Financial Advisory and Intermediary Services Act 2002 (Act No. 37 of 2002) Determinations Amendment of the Determination of Fit and Proper Requirements, 2020 Chapter 1 : Interpretation, Purpose and Application of Determination 1. Definitions

 

In this Schedule a word or expression to which a meaning has been assigned in the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002), has the same meaning as in that Act, and—

 

"accredited provider"

means a person that is recognised and certified or accredited by a Quality Council as having the capacity or provisional capacity to offer a qualification or part-qualification registered on the NQF at the required standard, or a foreign person that is so recognised and certified or accredited by a foreign authority that is equivalent to a Quality Council;

 

"administration of assistance policies"

means work performed by a person relating to the offsetting of claims, processing of claims or payment of fees or commission in respect of an assistance policy;

 

"Administrative Code of Conduct"

means the code of conduct for administrative FSPs published under section 15 of the Act;

 

"administrative FSP"

means an administrative FSP as defined in the Administrative Code of Conduct;

 

"applicant"

means a person who submits an application for authorisation;

 

"assessed"

in relation to competence requirements, means the structured process of gathering reliable evidence to determine the level of a person’s competence in relation to a pre-determined standard, and the extent to which the person’s competence meet the pre-determined standard;

 

"assistance business FSP"

means a person that performs the administration of assistance policies and includes a person who is a binder holder as defined in the Regulations under the Long-term Insurance Act, where such administration is performed by that binder holder;

 

"assistance policy"

means an assistance policy as defined in section 1 of the Long-term Insurance Act;

 

"automated advice"

means the furnishing of advice through an electronic medium that uses algorithms and technology without the direct involvement of a natural person;

 

"Banks Act"

means the Banks Act, 1990 (Act No. 94 of 1990);

 

"bonds"

in relation to financial product means—

 

"category of FSP"

means a specific category of FSPs referred to in section 3;

 

"category II financial services"

means the financial services referred to in the definition of  'discretionary FSP';

 

"category IIA financial services"

means the financial services referred to in the definition of 'hedge fund FSP';

 

"category III financial services"

means the financial services referred to in the definition of 'administrative FSP';

 

"category IV financial services"

means the financial services referred to in the definition of 'assistance business FSP';

 

"cash"

means—

[Definition substituted by section 2(a) of Notice No. 707, GG43474, dated 26 June 2020]

 

"class of business"

means the respective classes of business set out in Table 1 in Annexure Four;

 

"class of business training"

means the training referred to in section 29(4) in respect of a class of business and which training is provided and assessed by an accredited provider or an education institution;

 

"collective investment scheme"

means a collective investment scheme as defined in section 1(1) of the Collective Investment Schemes Control Act, and includes a portfolio as defined in section 1(1) of that Act;

 

"Collective Investment Schemes Control Act"

means the Collective Investment Schemes Control Act, No. 45 of 2002;

 

"competence"

means having the skills, knowledge and expertise needed for the proper discharge of a person’s responsibilities in the performance of his or her functions;

 

"CPD"

means continuous professional development;

 

"CPD activity"

means an activity that is—

and excludes—

[Definition substituted by section 2(b) of Notice No. 707, GG43474, dated 26 June 2020]

 

"CPD cycle"

means a period of 12 months commencing on 1 June of every year and ending 31 May of the following year;

 

"debentures and securitised debt"

in relation to financial product means –

 

"derivative instrument"

in relation to financial product means—

excluding—

 

"Discretionary Code of Conduct"

means the code of conduct for discretionary FSPs published under section 15 of the Act;

 

"discretionary FSP"

means a discretionary FSP as defined in the Discretionary Code of Conduct;

 

"education institution"

has the meaning assigned to it in section 1(1) of the NQF Act;

 

"examination body"

means a body that, in terms of section 6 of the Act, has been delegated the function of setting, administering and/or conducting regulatory examinations on behalf of the Registrar;

 

"execution of sales"

means an intermediary service performed by a person on instruction of a client to buy, sell, deal, invest or disinvest in, replace or vary one or more financial products;

 

"experience"

means continuous practical working experience that entails the active and on-going gaining of knowledge, skills and expertise relevant to a particular category of FSP, particular financial service and, where applicable, a financial product that was—

with no break in service of more than 5 years between the individual’s last working experience and the date of assessment of that individual’s experience;

 

"family member"

means a natural person who is—

 

"Financial Markets Act"

means the Financial Markets Act, 2012 (Act No. 19 of 2012);

 

"financial product"

includes—

 

