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FAIS Act FAIS Act and Subordinate Legislation

The Authority publishes a notice in the Gazette declaring a business practice undesirable. An FSP continues the practice for three weeks after publication, and the Authority then directs it to rectify the consequences. Which statement is correct?

RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.

  1. a) The practice had to stop on the date of publication, and the rectification must be done within 15 days of the direction.
  2. b) The practice could continue until the Authority issued a direction, which is what makes the notice binding on the FSP.
  3. c) The practice could lawfully continue for 60 days after publication, so the FSP has not yet contravened the notice.
  4. d) The practice had to stop on the date of publication, and the rectification must be done within 60 days of the direction.Correct

Why this is the answer

An FSP may not carry on a business practice on or after the date on which the notice declaring it undesirable is published. Where an FSP carries on regardless, the Authority may direct it to rectify what was caused by the practice, and the FSP must do so within 60 days after the direction is issued. The 60 days is a rectification period, not a grace period for continuing.

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