Regulation

Question 1

An FSP must have and effectively use the resources, ______and ________ to eliminate risk of financial loss.

Answer 1

procedures

technological systems

Question 2

Financial loss can be because of ____, ______ acts, poor _______, negligence or ________.

Answer 2

fraud
dishonest
administration
misconduct

Question 3

The internal control procedures is to ensure that:

• The business is carried out in an ____ and ____manner.
• Financial and other info used is _______.
• all _____ have been complied with.

Answer 3

orderly, efficient
reliable
laws

Question 4

An FSB must maintain in force suitable _____ and professional _______ insurance.

Answer 4

guarantees

indemnity

Question 5

Professional indemnity insurance, indemnifies professionals against _____ ______ to _____ parties for claims brought by the client due to their professional ____.

Answer 5

legal liability
3rd
negligence

Question 6

What would the indemnity insurance cover?

Answer 6

legal fees to defend
any loss due to negligent act/omission
any loss due to false statements/misrepresentation

Question 7

What are some risk management procedures that can be put in place i.t.o. FAIS/FICA?

Answer 7

• segregate roles and responsibilities
• access security (to stored information)
• physical security
• clearly set out POLICIES AND PROCEDURES
• system testing/disaster recovery
• staff TRAINING on FAIS and FICA
• BCP
• proper admin

Question 8

What are the Fit and Proper criteria for an FSP/Representative?

Answer 8

Financial Soundness (FSP)
Honesty & Integrity (+FSP)
Competency
==Experience
==Qualifications + RE Exams
==CPD
Operational ability (FSP)

Question 9

When can a representative be debarred?

Answer 9

• does not meet F&P criteria

* failed to materially comply with provisions of FAIS

Question 10

How does the FSP debar a representative?

Answer 10

*allow for business with client to be completed
*investigate all info regarding representative
*within 15 days – notify Registrar in writing + reasons
(will no be listed as a debarred person)

Question 11

What should be provided when applying for debarment?

Answer 11

• evidence supporting the reasons for debarment
• copy of service contract btw FSP and representative
• transcript of disciplinary hearing
• investigation/forensic report

Question 12

When can a debarred person be re-appointed?

Answer 12

• after 1 year
• all complaints/legalities resolved
• all non-concluded business resolved
• meets at least H&I, competence and operational ability

Question 13

What must be done PRIOR to advice given?

Answer 13

Suitability analysis
==get as much info as possible from client
==analyse info before advice
==identify appropriate products based on analysis

Question 14

If the client doesn’t provide enough info, what must you do?

Answer 14

notify client of
==no suitability analysis done
==might received incorrect products
==reconsider

Question 15

If the client elects not to follow the given advice (as per analysis), what should be done?

Answer 15

==alert client of the risk

==advise client to consider his needs/circumstances

Question 16

Where a financial product is to replace an existing financial product held by the client, there must be full ___ about the financial _____ as well as ____ and consequences thereof.

Answer 16

disclosure
implication
costs

Question 17

What is a record of summary?

Answer 17

brief summary of
==financial products
considered
recommended + explanations of why
==costs/fees

Question 18

What must a client do if he wants to complain?

Answer 18

lodge in writing to FSP (first internal)

Question 19

What must the FSP do when a client complains?

Answer 19

==receive in writing
==maintain record (5 yrs)
==handle fair and timely
==investigate and respond quickly
==refer to ombudsman etc if not resolvable

Question 20

What is a conflict of interest?

Answer 20

any situation where FSP has an actual or potential interest that may:
==influence objective performance of obligations
==prevent unbiased/fair service

Question 21

How must an FSP deal with a conflict of interest?

Answer 21

disclose to client in writing
==measures taken to mitigate
==details of financial or other interest
==nature of relationship/arrangement with 3rd party

Question 22

What is the law of delict?

Answer 22

==there was an ACT perpetrated (wrongdoing)
==wrongdoer has duty to compensate victem
==person who suffered wrongdoing has right to claim reperation

Question 23

To claim delictual demages there had to be an act of _____ or ______.

Answer 23

intention

negligence

Question 24

What is misrepresentation?

Answer 24

statement made by one party to another

the statement was incorrect or false

Question 25

What are the types of misrepresentation?

Answer 25

==negligent (what would reasonable person have done/known?)
==intentional (knows fact is false!)
==innocent (not negligent nor fraudulent)

Question 26

What are the ELEMENTS of delict?

Answer 26

==wrongfulness (intent or negligence)
==duty of care (reasonable man – foresee harm, took steps to avoid?)
==causation (was the loss CAUSED by the omission/act?)
==loss/damage

Question 27

What is the Protection of Personal Information Act?

Answer 27

aimed at right of PRIVACY

not an absolute right == justifiable limits

Question 28

What does the Protection of Personal Information Act try to achieve?

Answer 28

==promote protection of personal info
==set minimum requirements for processing info
==establish an Information Regulator
==provide rights against unsolicited electronic comms
(e.g. sms)
==regulates flow of info across borders