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Key Individual Role of the Key Individual in terms of the FAIS Act
An FSP's sole key individual spent two years focused on a new business venture and left the representatives unsupervised. Clients were mis-sold products. He argues that he made no sales himself. What is his exposure?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) None, because accountability under the Act attaches only to the person who rendered the financial service.
- b) He can be removed only by the board of the FSP, since the Authority approves key individuals but cannot remove them.
- c) The Authority may withdraw its approval of him, because the role is to manage and oversee the services.Correct
- d) None personally, because only the FSP as licensee can be sanctioned for the conduct of its representatives.
Why this is the answer
A key individual is responsible for managing or overseeing the financial services activities of the FSP. Failing to do so calls his competence and operational ability into question, and the Authority may withdraw its approval of a key individual who no longer meets the requirements. His exposure does not depend on having made sales and exists alongside the FSP's.
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