Financial Advisory and Intermediary Services Act 2002 (Act No. 37 of 2002)

TABLE 3

No.

Task

Knowledge Criteria

Skill Criteria

1

Apply the Category III FSP business model

Describe the characteristics of a category III FSP and how that differentiates it from other product providers such as insurers and unit trusts.

Take the difference between Category III FSPS and other product providers into account when making business related decisions.

Describe the reason for separation of client assets from Category III FSP's assets.

Perform the fiduciary duty of the category III FSP.

identify which assets belong to the client and which belong to the category III FSP.

Interpret basic financial systems.

Check that there are systems and processes to separate client and Category III FSP assets.

Explain the role and responsibilities of the different parties involved, including but not limited to:

Explain the concept of bulking and pooling of assets into a single account with investment provider.

Verify that the relevant contractual agreements are in place with the relevant other party.

Explain the relevant contractual agreements need to be in place with the relevant other party.

Confirm that the relevant contractual agreements are in place with the relevant other party and business is conducted in accordance with the contractual agreements.

2

Understand the role of the independent nominee

Explain the duties the nominee company is responsible for.

Verify that there are processes in place to check that the nominee company executes its' responsibilities towards the Category III FSP – reporting independence

Explain the purpose of the nominee company

Check the nominee company complies with its duties.

3

Manage and oversee client mandates

Explain why the category III FSP must use mandates that have been approved by the FSB.

Manage client mandates in accordance to mandatory requirements.

Explain why a mandate cannot be used if it is not approved by the FSB.

Explain why a mandate cannot be used if it is not signed by the client or his duly authorised representative.

Explain why such a mandate must adhere to the requirements in the Administrative Code of Conduct.

Explain what the requirements are for mandates.

4

Manage/oversee typical daily transactions

Explain how different products have different turnaround times and should be adhered to.

Check that the systems and processes enable the implementation and execution of different turnaround times for different products.

Describe how there should be adequate controls in place to manage risks.

Check that the systems and processes have embedded controls to manage and contain risk.

Explain how Category III FSPS are only allowed to take in one day's interest.

Check that the processes and systems only take one day's interest.

5

Manage and oversee disclosures

Explain how to ensure transparency and manage conflict of interests.

Confirm that disclosures are adequate to enable client's ability to make an informed decision.

6

Understand the legal environment of the Category III FSP.

Explain the liquidity requirement.

Apply the liquidity requirements to own business.

Explain the implications of the liquidity requirements

Describe the fidelity cover requirements.

Apply the fidelity requirements to own business.

Explain the implications of the fidelity cover requirements.

Describe the applicable capital requirement.

Apply the applicable capital requirements to own business.

Explain the implications of the capital requirements.

Explain why the Category III FSP is not allowed to engage in the netting of transactions.

Verify that there are systems in place to check that netting of transactions will not take place.

Explain how a Category III FSP must ensure that it only conducts business with another FSP that has the appropriate categories/ subcategories on its license, and that business must also be conducted within the parameters of the client mandate

Confirm that it only conducts business with another FSP that has the appropriate categories/ subcategories on its license, and that business must also be conducted within the parameters of the client mandate, to ensure that all business is legitimate.

Describe what the continual compliance with the license requirements and conditions are.

Check that there are systems in place to check that new products or proposed business ventures will meet the limitations of the license requirements and conditions are.

7

Apply the record keeping requirements.

Explain the period for which records must be kept.

Incorporate the record keeping requirements when planning system updates and strategic initiatives.

Describe the requirements specifically applicable to telephone and/or electronic requirements.

Verify that systems are in place to manage the record keeping risks of electronic and telephonic transactions.

8

Comply with requirements when reporting to clients

Explain why clients must receive written reports at quarterly intervals, that provide them with investment and related information.

Verify that there are systems and processes that enable the preparation and delivery of accurate quarterly reports.

9

Apply knowledge of the accounting and unit reconciliations

Explain how the accounting and unit reconciliations work.

10

Apply knowledge of how intermediaries must be licensed before they can do business.

Explain how intermediaries must be licensed before they can do business.

11

Deal with rebates

Explain how rebates work.

Explain all the related disclosures as it applies to rebates.