Fit and proper requirements for representatives: the FSP checklist

The fit and proper requirements for every representative are honesty and integrity, good standing, competence, continuous professional development (CPD), operational ability and financial soundness (Board Notice 194 of 2017, s4). They apply at appointment and for as long as the person stays on your register (s5), and the FSP must at all times be satisfied that its reps meet them (FAIS Act s13(2)(a)). The FSP records each rep's training, exams and CPD in a competence register and keeps the evidence for at least 5 years (s30; s32(3)).

This is the checklist we would use at appointment and at each annual review. For the appointment steps themselves, see how to appoint a representative.

What are the six fit and proper requirements?

Board Notice 194 of 2017, the Determination of Fit and Proper Requirements (issued by the FSB in 2017 and amended by the FSCA in 2020), lists them in section 4 and requires them on an ongoing basis in section 5 (s4; s5). For representatives they work out as set out below.

Honesty, integrity and good standing: what do you check?

• Honesty and integrity, and good standing apply to every representative (s7(1); s8(1)).
• Disclosure: the rep must tell the FSP about anything relevant "promptly and on own initiative" (s10). Good practice: ask for a signed declaration at appointment and every year.
• Debarment: a person debarred by an FSP may not act as a representative again unless the reappointment requirements are met (FAIS Act s14(9); Board Notice 82 of 2003). No rule expressly says "search the register", but checking the FSCA's published list of debarred persons is the most practical way to show you checked.

Can a rep be debarred for not being fit and proper?

Yes. The FAIS Act says an FSP must debar a representative who does not meet, or no longer complies with, the fit and proper requirements, following a fair process (FAIS Act s14). That covers a rep who fails the honesty and integrity requirement as much as one who misses a competence deadline. How this plays out when a supervised rep runs out of time for the RE5, and where the rules are less clear, is covered in what happens when a rep misses the RE5 deadline.

Competence: what must be in place, and by when?

Competence has five parts. Use this as your checklist for each rep and each class of business:

• Experience: adequate and appropriate, with minimum periods in Annexure One. Experience lapses after 5 consecutive years of not rendering the service (s15; s16; s17 to s21 in the 2017 text).
• Qualification: a qualification recognised by the FSCA for the category (s23). A rep under supervision has 6 years from first appointment for that product (FAIS Notice 86 of 2018, Condition 2(3)(b)).
• Regulatory exam: the RE5 for representatives, subject to the exceptions in s25 (s26). It must be passed before appointment unless the rep works under supervision, in which case they have 2 years from their DOFA (Condition 2(1)). Who must write it, and what a rep needs to register, is in RE5 requirements.
• Class of business training: before rendering any service for that class (s29(1)(a)), or within 12 months of the DOFA for a supervised rep (Condition 2(3)(a)).
• Product specific training: before rendering any financial service on that product, with no supervision exemption (s29(1)(b)). It does not apply to reps of Category II, IIA or III FSPs (s28(3)).
• Exclusions: the exam and class of business training do not apply to Category I reps appointed only for Long-term subcategory A or Friendly Society Benefits, only for Tier 2 products or only for execution of sales (s25(b); s28(2)).

Record training in the competence register within 15 days (s30(a)) and keep the records for 5 years after the person stops rendering services for that product or class (s30(b)). Supervised reps work against these dates from their DOFA, so the DOFA deadline calculator is a quick way to see each rep's RE5, class of business and qualification deadlines. What supervision itself must look like is set out in representative supervision under FAIS.

How do you record a rep's regulatory exam status in the competence register?

The competence register is where the FSP shows each rep's training, exams and CPD, and it must be updated regularly (s13(5); s30). For the regulatory exam, record whether the rep has passed the RE5, or whether they are under supervision and still working towards it, and keep the evidence on file for at least 5 years. For a supervised rep, note the date 2 years after their DOFA so the deadline is visible (Condition 2(1)).

For a field by field list of what to capture, see what belongs in a representative competence register.

For how these requirements fit into setting up training for a whole team, see how to set up RE5 and RE1 training for your team.

How many CPD hours does a rep need?

The CPD cycle runs from 1 June to 31 May (s1).

• 6 hours for one subclass of business, 12 hours for more than one subclass in one class, and 18 hours for more than one class (s33(1)).
• Hours are reduced in proportion for a rep appointed part way through a cycle (s33(4)).
• The rep gives the FSP their CPD evidence within 15 days after the cycle ends (s33(2)).
• The FSP records it within 30 days and keeps the evidence for 5 years (s32(3)).
• CPD does not apply to reps appointed only for Long-term subcategory A or Friendly Society Benefits, only for Tier 2 products, or only for intermediary services on Tier 1 products (s31(2)).

A supervised rep's CPD starts once they meet the class of business, exam and qualification requirements, or after 6 years, whichever comes first (Condition 2(4)). For how CPD relates to whether an RE5 pass stays valid, see does the RE5 expire.

Operational ability and financial soundness: what applies to reps?

Before appointing, the FSP must be satisfied that the rep is not an unrehabilitated insolvent, is not under liquidation or business rescue, and has no pending proceedings that could lead to these (s40(1)). The FSP may not let a rep outsource or sub-delegate any part of the financial services they render (s40(4)). Every rep must have the operational ability to do the work (s41(1)). A rep that is a company must also have sufficient financial resources (s40(1)(b)) and at least one Key Individual (s41(2)).

How often should you check each rep?

The Determination requires the FSP to evaluate each rep's competence at regular intervals but does not fix a frequency (s13(3)). The CPD cycle gives a natural annual point. Once the CPD deadlines of 15 June and 30 June have passed, refresh each rep's honesty and good standing declaration, confirm their training records are complete, and check that no supervised rep is close to a deadline under FAIS Notice 86 of 2018.

What must the FSP keep on file?

A competence register, updated regularly (s13(5)), and a record showing you evaluated each rep's competence at regular intervals (s13(3)); the representative register required by the FAIS Act (s13(3)); and records showing each rep's continued compliance, kept for at least 5 years (FAIS Act s18).

Sources

• Board Notice 194 of 2017 (2017 text, before the 2020 amendments)
• Board Notice 194 of 2017, s5 and the other sections cited (consolidated text, with the 2020 amendments)
• Board Notice 194 of 2017, s4 (fit and proper requirements)
• Board Notice 194 of 2017, s13 (responsibilities of FSPs)
• Board Notice 194 of 2017, s26 (regulatory examinations)
• Board Notice 194 of 2017, s30 (record keeping)
• Board Notice 194 of 2017, s33 (minimum CPD hours)
• FSCA FAIS Notice 86 of 2018, published by the FSCA on 3 December 2018
• FAIS Act 37 of 2002, s13, s14 and s18
• Board Notice 82 of 2003 (reappointment of debarred representatives)
• Financial Services Tribunal: Sabeka v First National Bank, FSP15/2024, 30 July 2024 (Board Notice 82 of 2003 applied)

To check every rep's RE5 deadline against their DOFA, use the free DOFA deadline calculator.

PassPath is an independent study platform. The RE1 and RE5 are written through Moonstone; PassPath is not affiliated with Moonstone or the FSCA.