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Fit & Proper FSP License (Fit & Proper/Operational Ability)
What is the basic financial-soundness requirement that applies to an FSP (and to a sole proprietor who is the FSP)?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Its assets must exceed its liabilities, and it must be able to meet its financial obligations as they fall due.Correct
- b) It must be the most profitable FSP in its province.
- c) Each representative must personally be a millionaire.
- d) It must hold no assets at all to avoid risk.
Why this is the answer
Financial soundness for an FSP means assets exceeding liabilities and the ability to meet obligations as they fall due (with additional capital/liquidity requirements for higher-risk categories). It does not depend on being the most profitable, and it applies to the FSP, not to each representative's personal wealth.
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