All RE5 questions
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) She is automatically disqualified because every person rendering financial services must show a positive net asset position.
- c) Her strong sales record allows the FSP to formally waive any fit-and-proper requirement that would otherwise apply to her.
- d) She keeps her status only because the FSP has agreed to underwrite her personal shortfall on her behalf.
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.
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.