Keeping the FSP Licence: Conditions, Display Rules and Reporting Changes

Getting an FSP licence is an event. Keeping it is a routine, and the RE1 gives more questions to that routine than to any other task.

How the Authority decides

When it considers an application, the Authority may use information from any source, including the Ombud and other regulators. There is a condition: the information must be disclosed to the applicant, who gets a reasonable opportunity to respond.

If the application is refused, the Authority must notify the applicant and give reasons.

Conditions and restrictions

A licence can be granted subject to conditions and restrictions. In deciding them, the Authority looks at the facts about the applicant and its key individuals, the category of financial services, the category of FSP and the categories of products involved.

Conditions can change later. The Authority may amend a condition on application, or on its own initiative. Before it does so on its own initiative it must give the FSP a reasonable opportunity to make submissions and consider them. It does not need the FSP's consent.

Remember that "this Act" includes any condition imposed under it. Breaching a licence condition is breaching the Act.

The three display duties

Section 8(8) gives a licensee three duties:

1. Display a certified copy of the licence in a prominent and durable manner within every business premises.
2. Refer to the licence in business documentation, advertisements and promotional material.
3. Have the licence available for production to anyone who asks for proof of licensed status.

Failing to do so is an offence.

What you may not do with a licence

Under section 8(9), nobody may use a licence or a copy of it for business purposes when the licence has lapsed, been withdrawn or provisionally withdrawn, or is suspended, provisionally or finally. During a suspension the FSP is regarded as not authorised.

Changes: approval first, or report afterwards?

This is where marks are won and lost.

Change	Rule
A new or replacement key individual	Approval before the person acts
A change of business address, name or contact details	Report within 15 days
A new director, member, trustee or partner who is not a key individual	Be satisfied of honesty and integrity, and inform the Authority within 15 days
A key individual no longer meets a requirement	Notify immediately

A typical question lists three events on the same date and asks which needed approval beforehand. Only the key individual did.

Stay inside the licence

An FSP may only render the financial services, for the product categories, that its licence authorises. It may also only do financial-services business with other persons who are themselves authorised. If a platform you place business through loses its licence, continuing to deal with it "for existing clients only" is still a contravention.

One comfort for clients: a transaction between a client and a product supplier is not unenforceable merely because the person who rendered the service was unauthorised. The policy stands. The unauthorised person is the one in trouble.

Controls a key individual should have

The qualifying criteria ask whether you can verify that controls exist. Good answers are specific:

• A register that records, for each representative, the products and services they are appointed for.
• A system that blocks transactions outside those products.
• A diary of regulatory dates: levies, financial statements, compliance reports.
• A named person who monitors the address the Authority uses for correspondence.
• A process for reviewing every new product against the licence before anyone sells it.

A reminder to staff to "read the licence" is not a control.

Levies and penalties

Failure to pay a levy is a ground for suspension or withdrawal. It does not make the licence lapse. Late returns can attract a penalty of up to R1 000 for every day the failure continues, which the Authority may waive on good cause.

What to memorise

• Certified copy, every premises.
• Key individual: approval first.
• Most other changes: 15 days.
• Loss of fitness: immediately.
• Submissions before the Authority amends a condition, not consent.