Preparation Guide Regulatory Examinations Level 1- RE4
PREPARATION GUIDE FOR LEVEL 1 REGULATORY EXAMINATIONS – Applicants and/or Key Individuals in Category III (RE4)
Table of Contents 1.
DISCLAIMER..................................................................................................................................... 2
2.
BACKGROUND TO THE REGULATORY EXAMS ................................................................................. 2
3.
FORMAT OF THE REGULATORY EXAMS .......................................................................................... 2
4.
REFERENCE MATERIAL .................................................................................................................... 6
5.
TAKING THE EXAM ........................................................................................................................ 10
6.
FINDING RESULTS .......................................................................................................................... 12
7.
FREQUENTLY ASKED QUESTIONS .................................................................................................. 12
8.
MORE INFORMATION ................................................................................................................... 13 APPENDIX A: List of examinations................................................................................................. 14
Appendix B: RE 4 QUALIFYING CRITERIA AND SOURCE REFERENCES ................................................... 15
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Preparation Guide Regulatory Examinations Level 1- RE4
1. DISCLAIMER The material in this PREPARATION GUIDE FOR LEVEL 1 REGULATORY EXAMINATIONS Applicants and/or Key Individuals in Category III (RE4) and APPENDIX B is made available for the purpose of providing preparation guidelines and not as professional or educational advice. The availability of this material is not an endorsement by the FSB of the material and not an indication of the FSB’s commitment to any particular course of action. Where sections of the Acts, The General Code of Conduct, Board Notices, etc. are referred to they are given merely as a guideline for candidates preparing for the RE4. The FSB accepts no responsibility for material contained in this preparation guideline.
2. BACKGROUND TO THE REGULATORY EXAMS The amended fit and proper requirements announced in 2008 have introduced the financial services industry to a new concept – “REGULATORY EXAMINATIONS”. These examinations were introduced together with stricter minimal formal qualifications in order to better serve clients’ needs across the financial services industry in South Africa. The regulatory exams are being developed and delivered under the direction and management of the FSB. Four examination bodies have been appointed to assist with the development of the regulatory exam questions and the delivery on a national basis. The approved examination bodies are as follow: Financial Planning Institute (FPI):
http://re.fpi.co.za/
Leselo:
http://www.leseloexams.co.za
Moonstone:
http://www.faisexam.co.za/
SAIFM (South African Institute for Financial Markets):
http://www.regulatoryexams.co.za/
Moonstone are the only approved examination body to deliver the Category III (RE 4) examination.
3. FORMAT OF THE REGULATORY EXAMS 3.1 Type of examination The regulatory examinations will be multiple choice questions based on specified qualifying criteria. Exams are closed book and no material will be allowed in the examination room. There will be no limit on the number of attempts made in order to achieve 2
Preparation Guide Regulatory Examinations Level 1- RE4 competence. There will be one national version of any regulatory examination for any category or subcategory. There is only one right answer to each question, so please read the questions and answers carefully. There is no negative marking, an answer is either right, or wrong. You can choose to write exams electronically, or on paper. Exam bodies will indicate on their registration pages what method they make available. The regulatory examinations aim on testing the application of factual knowledge in relation to the relevant legal provision as contained in the legislation, subordinate legislation and codes of conduct – Level 1 the rendering of financial services applicable to specific categories and subcategories of clients – Level 2
3.2 Qualifying criteria The qualifying criteria provide the basis of knowledge and skills against which the regulatory examinations are set. The qualifying criteria were developed in a process of consultation between the FSB and industry representatives, spanning from 2006 to 2008. Only questions based on these criteria will be included in the exams. The qualifying criteria were published in Board Notice 105 of 2008, and amendments were published as below: BN 151
31755
29 December 2008 w.e.f. 31 December 2008
BN 64
32268
29 May 2009
BN 95
32496
17 August 2009
BN 44
33052
26 March 2010
BN 60
33166
12 May 2010
All these documents are available on the FSB website – http://www.fsb.co.za
Click on the top right hand corner on FAIS Select the link – Fit and Proper: All the relevant board notices are hosted on this page.
