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Fit & Proper FSP License (Fit & Proper/Operational Ability)
Naledi is a star performer at Olwethu Wealth (Pty) Ltd, yet her personal debts currently exceed what she owns. A new colleague worries this disqualifies her as a representative. Which statement correctly reflects the FAIS fit-and-proper position on her situation?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) The financial-soundness requirement is directed at the FSP (and sole proprietors), so a representative who is not a sole proprietor is not disqualified merely because liabilities exceed assets.Correct
- b) Her strong sales record allows the FSP to formally waive any fit-and-proper requirement that would otherwise apply to her.
- c) She keeps her status only because the FSP has agreed to underwrite her personal shortfall on her behalf.
- d) She is automatically disqualified because every person rendering financial services must show a positive net asset position.
Why this is the answer
Under the Fit and Proper requirements the financial-soundness test applies to the FSP itself (and to sole proprietors who are the FSP). A representative who is an employee is not subjected to a personal solvency test, so a temporary excess of liabilities over assets does not, on its own, bar Naledi from acting as a representative. Honesty/integrity and competence requirements still apply.
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