QUALIFICATIONS, EXPERIENCE AND CRITERIA FOR APPROVAL AS COMPLIANCE OFFICER (2024)

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FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT

Act 37 of 2002.

QUALIFICATIONS, EXPERIENCE AND CRITERIA FOR APPROVAL ASCOMPLIANCE OFFICER
[Updated to 13 April 2017]

BN 127, G. 33537 (c.i.o 9 September 2010),
BN 136, G. 32293(c.i.o 15 August 2012),
BN 269, G. 37168 (c.i.o 20 December 2013),
BN 77,G. 38665 (c.i.o 31 March 2015),
BN 51, G. 40785 (c.i.o 13 April2017).

PART I

1. Definitions

In this Schedule “the Act” means the Financial Advisoryand Intermediary Services Act, 2002 (Act 37 of 2002), any word or expression towhich a meaning has beenassigned in the Act, read with the definition of“this Act” in section 1(1) of the Act, shall have that meaning and,unless the context otherwise indicates—

“applicant” means the natural person applying to theRegistrar for approval as a compliance officer, including the natural personappointed bythe compliance practice to render compliance services in respect ofa particular provider;

“application form” means Forms 6 and 13 of the Applicationby Financial Services Providers for Authorisation by the Financial ServicesBoard, BoardNotice 60 of 2009, in Gazette 32227 of 15 May 2009;

“compliance officer” means—

(i)a natural person appointed to render compliance services, including anatural person appointed by a compliance practice; or

(ii)a compliance practice appointed to render compliance services, andapproved, on application, by the Registrar for such purpose;

“compliance practice” means a company, close corporationor partnership that appoints one or more natural persons to render complianceservices in respectof a particular provider and such natural persons areapproved by the Registrar for that purpose as compliance officers;

“compliance services” means the performance by acompliance officer of functions contemplated in section 17 of the Act;

“continuous professional development” or“CPD” means a process of ongoing learning and development,with the aim to enable the compliance officer to maintain the requiredcompetenciesto render compliance services competently;

“external compliance officer” means a compliance officerother than an internal compliance officer and includes a compliancepractice;

“generic recognised compliance qualification” means aqualification recognised by the Registrar that addresses knowledge, skills andcompetence that are broadly applicable tothe rendering of complianceservices;

“internal compliance officer” means a compliance officerthat is a natural person in the permanent employ of a financial servicesprovider and that renders complianceservices in respect of that particularprovider or another financial services provider that is a subsidiary, holdingcompany or subsidiaryof the holding company, of the first-mentionedprovider;

“list of recognised compliance qualifications” means thequalifications recognised by the Registrar as either generic recognisedcompliance qualifications or specific recognisedcompliance qualifications andpublished by notice in the Gazette as part of Annexure 2;

“Phase I approval” means the approval by the Registrar of,inter alia, an applicant’s qualifications, experience and personalcharacter qualities of honesty and integrity;

“Phase II approval” means the approval granted by theRegistrar to an applicant to render compliance services to a specificprovider;

“qualifying criteria” means the qualifying criteria inAnnexure 1;

“regulatory examination” means the examination determinedby the Registrar subject to the qualifying criteria, after consultation with theAdvisory Committee;

“specific recognised compliance qualification” means aqualification recognised by the Registrar that addresses specific and/orspecialized knowledge, skills, and competence applicableto the compliancefunction.

PART II

2. Applicationfor approval as compliance officer

(1)An applicant and compliance practice must apply on the application formsto the Registrar for Phase I and Phase II approvals.

(2)

(a)The entities that may apply for approval as a compliance practiceare—

(i)a partnership of which all the partners are natural persons who arethemselves approved compliance officers;

(ii)a company or close corporation that is incorporated and registered interms of applicable legislation, and of which only individualswho have Phase 1approval are directors and members of the company or close corporation.

(b)Where a member of a close corporation dies, the estate of the member maycontinue to hold the relevant interest for a period ofsix months as from thedate of the death or for such longer period as the Registrar may approve.

(c)Where a member of a close corporation ceases to conform to anyrequirement of this subparagraph, the member may continue to holdthe relevantinterest for a period of six months as from the date on which the member ceasesso to conform or for such longer periodas the Registrar may approve.

(3)If the Registrar is satisfied that the applicant or compliance practicecomplies with the criteria for—

(a)Phase I approval, the Registrar must grant Phase I approval and issue anapproval number on payment of the prescribed fee;

(b)Phase II approval, the Registrar must grant Phase II approval on paymentof the prescribed fee.