How do I read the qualifying criteria? Each set of qualifying criteria are displayed in a table format with headings. Underneath the headings you will find the following detail:
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Preparation Guide Regulatory Examinations Level 1- RE4
3.3 Question development Individual questions are based on one or more knowledge criteria, also taking into account the applicable skill. Every task will be covered at least once in an examination. Therefore do not skip any of the tasks or the underlying knowledge criteria and skills, even if you do not think it is relevant to how your FSP operates. It is important to ensure that you understand every task, and the knowledge and skill criteria related to it. Each exam will contain questions at 4 different levels of complexity. These four levels deal with:
Each question has four options, and you must select the correct option. Questions can be posed in the following styles: A direct closed ended question: the question must be answered by choosing the correct option. An incomplete sentence: the sentence must be completed correctly by choosing the correct option. The negative question: the negative option needs to be chosen. Applicant must be aware that these type of questions will be asked and therefore must read questions carefully. The most/best/least format: applicant must choose most applicable option to the question.
4
Preparation Guide Regulatory Examinations Level 1- RE4 Roman numeral format: A closed ended question where applicants must choose more than one correct option from a list of options. Sequencing: the options should be listed in the correct sequence.
Question example:
Example of a knowledge question Within how many days must a financial services provider inform the Registrar of the debarment of its representative? A. B. C. D.
14 days 7 days 30 days 15 days
Example of a comprehension question: Jane Chetty is a sole proprietor and has no representatives. What are the requirements regarding the compliance function of the FSP? A. B. C. D.
Jane must appoint an external Compliance Officer Jane doesn’t need to appoint a Compliance Officer Jane must appoint an internal Compliance Officer Jane must be appointed as the Compliance Officer
Example of an application question: Jean Hill, the representative of DCB Investments must advise a client that is retiring on specific investments. Which of the following aspects is Jean NOT obliged to disclose about a recommended financial product unless enquired about by the client? A. The risk of possible capital loss in future due to fluctuations in the financial markets B. Information and graphs to illustrate the product's performance at intervals over a period of time C. Any income and other relevant tax issues of a material nature that need to be considered D. Any material illustrations about the product provided by the product supplier
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Preparation Guide Regulatory Examinations Level 1- RE4
Example of analysis question
Consider the following events that occurred on the same day. Each of these events has, in terms of the relevant legislation, varying periods of time during which the FSP must respond to the event, or otherwise adhere to the legislation. Arrange the events in order of shortest to longest applicable period and select the CORRECT option. i) The FSP uses a new postal address and must inform the Registrar of the change ii) The FSP received cash funds, exceeding the cash threshold reporting requirement, and must inform the Financial Intelligence Centre iii) The Registrar has requested that the FSP provide certain documents pertaining to a client's advice record iv) A client terminated a financial product and the FSP is now required to maintain records of advice associated with this client's purchase for an additional period v) The FSP received client funds and must pay the funds into the bank account designated for client funds vi) During an office meeting, the FSP provided a client with the details of the product supplier, and must now provide the details to the client in writing A. B. C. D.
(i) then (iii) then (ii) then (vi) then (v) then (iv) (v) then (ii) then (iii) then (i) then (vi) then (iv) (ii) then (vi) then (v) then (i) then (iii) then (iv) (iii) then (v) then (ii) then (i) then (iv) then (vi)
4. REFERENCE MATERIAL The following material was used in the development of the questions for the Regulatory level 1 exams, please refer to appendix B for a mapping of criteria to relevant material:
The FAIS Act General Code of Conduct FIC Act (FICA) Board notices
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Preparation Guide Regulatory Examinations Level 1- RE4 4.1 PREPARATION FOR THE EXAM
Multiple choice exams cover a lot of detail and facts. The short term memory’s capacity is very limited; therefore it is essential to start preparing for the regulatory exams at least 3 month prior to your examination date. The learner will have to be repeatedly subjected to the material in order to store the information effectively in the long term memory. Although attending workshops and training will certainly be helpful, this is no replacement for extensive studying of the required material. And yes, it is necessary and very possible to study successfully for multiple choice exams!
