludicrous. This conduct was sheer negligence and unbecoming of a
financial services provider in this industry.”
The Registrar, in response to mitigating circumstances put forward by the
appellant, noted:
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He had been operating in the industry since 2012 (over 5 years), knowing full
well that his qualifications were fraudulent. Each time the Appellant rendered
financial services to clients, he knew that he was not qualified to do so.
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The Appellant placed different versions before the investigators, the
Registrar and the Appeal Board. That in itself demonstrates that he was in
collusion with the FPI officials.
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The Registrar is duty bound to protect the public against persons who act with
dishonesty. This is clearly an instance which justifies a debarment.
A question that arises is to what extent remorse, as mentioned above, played a
role, given the second point raised by the Registrar above. Surely, one who is
remorseful would not perpetuate the transgression?
Click here to download the applicable
Appeal Board decision. |
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Your Practice Made Perfect |
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New Fit and Proper Regulations and the Regulatory Exams |
The long anticipated amended “Determination of Fit and Proper
Requirements for Financial Services Providers, 2017” was finally printed
in December last year.
Do not be fooled by the fact that the determination, sans the annexures,
only consists of 40 pages. There is a lot to consider. We will cover
this in more detail in the coming weeks.
Possibly the biggest changes are contained in Chapter 3 – Competence
Requirements and Chapter 4 - Continuous Professional Development.
The amended determination comes into effect on 1 April 2018, with
the following exceptions:
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Section in Notice |
Effective Date |
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Section 13(3) - FSP recording obligations and
(5) – establishment of a competence register. |
1 May 2018 |
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Section 29(1)(a) – Class of Business training |
1 August 2018 |
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Section 29(1)(b) – Product Specific training |
1 May 2018 |
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Section 29(2) – KI class of business training |
1 August 2018 |
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Section 31 – 34 – Continuous Professional
development |
1 June 2018 |
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Section 38 – Automated advice requirements |
1 May 2018 |
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Sections 44(1) and (2): 45: 48 and 49 -Financial
soundness, but only insofar as it relates to a
juristic representative |
1 March 2019 |
Regulatory Exam Study Material
The amended requirements will have a substantial impact on
the content of the study material for the REs.
We believe that the FSB will provide guidance on the
deadline by when the amended requirements are to be
incorporated in the regulatory exam questions.
Candidates who are currently preparing to write the exams
should consider the possible implications of such changes,
and endeavour to write the exams before it becomes
effective.
Candidates are advised to carefully consider the above and
to only write the REs once they are absolutely ready.
Click here for a copy of the
Determination of Fit and Proper Requirements for Financial
Services Providers, 2017. |
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Guidance on reappointment of debarred reps
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A newly published document by the Registrar attempts to address some
of the practical problems experienced in the past.
“16. The frequency of representative complaints reported to the
Registrar's office, and the intensity of debate around the issue of
debarments by FSPs in terms of section 14(1), prompted the Registrar on
5 November 2013 to issue a revised Guidance Note regarding the
application of that section. The Guidance Note can be accessed via the
website of the Financial Services Board.”
“17. In order to provide further clarity as regards an FSP's
responsibilities, an amendment to section 14 was proposed to and passed
by Parliament during August 2017. The aim of the amendment, inter alia,
is to entrench the provisions of PAJA in the FAIS Act to ensure that
FSPs act fairly and follow due administrative process when exercising
the power to debar a representative. The amendment not only enhances the
requirements FSPs must comply with when exercising the power to debar
representatives but also provides a representative who was debarred by
an FSP a right of appeal to the Appeal Tribunal. The amendment will come
into effect on a date to be determined by the Minister of Finance.”
At a first reading, the newly published Guidance Note reminds me of the
Johnny Nash song “There are more questions than answers”.
One commentator said: “The new Guidelines deal in great detail with the
significance of S 14(1) of FAIS when this section has been repealed and
will no longer exist once the effective date of the FSRA is determined.”
We will address the whole document in more detail soon.
Please click here to download the
Guidance on reappointment of debarred reps. |
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Regulatory Examinations
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2018 RE Schedules updated |
Please note: Registration cut-off is 11 working days before date of exam. |
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Frequently Asked Regulatory Exam
Questions |
| 1. |
What exam must I write?