(4)No person may render compliance services without having obtained Phase Iand Phase II approvals, except for the persons referredto in paragraph8(2)(a)(i) and (ii).

PART III

3. Criteriafor Phase I approval

(1)An applicant must—

(a)hold a qualification on the list of recognised compliancequalifications;

(b)have passed the regulatory examination;

(c)have at least three years’ experience in performing a compliance orrisk management function;

(d)comply with the same requirements determined by the Registrar undersection 8(1)(a) of the Act in respect of personal characterqualities of honestyand integrity;

(e)have at least one year’s experience in performing a compliance orrisk management function in respect of the specific categoryof providers theapplicant seeks to obtain approval to render compliance services;

(f)not be an unrehabilitated insolvent, have entered into a compromise withcreditors or have been provisionally sequestrated orliquidated; and

(g)have adequate access to communication facilities, including at least atelephone or cell phone service and typing and documentduplicationfacilities.

(2)A person applying for approval as an external compliance officermust—

(a)have a fixed business address;

(b)maintain the operational ability to render compliance servicesefficiently, including—

(i)adequate storage and filing systems for the safe-keeping of records,business communications and correspondence;

(ii)control structures, processes and procedures with referenceto—

(aa)segregation of duties where such segregation is appropriate from anoperational risk mitigation perspective;

(bb)control of access to the premises;

(cc)access rights and data security on electronic data;

(dd)physical security of the compliance officer’s records;

(ee)business policies and controls;

(ff)system application testing;

(gg)disaster recovery and back-up procedures on electronic data;

(hh)a business continuity plan.

(3)Individuals referred to in paragraph 2(2)(a) must—

(a)comply with the same requirements determined by the Registrar undersection 8(1)(a) of the Act in respect of personal characterqualities of honestyand integrity;

(b)not be an unrehabilitated insolvent, have entered into a compromise withcreditors or have been provisionally sequestrated orliquidated.

PART IV

4. Criteriafor Phase II approval

(1)An applicant and compliance practice must have Phase I approval.

(2)The Registrar must be satisfied that an applicant and compliance practicehave—

(a)adequate resources available to ensure the efficient rendering ofcompliance services; and

(b)direct access to, and demonstrable support from, the senior management ofthe provider.

(3)The Registrar must be satisfied that an applicant and compliance practicewill be able to—

(a)render compliance services independently and objectively;

(b)avoid conflicts of interest in the rendering of compliance services;

(c)keep records and supporting documentation of activities undertaken in thecourse of compliance reviews, visits or monitoring;

(d)assist the provider in the compilation of an appropriate compliance riskmanagement strategy as part of the provider’s overallrisk managementstrategy;

(e)liaise directly with the Registrar; and

(f)conduct regular reviews of financial services rendered by the providerand any representative.

(4)The Registrar must be satisfied that—

(a)an applicant and compliance practice who applied for approval as anexternal compliance officer are able, in respect of—

(i)categories I and IV providers, to conduct regular visits to the businesspremises, business units and/or branches of the provider.The intervals of suchvisits may not be less than once a quarter and in respect of representatives ofthe provider, twice a year;

(ii)categories II, IIA and III providers, to conduct regular visits to thebusiness premises, business units and branches of theprovider and anyrepresentative. The intervals of such visits may not be less than once amonth;

(b)an applicant who applied for approval as an internal compliance officeris able in respect of—

(i)categories I and IV providers, to conduct regular visits to the businesspremises, business units and branches of the providerand any representatives,and the intervals of such visits may not be less than once a year;

(ii)categories II, IIA and III providers, to conduct regular visits to thebusiness premises, business units and branches of theprovider and anyrepresentative, and the intervals of such visits may not be less than once aquarter;

(c)an applicant and compliance practice be able to provide the provider withreports at intervals not less than the intervals referredto in subparagraphs(a) and (b) on the rendering of financial services, including the making of arecommendation to the providerregarding the rendering of complianceservices.

(5)An applicant and a compliance practice must ensure that the number ofclients allocated to any applicant or compliance officerrepresenting suchpractice, are at all relevant times sufficient to ensure the rendering of properand appropriate compliance servicesto such clients.

PART V

5. Compliancewith CPD requirements after approval

A compliance officer and the individuals referred to in paragraph 2(2)(a)must comply with the CPD requirements as determined by theRegistrar by noticein the Gazette from time to time.

PART VI

6. Recognitionand qualifying criteria of compliance qualifications

(1)A person may, in the form and manner determined by the Registrar bynotice in the Gazette, apply to the Registrar for recognition of ageneric compliance qualification or a specific compliance qualification.