4.2 Studying instructions You will need:
A positive attitude Lots of will power Enough rest Quiet place to study Qualifying criteria Recourse material
Steps to follow: 1. Identify the regulatory examination(s) that apply to your situation. 2. Find the corresponding sets of qualifying criteria, for each of the relevant regulatory examinations that you must prepare for. See appendix B for the qualifying criteria for the regulatory level 1 exams. 3. Work through the qualifying criteria and make sure you understand them against the relevant acts and legislation. 4. Use of additional study material is advisable but optional. 7
Preparation Guide Regulatory Examinations Level 1- RE4 5. Repeat step 3 as many times as necessary to store the factual knowledge in the long term memory.
4.3 Study material and training Numerous training materials have been developed by various training providers for the purpose of the regulatory level 1 exams. It should be noted that the FSB does not endorse any of these training materials. It is advisable to still refer back to the relevant legislation as contained in the acts and regulations in order to eliminate difference in terminology use, if you decide to use designed study material and/or training. Please note: Examination bodies may not provide training and/or study material for the regulatory exams. Examination bodies will make FSB approved study guides with reference to suggested material available; however the sourcing of appropriate study material and/or training providers is the responsibility of the candidates.
4.4 Study tips for multiple choice exams It is necessary and very possible to study successfully for multiple choices exam. Follow the following guidelines in order to help you in your preparation for the regulatory exams.
4.5 Study styles for multiple choice tests There are numerous styles of learning and remembering facts. . Please remember that every person learns differently, and there is only the “right way” for you and a “wrong way” for you. Your method may be different from that of your friend. One of the most effective ways to prepare for multiple choice tests is by study reading, but you are welcome to investigate other methods of studying. References to relevant websites are included in paragraph 9.
8
Preparation Guide Regulatory Examinations Level 1- RE4 Study reading is the reading style used when the purpose is to read difficult material at a high level of comprehension. When using the Study Reading style, you should read at a rate that is slower than your normal reading rate. Further, as you read you must challenge yourself to understand the material. Study Reading will often require you to read material more than once to achieve a high level of understanding. Sometimes, reading the material aloud will also help you improve your understanding.
4.6 Improving concentration Many people have difficulty concentrating while studying. Being able to concentrate while you are studying is essential to doing well in exams. Here are suggestions for improving your study concentration:
Study in a quiet place that is free from distractions and interruptions. Try to create a space designated solely for studying.
Make a study schedule that shows what tasks you need to accomplish and when you plan to accomplish each task. This will provide you with the structure you need for effective studying.
Try to study at the time of day you work best. Some people work well early in the morning, others late at night. You know what works best for you.
Try to study at the same time every day, as you will start to adapt to study mode automatically at that time of the day.
Make sure you are not tired and/or hungry when you study. Otherwise, you won't have the energy you need to concentrate. Also, maintain your physical fitness.
Don't try to do two tasks at the same time. You won't be able to concentrate on either one very well. Concentration means focusing on one thing to the exclusion of all else.
Break large tasks into series of smaller tasks that you can complete one at a time. If you try to complete a large task all at once, you may feel overwhelmed and will be unable to maintain your concentration.
Relax. It's hard to concentrate when you're tense. It's important to relax when working on a task that requires concentration. Meditation is helpful to many students.
Clear your mind of worrisome thoughts. Mental poise is important for concentration. You can get distracted by your own thoughts. Monitor your thoughts and prevent yourself from following any that take you off track. Don't daydream.
Develop an interest in what you are studying. Try to relate what you are studying to you own life to make it as meaningful as possible. This can motivate you to concentrate. 9
Preparation Guide Regulatory Examinations Level 1- RE4 Take breaks whenever you feel fatigued. There is no set formula for when to take breaks.