"foreign professional programme"

means a programme offered by a foreign body that is equivalent to an education institution or a professional body which sets an internationally accepted standard for a specialised profession relevant to the financial services industry;

 

"forex investment"

has the meaning assigned to it in section 1(1) of the Code of Conduct for Authorised Financial Services Providers and their Representatives involved in Forex Investment Business, 2004;

 

"friendly society benefit"

means a benefit provided by a friendly society contemplated in paragraph (d)(ii) of the definition of "financial product" in section 1(1) of the Act;

 

"FSP"

means a financial services provider as defined in section 1(1) of the Act;

 

"General Code of Conduct"

means the general code of conduct for authorised FSPs published under section 15 of the Act;

 

"fund member policy"

means a fund member policy as defined in Regulation 3.1 of the Regulations under the Long-term Insurance Act;

[Definition substituted by section 2(c) of Notice No. 707, GG43474, dated 26 June 2020]

 

"fund policy"

means a fund policy as defined in Regulation 1.1 of the Regulations under the Long-term Insurance Act;

[Definition inserted by section 2(d) of Notice No. 707, GG43474, dated 26 June 2020]

 

"health service benefit"

means a benefit referred to in paragraph (g) of the definition of 'financial product' in section 1(1) of the Act;

 

"CIS hedge fund"

means a hedge fund as defined in the Declaration made by the Minister under section 63 of the Collective Investment Schemes Control Act;

 

"hedge fund FSP"

means a hedge fund FSP as defined in in the Discretionary Code of Conduct;

 

"Insurance Act"

means the Insurance Act, 2017 (Act No. 18 of 2017);

[Definition inserted by section 2(e) of Notice No. 707, GG43474, dated 26 June 2020]

 

"juristic"

in relation to a representative, means a representative that is not a natural person;

 

"key individual"

includes a key individual of a juristic representative of an FSP;

 

"limited underwriting"

means where the only requirements a prospective policyholder or life insured must comply with in order for a product supplier to accept risk or pay a claim are—

 

"long-term deposit"

means a deposit as defined in section 1(1) of the Banks Act, including a foreign currency deposit, with a term exceeding 12 months but excluding a structured deposit;

 

"Long-term Insurance Act"

means the Long-term Insurance Act, 1998 (Act No. 52 of 1998);

 

"long-term insurance subcategory A"

means an assistance policy or a life insurance policy as defined in section 1 of the Insurance Act underwritten under the Funeral class of life insurance business as set out in Schedule 2 of the Insurance Act;

[Definition substituted by section 2(f) of Notice No. 707, GG43474, dated 26 June 2020]

 

"long-term insurance subcategory B1"

means—

[Definition substituted by section 2(g) of Notice No. 707, GG43474, dated 26 June 2020]

 

"long-term insurance subcategory B1-A"

means those long-term insurance policies or life insurance policies referred to in the definition of long-term insurance subcategory B1 which require no or limited underwriting;

[Definition substituted by section 2(h) of Notice No. 707, GG43474, dated 26 June 2020]

 

"long-term insurance subcategory B2"

means—

but excludes a fund policy, a fund member policy and a policy referred to in the definitions of long-term insurance categories A, B1, B1-A, B2-A and C; or

that has a guaranteed investment value or a materially equivalent value;

but excludes a fund policy, a fund member policy and a policy referred to in the definitions of long-term insurance categories A, B1, B1-A, B2-A and C;

[Definition substituted by section 2(i) of Notice No. 707, GG43474, dated 26 June 2020]

 

"long-term insurance subcategory B2-A"

means those long-term insurance policies or life insurance policies referred to in the definition of long-term insurance subcategory B2 which provide for the premiums to be invested in an investment portfolio managed by the product supplier with no option by the policyholder to request a change or amendment to that portfolio;

[Definition substituted by section 2(j) of Notice No. 707, GG43474, dated 26 June 2020]

 

"long-term insurance subcategory C"

means a long-term policy as defined in section 1(1) of the Long-term Insurance Act, or a life policy as defined in section 1 of the Insurance Act excluding–

[Definition substituted by section 2(k) of Notice No. 707, GG43474, dated 26 June 2020]

 

"money-market instruments"

in relation to financial product means –

 

"no underwriting"

means there is no requirement by a product supplier for any medical, financial, demographic or lifestyle information to be provided by a prospective policyholder or life insured in order for such product supplier to accept risk or pay a claim;

 

"NQF"

has the meaning assigned to it in the NQF Act and includes the sub-frameworks as defined in section 1 of that Act;

 

"NQF Act"

means the National Qualifications Framework Act, 2008 (Act No. 67 of 2008);

 

