Fit and proper is assessed when a Key Individual is approved and when a representative is appointed. The FAIS Act, however, requires it to be maintained at all times, and section 13 makes the FSP responsible for ensuring that its representatives comply. Most licence findings in this area are not about the original assessment. They are about what happened afterwards: a regulatory examination deadline that passed, a CPD cycle that was short, a representative whose debt review went unreported, a KI who stopped being involved in the business. Ongoing monitoring is the control that catches these before the FSCA does.
The five pillars, and how each changes over time
Board Notice 194 of 2017 sets out honesty and integrity, competence, continuous professional development, operational ability and financial soundness. Each has a time dimension.
Honesty and integrity is a declaration at appointment and a duty to notify afterwards. Criminal charges, civil judgments involving dishonesty, debarment by another FSP, disciplinary findings by a professional body and sequestration all have to be reported to the FSP and, for a KI, to the FSCA. The monitoring question is whether the FSP would find out.
Competence is a set of deadlines. The RE5 for a representative and the RE1 for a KI, class of business training and the recognised qualification each have a fixed period from the date of first appointment, and supervision requirements run alongside them. The register of representatives carries the dates, and the FSCA reconciles them.
CPD runs in a cycle from 1 June to 31 May, with the required hours determined by the classes and subclasses of business the person is authorised for (6, 12 or 18 hours), and a record that must show the activity, the provider and the hours. A representative who is short at 31 May is not compliant on 1 June.
Operational ability is about the FSP and its systems, but it also includes the KI's actual involvement in managing and overseeing the business. A KI who is on the licence in name only fails this test.
Financial soundness applies to the FSP and to sole proprietors, and is reviewed against the annual financial statements and any event that affects solvency.
A monitoring programme that works
An FSP of any size can run fit-and-proper monitoring on a single calendar and two registers.
- The calendar holds every competence deadline for every representative and KI, every CPD cycle end, the annual declaration date and the financial statement date, with a reminder three months ahead of each.
- The register of representatives is reconciled to the FSCA's record quarterly. Differences in subcategories, supervision status or dates are findings.
- The competence register holds the evidence: the exam result, the class of business certificate, the qualification, the CPD activities with their hours, and the supervision agreement where one applies.
Two further controls catch what the calendar cannot:
- An annual declaration from each KI and representative, in which they confirm or update their honesty and integrity position and their outside interests.
- Triggers written into the HR and complaints processes: a complaint that alleges dishonesty, a garnishee order, a resignation, a change of role. Each triggers a fit-and-proper review.
Monitoring exists so that remediation can happen in time. A representative who is behind on CPD in March can still make the hours. One who has missed the RE5 deadline cannot render services until it is passed, and must be removed from the register for those subcategories. An honesty and integrity finding leads to the section 14 process: the FSP must debar a representative who no longer meets the requirement, following a fair procedure, and notify the FSCA. The monitoring record is what shows that the FSP acted when it should have, rather than when it was told to.
Where the Key Individual sits
The KI owns this programme. It is the oversight duty on which the KI's own fit-and-proper approval rests, and it is the first thing a compliance officer tests. RCC's Key Individual services include capacitation on exactly this oversight, and class of business and CPD support keeps the competence register current. The value of ongoing monitoring is not the report. It is the licence that is still intact at the next inspection.