4.7 Registering with the correct examination body There are four recognized examination bodies. Candidates must select the examination body through which they would like to enrol for the examinations. The examination bodies do not offer all the same exams; refer to appendix A for a list of the exams and the examining bodies that offer them. Once you have identified an examination body that offers the examination you need to write, you must check whether they offer the exam at a venue that suits you. If you are satisfied with the venue, check for a date and time that suits you. You must then enrol for the examination with the exam body. Each exam body has their own registration procedures, which they explain on their websites. They allow for different methods of registration. It is important to check carefully before you register for an examination, to ensure that you selected the correct examination, and the venue, date and time that suits you. 4.8 Special needs Candidates with special needs must contact the examination body when they are registering in order to make arrangements for any assistance they might require. The examination bodies will do everything they can to assist with the requests of the candidates. Candidates may be required to produce a valid medical certificate in order to verify their special need or disability.
5. TAKING THE EXAM 5.1 What to expect when writing these examinations Strict examination procedures will apply at all times. This will help to ensure that the integrity of the exams is protected. You will have to identify yourself before the exams start, using a photo ID document. The acceptable documents include a SA identity document, a passport or a driver’s license. Please ask your examining body for a copy of the terms and conditions of the examination. 5.2 Exam taking tips for multiple choice exams Read the directions carefully. Many people often make the mistake of skipping the directions. Write what is on your mind. Write down your mental stimulus or associations on the scrap paper provided.
10
Preparation Guide Regulatory Examinations Level 1- RE4 Pace yourself. Try to answer all the questions but do not procrastinate around a question – rather return to the question later. The following is a guideline for the allowable time per type of question: Knowledge: ½ - 1 minutes per question Understanding: 1 - 1½ minutes per question Application and analysis: 1½ - 2 minutes per question Read through the question carefully. Be watchful for negative questions and all or nothing words such as all/any/most ex. Know if the question has one or more correct options – Roman numeral type of questions. Read through all the options carefully. Do not mark the first option which you think may be correct. Do not assume facts. The only facts that you have to take note of are the facts given in the question. If the question tells you that unicorns exist, do not argue with the question. Do not ignore your answer. Many examinees ignore answers because they assume that every multiple choice question is a trick question. Remember that if you are ready, you should know the answer and if you know the answer, there should be nothing stopping you from answering correctly. Every question is an isolated question. There are no patterns in multiple choice exams. Just because you have answered “C” for ten consecutive times, it doesn’t mean the next answer will be “C”. Many myths have been told that the answer that appears more commonly is the best guess. There is no truth in that belief. If time allows, review both questions and answer. It is possible you misread questions the first time. Improve your odds, think critically:
Cover the options, read the stem, and try to answer. Select the option that most closely matches your answer. Read the stem with each option. Treat each option as a true-false question, and choose the "most true".
Multiple choice exams are not intimidating if you are prepared to face them. If you are prepared, multiple choice exams are not as formidable as they may seem.
5.3 Bubble answer sheets Taking a multiple choice exam using an answer sheet in which you trace in a bubble presents its own unique difficulty. Always make sure you are paying attention to what you are doing and always go back over the answer sheet before you turn it in.
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Preparation Guide Regulatory Examinations Level 1- RE4 All those bubbles and numbers can wreak havoc on your perception, and if you accidentally miss just one row it throws every answer following that one off. The quickest way to get a terrifying grade on this kind of exam is to unwittingly fill in the wrong answer on nearly every question because you missed one row of bubbles or filled that row in twice for two different questions. It is useful to take a ruler with you to the exam room, and to place the ruler under each row of questions and bubbles for the options. Move the ruler down line by line. This should help you to answer the right answer next to the right bubble option.
6. FINDING RESULTS The exam bodies will make the exam results available. Exam results will also be made available on the FSB website. Please check the FSB website 6 weeks after the exams, under the FAIS page. You will use your ID number to access your results.