Both the RE 5 and RE are Level One exams. RE 5 is for Representatives and
RE1 for Key Individuals. The RE 3 exam is for licence category II
candidates.
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How much does it cost?
The FSB determines the fee. Currently it costs R1163 per exam, also in
the case of a re-write.
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What preparation material is available?
Fully updated resources are available for those requiring access to the
legislation applicable to the regulatory examinations:
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Please make sure that you first read the
FSB’s Preparation Guide to
make sure you follow the right process in preparing. Page seven includes
a recent amendment to guide candidates in studying in the correct
manner. |
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Click on the following highlighted sections to download the relevant
updated Inseta learning material for key individuals,
RE 1, and
representatives,
RE 5. |
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LexisNexis provides a “Legislation Handbook” together with a
“Preparation Guide” containing the qualifying criteria, with a link to
the relevant legislation. |
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The
Juta FAIS Pocket Statutes also contains a CD with a comprehensive
list of updated supplementary legislative material for reference
purposes. Please click here to order this from our online shop. |
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The FSB’s telematics broadcast on the RE 1 and RE 5
provides a good introduction and overview, and can also be ordered
online in: |
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DVD format or on a
USB memory stick
MP4 direct download - 2 Gb |
| 4. |
Where can I write?
Go to:
http://www.faisexam.co.za/show_venues |
| 5. |
What dates are available?
Go to:
http://www.faisexam.co.za/view_schedule |
| 6. |
What training is available?
As an Exam body we are not allowed to recommend companies that offer
face-to-face Regulatory exam classes. You can try Google for someone in
your area.
Bear in mind that this exam tests your knowledge about the laws
applicable to the provision of financial advice and intermediary
services. The questions are based on very specific qualifying criteria
set out in the FSB preparation guide. Any training that does not have
this as a basis will not prepare you properly for the exam. Do your own
research and don’t just accept what others say. |
| 7. |
Where can I buy old question papers?
There are no genuine “old question papers” available. Be very careful
when buying such preparation aids as some of those on offer are not in
line with the high standard prevailing in the actual exams and often
lead to a false sense of knowledge which is sadly exposed when
confronted by the actual exam. Follow the guidelines provided in the FSB
Preparation Guide and you are far more likely to achieve success. |
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Careers Platform
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www.moonstone.co.za
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dedicated financial decision makers who receive 2 newsletters per week. |
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In Lighter Wyn |
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Ashes to ashes… |
An English father goes into his daughter's bedroom and sees a letter
addressed to "Mummy and Daddy" on the bed. With a heavy heart he
opens it and reads:
Dearest Mummy and Daddy,
It is with great regret and sorrow that I'm telling you that I've
eloped with my new boyfriend. I've found real love and he is so nice
- especially with all his piercings, scars, tattoos and his big
American motorcycle.
But it's not only that, I'm pregnant and my boyfriend said that we
will be very happy in his caravan in the forest. He wants to have
many more children with me and that's one of my dreams, too. I've
learned that marijuana does not hurt anyone and we'll be growing it
only for ourselves and our friends. They're the ones providing us
with all the cocaine and ecstasy we could ever want. In the
meantime, we'll pray for science to find a cure for AIDS so my
boyfriend can get better. He really deserves it.
Don't worry about money. My boyfriend has arranged for me to be in
films that his friends Leroy and Jahmal make in their basement.
Apparently I can earn £200 per scene.
Don't worry, Mummy, now that I'm 15 I know how to take care of
myself. Someday we'll visit you and Daddy so that you can meet your
grandchildren.
Your loving daughter
Sarah
P.S. Daddy, it's not true - I'm watching television with Jessica and
her parents next door.
I just wanted to show you that there really are far worse things in
life than England losing the Ashes.
Ja Boet, one test victory over the Indians and we start laughing
at the rest.
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Tel: +27 21 883 8000 | Fax: +27 21 883 8005
info@moonstoneinfo.com
www.moonstone.co.za
P.O. Box 12662, Die Boord, Stellenbosch, 7613, Republic of South Africa
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The complete disclaimer can be accessed
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