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Key Individual Role of the Key Individual in terms of the FAIS Act
An FSP is licensed for Category I and Category II. Its only key individual approved for Category II resigns, leaving one key individual who is approved for Category I only. The FSP manages R900 million of client portfolios on a discretionary basis, and the remaining key individual offers to 'keep an eye on' that business. 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) It must halt the discretionary business until someone is approved to manage it.Correct
- b) It may carry on with Category II for twelve months while it recruits and trains a replacement.
- c) It may carry on as before, because one approved key individual is enough for any number of categories.
- d) It may carry on with Category II, provided its compliance officer oversees that business.
Why this is the answer
A key individual must be approved for, and competent in, each category whose services he manages. Without an approved key individual for Category II, the FSP has no one to manage that business and may not render it until a replacement is approved. A compliance officer monitors; he cannot stand in as key individual.
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