7. FREQUENTLY ASKED QUESTIONS 7.1 What is the difference between a key individual and a representative examination? The key individual level 1 examination addresses the tasks, knowledge and criteria that is relevant to the role and function of a key individual (KI). Remember that the KI is responsible to “manage and oversee” the rendering of financial services within a FSP. The questions will thus be aimed at finding out whether the KI understands the aspects he/she is held accountable for in terms of the legislation. The level 1 regulatory examination for representatives focuses on those tasks, knowledge and skill criteria that describe what they are held responsible for in terms of the legislation. Remember that the representative actually gives advice and/or renders the intermediary service. The questions will thus focus on these activities that are performed by the representative.
7.2 When will the regulatory exams be updated if the legislation is changed/amended? The regulatory examinations will be updated within 6 months of the publication of the amendment to the legislation.
7.3 What do I do if I have special needs? Candidates with special needs must contact the examination body when they are registering, to make arrangements for any assistance they require. The examination bodies will do everything they can to assist with the requests of the candidates.
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Preparation Guide Regulatory Examinations Level 1- RE4 7.4 What are the names of the regulatory examinations? The names of the regulatory examinations are included in Appendix A of this document. Each examination has a number and a name.
8. MORE INFORMATION You can visit the following websites for more information on study styles and test taking skills:
http://www.ehow.com/way_5375891_tips-answering-multiple-choice-questions.html
http://www.test-preparation.ca/study-center/answering-multiple-choice-questions/
http://studygs.net/tsttak3.htm
http://en.wikipedia.org/wiki/Study_skills
Best Way - Tips on Answering Multiple Choice Questions | eHow.com http://www.ehow.com/way_5375891_tips-answering-multiple-choicequestions.html#ixzz0ywPhccy8
Best Way - Tips on Answering Multiple Choice Questions | eHow.com http://www.ehow.com/way_5375891_tips-answering-multiple-choicequestions.html#ixzz0ywPcR7hr
http://www.how-to-study.com/study-skills/en/studying/98/
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Preparation Guide Regulatory Examinations Level 1- RE4
APPENDIX A: List of examinations Examination body that will offer RE No
Section in BN 105
Description
Moon stone
FPI
Leselo
SAIFM
X
X
X
X
X X X X
X X X X
X X X X
X X X X
X X X
X X X
X
X
X X X X X X X X X X X X
X X
LEVEL 1 EXAMS 1 2 3 4 5
KI Level 1: Cat I, II, IIA, III and IV (General) KI Level 1: Cat 1.1 & 1.19 KI Level 1: Cat II & IIA KI Level 1: Cat III Representatives
1 1&5 2 3 4
LEVEL 2 EXAMS 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Category IV level 2 exam Long-term insurance category B1 (risk) Long-term insurance category B2 (Investment) Long-term insurance category C and retail pension benefits Collective Investment Schemes Health Care Benefits Short-term insurance: Personal lines Short-term insurance: Commercial lines Pension Fund Benefits Deposits S & I: Shares Cat I & III S & I: Money markets Cat I & III S & I: Debentures Cat I & III S & I: Warrants Cat I & III S & I: Bonds I & III S & I: Derivatives I & III Forex Investment business I & III Long Term Insurance category A S&I - General exam - Cat I & II & III S & I: Shares Cat II S & I: Money markets Cat II S & I: Debentures Cat II S & I: Warrants Cat II S & I: Bonds Cat II S & I: Derivatives Cat II Forex Investment business Cat II
14 15 16 7 8 12 10 11 13 6 9 9 9 9 9 9 9 5 9 9 9 9 9 9 9 9
X X X X X X X X
X X X X X X X X X X X X X X X X X X X X
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Appendix B: RE 4 QUALIFYING CRITERIA AND SOURCE REFERENCES Description: Task No 1
Task
Apply the Category III FSP business model
RE 4: First Level Regulatory Examination: Applicants and/or Key Individuals in Category III
Qualifying Criteria
Describe the characteristics of a category III FSP and how that differentiates it from other product providers such as insurers and unit trusts.
