SUMMATIVE ASSESMENTS MEMORANDUM

National Certificate: Wealth Management

ID 66611 - LEVEL 5 – CREDITS 120.

DEMONSTRATE KNOWLEDGE AND UNDERSTANDING OF THE FINANCIAL ADVISORY AND

INTERMEDIARY SERVICES ACT 2002 (FAIS) (ACT 37 OF 2002) AS IT IMPACTS ON A SPECIFIC
FINANCIAL SERVICES SUB-SECTOR

SAQA: 242584

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Learner Information (Please Complete this Section)

Name & Surname:

ID Number
Tel/Cellphone Number
Email Address
Organisation/Venue:
Workplace Unit/Dept:
Facilitator Name:
Date Started
Date completed

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Declaration

I(Learner)…………………………………………………………………………………………….herewith
declare that I am ready for the assessment, that we have reviewed the assessment preparation and plan, I
understand the assessment process and I am happy that the assessment will be conducted in a fair manner.
Learner Signature: Date:

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 Assessor Information
Name:
Surname:

Date:
Contact telephone No:
Assessor No:
ID
Moderator Information
Name:
Surname:

Date:
Contact telephone No:
Moderator No:
ID

Summative Assessment Information

The purpose of this summative assessment is to award credits to learner achieving the following skills
program/unit standard: DEMONSTRATE KNOWLEDGE AND UNDERSTANDING OF THE
FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT 2002 (FAIS) (ACT 37 OF 2002) AS
IT IMPACTS ON A SPECIFIC FINANCIAL SERVICES SUB-SECTOR, and is intended for use by the
accredited Training Providers, for the following qualification: National Certificate: Wealth Management ID
66611 - LEVEL 5 – CREDITS 120..
NOTE
The assessment instruments included in this assessment pack are all summative assessment instruments and are
to be read in conjunction with the formative assessment instruments Contained in the learner workbook. Both
formative (workbook) and summative assessments are to be retained as part of the learner’s portfolio of
evidence.
 A number of the assessment instruments contained in this assessment are workplace knowledge based
questions.
 This means that you will arrange with the learner, a time that is suitable, during which the learner will
complete each questions.
 Answer all the questions.

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 US: 242584, NQF LEVEL 4 WORTH 2 CREDITS
DEMONSTRATE KNOWLEDGE AND UNDERSTANDING OF THE

Learning Unit 1 FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT 2002

(FAIS) (ACT 37 OF 2002) AS IT IMPACTS ON A SPECIFIC FINANCIAL
SERVICES SUB-SECTOR

 This Unit Standard is intended for learners in the Financial Services sector
who are construed to give financial advice under FAIS. It will be useful for
Financial Planners, Intermediaries and learners employed by financial service
providers.
The qualifying learner is capable of:
Unit Standard  Explaining the purpose of the Financial Advisory and Intermediary Services
Purpose Act (FAIS).
 Explaining the requirements for licensing under FAIS.
 Explaining the mechanisms for enforcement and the implications for the
intermediary and the industry.
 Discussing the effects of requirements for transparency and the right to
information on the financial services industry.

Learning Assumed to be
 It is assumed that learners are competent in Communication at Level 3.
in Place

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 SESSION 1 EXPLAIN THE PURPOSE OF THE FINANCIAL ADVISORY AND
SO 1 INTERMEDIARY SERVICES ACT (FAIS).

 The need for the Financial Advisory and Intermediary Services Act (FAIS) is
Learning explained with reference to the historical situation in South Africa and similar
Outcomes international legislation.
(Assessment  The concepts of financial services providers and financial products are explained
Criteria) with examples.
 The protection of consumers afforded by FAIS is explained with examples.

Activity

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In short teams explain the Aim of the FAIS Legislation
It is important to bear in mind, when seeing FAIS in context with other pieces of legislation, that what it really
creates or aims to create is a formal system of regulating financial advisors and intermediaries. As a result of
this, aggrieved consumers will be able to seek redress when they have been misled or misrepresented to by a
representative or financial services provider.
It appears that in recent times, compliance and consumer protection have become buzzwords in the financial
services industry and certainly FAIS is not the first piece of legislation in this industry to concern itself with the
rights of consumers. Other pieces of legislation include the Long and Short Term Insurance Act – more
specifically, the Policyholder Protection Rules – The Financial Markets Control Act and the Stock Exchanges
Control Act. So in a nutshell, different pieces of legislation are enacted with different aims in mind.
The FAIS legislation has been enacted with a strong emphasis on consumer protection and aims to achieve
effective regulation of the different role-players through a number of mechanisms:
 Financial Services Providers (FSP’s) will have to be licensed in terms of the Act and they will have to
comply with certain prescribed fit and proper criteria.
 The FSP’s are responsible for their representatives who also have to comply with fit and proper
requirements.
 Further, the Act lays down standards for the market conduct of both FSP’s and representatives. Again,
the focus here is on the consumer to receive fair treatment and to have full disclosure made to the
consumer.

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 SESSION 2
EXPLAIN THE REQUIREMENTS FOR LICENSING UNDER FAIS.
SO 2

 Work roles affected by FAIS are identified with reference to requirements for
licensing by the Financial Services Board related to each work role.
 The relationship between Financial Services Providers and representatives is
Learning
explained with reference to accountability and responsibility.
Outcomes
 The concept of a natural person is explained as defined in the FAIS legislation.
(Assessment
 The process to be followed for licensing and on-going compliance is explained for
Criteria)
a financial service provider.
 Conditions under which suspensions, withdrawals and reinstatement of
authorisation may be imposed are explained with examples.