(2)A qualification, subject to paragraph 7, will be recognised by theRegistrar based on the extent to which the qualification addressesthequalifying criteria.

(3)The list of recognised compliance qualifications is published in Annexure2.

7. Criteriafor recognition of a specific and generic compliancequalification

(1)A qualification, to be recognised as a specific qualification, mustbe—

(a)a qualification registered by SAQA; or

(b)an extracurricular specialist programme offered at a post-graduate levelby an Institution of Higher Education.

(2)A qualification referred to in subsection (1) must—

(a)in respect of non-unit standards based qualifications, the qualificationmust corresponds with at least 80% of the qualifyingcriteria; or

(b)in respect of unit standards based qualifications, at least 80% of therelevant qualifying criteria is met by the core and electiveunit standards ofthe qualification.

(3)A qualification, to be recognised as a generic qualification, mustbe—

(a)a qualification registered by SAQA;

(b)an extracurricular specialist programme offered at a post-graduate levelby an Institution of Higher Education;

(c)an industry or professional programme offered through a professional bodyrecognised by the Registrar or an accredited trainingprovider; or

(d)a foreign qualification that is similar to a qualification referred to insubparagraphs (a) to (c).

(4)A qualification referred to in subsection (3) must—

(a)in respect of non-unit standards based qualifications, the individualmust have successfully completed a minimum of three subjectslisted in Table Aand at least one of the subjects must be—

(i)in the field of commerce, corporate governance or law; and

(ii)a major subject; on final year level, where applicable; or

PART VII

8. Delegationof rendering of compliance services

(1)No compliance officer, other than an internal compliance officer andsubject to the conditions referred to in subparagraph (2),may delegate therendering of compliance services, including compliance monitoring to anotherperson.

(2)An internal compliance officer may delegate the rendering of complianceservices to another person subject to the following conditions—

(a)Such other person must—

(i)be a natural person in the employ of the provider or a subsidiary,holding company or subsidiary of the holding company of theprovider; and

(ii)comply with paragraph 3(1) unless the person conducts compliancemonitoring in terms of a documented procedure and such personwill exercise nojudgment in the performance of the procedure; or

(iii)be an approved compliance practice.

(b)the internal compliance officer must have appropriate oversight of suchother person;

(c)the internal compliance officer remains accountable for the rendering ofcompliance services; and

(d)the internal compliance officer must maintain a register with the namesof the persons to whom the rendering of compliance serviceshas been delegated,a description of the rendering of compliance services delegated and confirmationthat the requirements of subparagraph(a)(ii) have been complied with.

9. Withdrawaland lapsing of approval

(1)The Registrar may withdraw—

(a)a compliance officer’s approval if such officer no longer complieswith any provision of this Notice; and

(b)the Phase I approval granted to an individual referred to in paragraph2(2)(a) if such individual no longer complies with thecriteria for Phase 1approval and paragraph 5.

(2)Phase I approval of an applicant or compliance practice lapses if theapplicant or compliance practice fails to obtain Phase IIapproval within 12months of the date of Phase I approval.

(3)Phase I approval granted to an individual referred to in paragraph2(2)(a) lapses after 24 months of the date of approval unlesssuch individualreapplies for approval before the expiry of the 24 months.

10. Transitionalprovisions

(1)Compliance officers approved by the Registrar before or on the date ofcommencement of this Notice—

(a)do not have to comply with paragraph 3(1)(a);

(b)who do not meet a requirement of paragraph 3(1)(b) and (e), have threeyears (ending 31 December of the third year) to complywith the requirement fromthe date of publication of this Notice in the Gazette.

(2)A compliance practice approved by the Registrar before or on date ofcommencement of this Notice who do not comply with paragraph2(2) have ninemonths to comply with the requirements from the date of publication of thisNotice in the Gazette.

(3)Compliance officers approved by the Registrar after commencement of thisNotice until 31 December 2011 have two years (ending31 December of the secondyear) to comply with paragraph 3(1)(b).

(4)Must within three months from the commencement of this Notice comply withany other provisions thereof.

11. Repeals

The Determination of Criteria and Guidelines for the Approval of ComplianceOfficers, 2002, and the Notice on Qualifications and Experienceof ComplianceOfficer in respect of Financial Services Business, 2008, are herebyrepealed.

12. Updating

The Registrar may from time to time, after consultation with the AdvisoryCommittee, publish by notice in the Gazette an updated version of thisSchedule, including the Annexures.

13. Shorttitle