Knowledge (K) or Skill (S) K
Reference COC Administrative FSPs - Sec 1 COC Administrative FSPs - Sec 2. COC Administrative FSPs - Sec 2 Definition of bulking and Administrative FSPs. COC Administrative FSPs - Sec 3. COC Administrative FSPs - Sec 3.4. COC Administrative FSPs - Sec 4. FAIS Regulations - Sec 10(2). FAIS Act - Sec 1 Definition of Financial Product. BN 106 of 2008 - Sec 4(4)(a)
Take the difference between Category III FSPS and other product providers into account when making business related decisions.
S No specific questions. Covered in other relevant task and criteria
Task No
Task
Qualifying Criteria
Describe the reason for separation of client assets from Category III FSP's assets.
Perform the fiduciary duty of the CAT III FSP
Knowledge (K) or Skill (S) K
Reference GCOC - Sec 10(1) COC Administrative FSPs - Sec9.1. FAIS Regulations – Reg. 9(2).
S
GCOC - Sec 2. GCOC - Sec 7(1)(xiii). GCOC - Sec 10. COC Administrative FSPs - Sec 3 3(b). COC Administrative FSPs - Sec9.1.
Identify which assets belong to the client and which belong to the category III FSP.
S
GCOC - Sec 10(1)(d). COC Administrative FSPs - Sec 9. FAIS Act - Sec 19(3). BN85 of 2008, Section 19(3) requirements.
Interpret basic financial systems.
S
Check that there are systems and processes to separate client and Category III FSP assets.
S
No specific questions. Covered in other relevant task and criteria
GCOC - Sec 10.
Task No
Task
Qualifying Criteria
Knowledge (K) or Skill (S)
Explain the role and responsibilities of the different parties involved, including but not limited to: * different parties/ legal entities involved, * nominee, * MANCO, * insurers, * pension funds, * 3rd party FSP's, * Financial Advisors, * brokers, * clients Explain the concept of bulking and pooling of assets into a single account with investment provider. . Verify that there are systems and processes to allow for the bulking of client assets without pooling or unitisation.
K
Explain the relevant contractual agreements that need to be in place with the relevant other party.
S
Confirm that the relevant contractual agreements are in place with the relevant other party and business is conducted in accordance with the contractual agreements.
S
Reference
COC Administrative FSPs - Sec 2 Definitions COC Administrative FSPs - Sec 5.2(b). COC Administrative FSPs - Sec 5.6. COC Administrative FSPs - Sec 5.13.
K
COC Administrative FSPs – Sec 2 Definitions
K No specific questions. Covered in other relevant task and criteria
GCOC - Part III.
COC Administrative FSPs - Sec 5.10. BN 79 of 2003 - Sec 5.
Task No 2
Task
Understand the role of the independent nominee
Qualifying Criteria
Explain the duties the nominee company is responsible for.
Knowledge (K) or Skill (S)
Reference
K FAIS Regulations – Reg. 10(2) & 10(3) FAIS Regulations - Reg. 10 (2)(a) & 10(2)(e). BN 63 of 2007 - Sec 7.
Verify that there are processes in place to check that the nominee company executes its' responsibilities toward the Category III FSP - reporting independence.
S
Explain the purpose of the nominee company
K
FAIS Regulations – Reg. 7(3). FAIS Regulations – Reg. 9. FAIS Regulations – Reg. 9(1). .COC Discretionary FSPs - Sec 5(2)(d). COC Administrative FSPs - Sec 9. COC Administrative FSPs - Sec 9.1. COC Administrative FSPs - Sec 9.2. FAIS Regulations - Sec 10(1).
Check the nominee company complies with its duties
S
COC Administrative FSPs - Sec. 9.2
FAIS Regulations - Reg. 7, 8 & 10 FAIS Regulations - Reg. 10(2).