"offsetting of claims"

means the payment of policyholder’s claims and the offsetting of such claims against premium received from policyholders for remittal to a long-term insurer;

 

"participatory interest in a CIS hedge fund"

means a participatory interest in a collective investment scheme that is a hedge fund;

 

"participatory interest in a collective investment scheme"

means a participatory interest in one or more collective investment schemes as referred to in paragraph (b)  of the definition of ‘financial product’ in section 1(1) of the Act excluding a participatory interest in a CIS  hedge fund;

 

"particular financial product"

in relation to product specific training, means a specific product of a product supplier with its own specific characteristics, features, terms and conditions and which product is a financial product;

 

"particular financial service"

means the financial services performed by a category of FSP referred to in section 3, and in respect of a Category I FSP, advice or intermediary services;

 

"part qualification"

has the meaning assigned to it in section 1(1) of the NQF Act;

 

"pension fund benefit"

means a financial product contemplated in paragraph (d)(i) of the definition of "financial product"in section 1(1) of the Act, including a fund policy, but excluding a retail pension benefit;

 

"product specific training"

means the training referred to in section 29(5) in respect of a particular financial product and which training is assessed, including any amendments to that particular financial product;

 

"professional body"

means a body recognised by the SAQA as a professional body for purposes of the NQF Act;

 

"professional programme"

means a programme at post-graduate level offered by an education institution or a professional body for the purposes of providing specialised competence in a specific field of the financial services industry;

 

"qualification"

means a—

 

"Quality Council"

has the meaning assigned to it in section 1 of the NQF Act;

 

"qualifying criteria"

in relation to a regulatory examination, means the criteria against which a regulatory examination must be set;

 

"RE 1"

means the regulatory examination developed in terms of the criteria set out in Table 1 of Annexure Five;

 

"RE 3"

means the regulatory examination developed in terms of the criteria set out in Table 2 of Annexure Five;

 

"RE 4"

means the regulatory examination developed in terms of the criteria set out in Table 3 of Annexure Five;

 

"RE 5"

means the regulatory examination developed in terms of the criteria set out in Table 4 of Annexure Five;

 

"recognised qualification"

means a qualification that is recognised by the Registrar in terms of section 24 and that is published as a recognised qualification on the official web site of the Financial Services Board;

 

"regulatory examination"

means a regulatory examination based on the qualifying criteria set out in the Tables in Annexure Five, the purpose of which is to test a person’s knowledge, understanding and application of legislation, including a financial sector law as defined in section 1(1) of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001), and all measures promulgated in terms of those Acts, directly applicable to an FSP, representative or key individual;

 

"related parties"

means related parties as defined in International Accounting Standard (IAS 24);

 

"regulatory authority"

includes—

 

"retail pension benefit"

means a benefit provided by a retirement annuity fund, preservation pension fund or preservation provident fund, as defined by the Income Tax Act, 1962 (Act No. 58 of 1962), and includes a benefit provided by a fund member policy, as defined in the Regulations to the Long-term Insurance Act, but excludes a pension fund benefit;

 

"securities and instruments"

means—

 

"shares"

in relation to financial product means –

 

"short-term deposit"

means a deposit as defined in section 1(1) of the Banks Act, including a foreign currency deposit, with a term not exceeding 12 months but excluding a structured deposit;

 

"Short-term Insurance Act"

means the Short-term Insurance Act, 1998 (Act No. 53 of 1998);

 

"short-term insurance commercial lines"

means—

[Definition substituted by section 2(l) of Notice No. 707, GG43474, dated 26 June 2020]

 

"short-term insurance personal lines"

means—

[Definition substituted by section 2(m) of Notice No. 707, GG43474, dated 26 June 2020]

 

"short-term insurance personal lines A1"

means—

and which policies—

[Definition substituted by section 2(n) of Notice No. 707, GG43474, dated 26 June 2020]

 

"SAQA"

has the meaning assigned to it in section 1 of the NQF Act;

 

"structured deposit"

means a—

 

"sole proprietor",

in relation to an FSP, means an FSP who is a natural person;

 

"the Act"

means the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002);

 

"Tier 1 financial products"

means the financial products listed in column A of Table 1 in Annexure Three;

 

"Tier 2 financial products"

means the financial products listed in column B of Table 1 in Annexure Three;

 

"verifiable"

in relation to CPD activities means activities that can be objectively verified and includes evidence of the identity of the person who partook in such activities and proof of the completion thereof;

 

"warrants, certificates or other instruments"

in relation to financial product means—

 

"wear and tear"

means the normal expected deterioration of the insured asset arising from normal usage and age.