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FAIS Act FAIS Act and Subordinate Legislation
The Authority suspends an FSP's licence for three months. During the suspension the FSP signs up twelve new clients, reasoning that the licence has not been withdrawn. 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.
- a) A suspended FSP may continue as normal, provided it tells each new client about the suspension.
- b) A suspension prevents the FSP from appointing new representatives but not from taking on new clients.
- c) A suspension takes effect only if the FSP has not remedied the default by the end of the period.
- d) During a suspension the FSP is regarded as unlicensed, so rendering financial services contravenes the Act.Correct
Why this is the answer
During any period of suspension the licensee is regarded, for the purposes of the Act, as a person who has not been issued with a licence. Rendering financial services while suspended is therefore unlicensed business. The suspension operates immediately and disclosure to clients does not make the business lawful.
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