Task No
Task
Qualifying Criteria
Describe the obligations and requirements regarding the use of nominee companies NEW BN 60
Check that any nominee companies used have been approved by the FSB in terms of the nominee policy. Confirm that the reports concerning the nominee company are provided timeously to the FSB NEW BN 60
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 the mandate cannot be used if it is not approved by the FSB.
Knowledge (K) or Skill (S) K
Reference COC Administrative FSPs - Sec 9. BN 63 of 2007 - Sec 5.1 & 5.2 BN 63 of 2007 - Sec 5 & 7.
S
BN 63 of 2007 - Sec 7.1.
K COC Administrative FSPs – Sec 5
K
COC Administrative FSPs - Sec 5. COC Administrative FSPs - Sec 5.6.
K
COC Administrative FSPs - Sec 5. COC Administrative FSPs - Sec 5.4.
Task No
Task
Qualifying Criteria
Knowledge (K) or Skill (S)
Explain why a mandate cannot be used if it is not signed by the client or his duly K authorized representative. Explain why such a mandate must adhere to the requirements in the Discretionary Code of Conduct
Reference
COC Administrative FSPs - Sec 5. COC Administrative FSPs - Sec 5.1 & 5.2.
K COC Administrative FSPs - Sec 5. COC Administrative FSPs - Sec 5.1. COC Administrative FSPs - Sec 5.1(f) COC Administrative FSPs - Sec 2 Definition of completed day. COC Administrative FSPs - Sec 5.2. COC Administrative FSPs - Sec 5.2(b). COC Administrative FSPs - Sec 5(2)(c). COC Administrative FSPs - Sec 5.2(e)(i). COC Administrative FSPs - Sec 5.2(f). COC Administrative FSPs - Sec 5.4. COC Administrative FSPs - Sec 6. COC Administrative FSPs - Sec 5.6(a). COC Administrative FSPs - Sec 5.7 COC Administrative FSPs - Sec 5.8. COC Administrative FSPs - Sec 5.9. COC Discretionary FSPs - Sec 5.1 & 5.2 COC Discretionary - Sec 5.1(c) & (d) & (j) COC Discretionary FSPs - Sec 8A
Task No 4
Task
Manage and oversee typical daily transactions
Qualifying Criteria Explain how different products have different turnaround times and should be adhered to.
Knowledge (K) or Skill (S)
Reference
K
COC Administrative FSPs - Sec 5.2(e).
Check that the system and processes enable the implementation and execution S of different turnaround times for different products.
COC Administrative FSPs - Sec 5.2(e).
Describe how there should be adequate controls in place to manage risks.
K
GCOC Administrative FSP - Sec 5.5 GCOC - Sec 11. COC Administrative FSPs - Sec 5.5.
Check that the systems and processes have embedded controls to manage and contain risk.
5
Manage and oversee disclosures
S
Explain how Category III FSPS are only allowed to take in one day's interest.
K
Check that the processes and systems only take one day's interest.
S
Explain how to ensure transparency and manage conflict of interests.
K
No specific questions. Covered in other relevant task and criteria
COC Administrative FSPs - Sec 5.11.
No specific questions. Covered in other relevant task and criteria
GCOC - Sec 3A. GCOC - Sec 7.
Task No
Task
Qualifying Criteria
Confirm that disclosures are adequate to enable client's ability to make an informed decision.
Knowledge (K) or Skill (S) S
Reference GCOC - Sec 2, 3, 4, 5 & 7.
GCOC – Sec 7(1)(c)(iii)(ee).
COC Administrative FSPs.
6
Understand the legal environment of the CAT III FSP
Explain the liquidity requirement.
K
BN 106 of 2008 - Sec 9(5).
Apply the liquidity requirements to own business
S
BN 106 of 2008 - Sec 9(5).
Explain the implications of the liquidity requirements.
K
Describe the fidelity cover requirements.
