All RE5 questions
Organizational Structure FAIS Act Compliance
An FSP is licensed for long-term and short-term insurance. Its mandate with representative Bongani, and his entry on the register, cover long-term insurance only. Bongani sells a client a short-term household policy through the FSP. 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) He acted lawfully, because the FSP is licensed for short-term insurance.
- b) He acted lawfully, provided the client was satisfied with the household policy.
- c) He acted outside his mandate only if the FSP refuses to pay him commission on the sale.
- d) He acted outside his mandate, which limits him to the services he was appointed for.Correct
Why this is the answer
The mandate and the register define which financial services and products a representative may render on the FSP's behalf. The FSP's licence sets the outer limit, but a representative is authorised only for what he has been appointed and is competent for. Client satisfaction and commission arrangements do not change that, and the FSP must control what its representatives sell.
Want to test yourself on 700+ more questions like this?
Start your free RE5 simulator today — timed mock exams, full answer explanations and cloud-synced progress tracking.