K
BN 106 of 2008 - Sec 9(5)(a),(b) & (c).
BN 106 of 2008 - Definition of Liquid Assets. BN 106 of 2009 - Sec 9.
BN 123 of 2009 - Sec 3. BN 123 of 2009 - Sec 3 (h).
Apply the fidelity requirements to own business.
S
BN 106 of 2008 - Sec 9. BN 123 of 2009 - Sec 3(h).
Task No
Task
Qualifying Criteria
Knowledge (K) or Skill (S)
Explain the implications of the fidelity cover requirements.
K
Describe the applicable capital requirement.
K
Apply the applicable capital requirements to own business.
S
Explain the implications of the capital requirements.
K
Explain why the Category III FSP is not allowed to engage in the netting of transactions.
K
Verify that there are systems in place to check that netting of transactions will not take place.
S
Reference BN 123 of 2009 - Sec 3. BN 123 of 2009 - Sec 4. BN 106 of 2008 - Sec. 9(5) & (6). BN 106 of 2008 - Sec 9.
BN 106 of 2008 - Sec 9(5).
No specific questions. Covered in other relevant task and criteria
COC Administrative FSPs - Sec 3.2. COC Administrative FSPs - Sec 2 Definition of Netting.
COC Administrative FSPs - Sec 3.
Task No
Task
Qualifying Criteria
Knowledge (K) or Skill (S)
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.
K
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.
S
Describe what the continual compliance with the license requirements and conditions are.
K
Reference
COC Administrative FSPs - Sec 4.
No specific questions. Covered in other relevant task and criteria
License Annexure – Condition 2.1 COC Administrative FSPs - Sec 5.5 & 5.7 & 5.8 & 5.10. FAIS Act - Sec 8(8).
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.
S FAIS Act - Sec 7(3).
Task No 7
Task
Apply the record keeping requirements
Qualifying Criteria
Explain the period for which records must be kept.
Knowledge (K) or Skill (S) K
Reference COC Administrative FSPs - Sec 7.2. FAIS Act - Sec 18. FAIS Act - Sec 18(b) & (d)
Incorporate the record keeping requirements when planning system updates and strategic initiatives.
S
COC Administrative FSPs - Sec 7.1 & 7.2.
Describe the requirements specifically applicable to telephone and/or electronic requirements.
K
GCOC – Sec 3(2)(b)
Verify that systems are in place to manage the record keeping risks of electronic and telephonic transactions.
S
COC Administrative FSPs - Sec 5.8. FAIS Act - Sec 18
No specific questions. Covered in other relevant task and criteria
Task No
Task
Qualifying Criteria
Knowledge (K) or Skill (S)
Reference COC Administrative FSPs - Sec 10.
8
Comply with Explain why clients must requirements when receive written reports at reporting to clients quarterly intervals that provide them with investment and related information.
K COC Administrative FSPs - Sec 10.1. COC Administrative FSPs - Sec 10.2. COC Administrative FSPs - Sec 10.3. COC Administrative FSPs - Sec 10.3(g).
9
10
Apply knowledge of the accounting and unit reconciliations Apply knowledge of how intermediaries must be licensed before they do business.
Verify that there are systems and processes that enable the preparation and delivery of accurate quarterly reports.
S
Explain how the accounting and unit reconciliations work.
K
Explain how intermediaries must be licensed before they can do business
K
Deal with rebates
COC Administrative FSPs - Sec 10.2.
No specific questions. Covered in other relevant task and criteria
COC Administrative FSPs - Sec 4 & FSP 2 Form. FAIS Act - Sec 7(3). ML & TFC Regulations – Reg. 7 & 8.
Explain how rebates work. 11
COC Administrative FSPs - Sec 10.1(b).
K
No specific questions. Covered in other relevant task and criteria
Task No
Task
Qualifying Criteria
Explain all the related disclosures as it applies to rebates.
Knowledge (K) or Skill (S) K
Reference GCOC - Sec 7(1)(c)(iii)(dd).