Activity

2
What is the Minimum Requirements Needed to be licensed?

In order to be licensed, providers (both FSP’s and their representatives) must prove that they are “Fit and
Proper” in terms of the Determination of Fit and Proper requirements. This means that they have to comply in
four different areas:
1. Sound financial security
This refers to the financial soundness of the Financial Services Provider and Representative and clearly states
that:
• The Provider may not be an un-rehabilitated insolvent, or
• In the case of an FSP II or III, that the assets of the FSP must exceed its liabilities.
2. Honesty and integrity
The Determination is quite clear that the following will determine the Honesty and Integrity of the Provider:
(1) An applicant must be of good character and integrity.
(2) In determining whether the applicant is of good character and integrity, the Registrar may refer to any
information in possession of the Registrar or brought to the Registrar’s attention.
(3) Without prejudice to the generality of subparagraphs (2) and (4) of this paragraph any of the following
factors is prima facie proof that the applicant does not comply with subparagraph (1), namely that the
applicant:
(a) Has within a period of five years preceding the date of application been found guilty in any civil
or criminal proceedings by a court of law or other competent authority (whether in the Republic or
elsewhere) of having acted fraudulently, dishonestly, unprofessionally, dishonourably or in breach
of a fiduciary duty;

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 (b) Has within a period of five years preceding the date of application been fined or censured by, or
denied membership due to disqualification of, any professional or financial services industry body
(whether in the Republic or elsewhere), recognised by the Board, on account of any act of
dishonesty, negligence, incompetence or mismanagement;
(c) Has within a period of five years preceding the date of application been fined or censured by any
regulatory body (whether in the Republic or elsewhere), recognised by the Board, or that the
applicant’s authorisation to carry on business has been refused, suspended or revoked by any such
body, because of negligence, incompetence or mismanagement; and
(d) Has at any time prior to the date of application been disqualified or prohibited by any court of law
(whether in the Republic or elsewhere) from taking part in the management of any company or
other statutorily created, recognised or regulated body, irrespective of whether such
disqualification has since been lifted or not.
(4) An applicant must in the application be candid, frank and accurate and must of own accord disclose all facts
or information at the disposal of or which may be accessible to the applicant and which may be relevant for
purposes of a decision by the Registrar that the applicant complies or does not comply with subparagraph (1).

3. Operational ability
(1) An applicant must have and be able to maintain the operational ability to fulfil the responsibilities imposed
by the Act on licensees, including the following minimum requirements:
a) A fixed business address from which business is conducted and which can also serve as a domicilium
citandi et executandi for purposes of entry into contract and any judicial or quasi-judicial proceedings;
b) Adequate communication facilities including at least a full-time telephone or cell phone service, and
typing and document duplication facilities;
c) Adequate storage and filing systems for the safe-keeping of records, and business communications and
correspondence; and
d) An account with a registered bank including, where necessary, a specific trust account for client
moneys.
(2) An applicant must have in place the appropriate money laundering control systems and provision for training
of staff, including identification, record-keeping and reporting procedures required under the Financial
Intelligence Centre Act, 2001 (Act No. 38 of 2001).

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 SESSION 3 EXPLAIN THE MECHANISMS FOR ENFORCEMENT AND THE
SO 3 IMPLICATIONS FOR THE INTERMEDIARY AND THE INDUSTRY.

 The role and functions of the Registrar are explained with reference to the
relationship to the Financial Services Board and the steps that the Registrar could
Learning take in cases of non-compliance.
Outcomes  The role and functions of the FAIS Ombuds are explained with reference to recent
(Assessment rulings and the implications for a sub-sector.
Criteria)  The role, duties and powers of the courts are described in terms of judgements
against organisations and redress through the courts.
 The rights of recourse available to aggrieved clients are explained with examples.

Activity

3
Identify Role, Duties and Powers of the Courts
(1) The Registrar may, when satisfied on the basis of available facts and information that a person has
contravened or not complied with any provision of this Act, or is likely so to contravene or not to comply, apply
to a Court for an order restraining such person from continuing to commit any such act or omission or from
committing it in future, and requiring the person to take such remedial steps as the Court deems necessary to
rectify the consequences of the act or omission, including consequences which prejudiced or may prejudice any
client.

(2) The Registrar may institute action in a Court against any person who has contravened or not complied with
any provision of this Act, for payment of- (a) an amount determined by the Court as compensation for losses
suffered by any other person in consequence of such contravention or non-compliance; (b) a penalty for punitive
purposes in a sum determined in the discretion of the Court but not exceeding three times the amount of any
profit or gain which may have accrued to the person involved as a direct result of any such act or omission; (c)
interest; and (d) costs of suit on such scale as may be determined by the Court.
(3) Any amount recovered by the Registrar in terms of subsection (2) must be deposited by the Registrar
directly into a specially designated trust account established by the Registrar with an appropriate financial
institution, and thereupon- (a) the Registrar is, as a first charge against the trust account, entitled to
reimbursement of all expenses reasonably incurred in bringing proceedings under subsection (2) and in
administering the distributions made to persons in terms of subsection (5); (b) the balance, if any (hereinafter
referred to as the "distributable balance" ) must be distributed by the Registrar to the persons referred to in
subsection (5), any funds remaining, accruing to the Registrar in the Registrar's official capacity.
(4) Any amount not claimed within three years from the date of the first distribution of payments, accrues to the
Registrar in the Registrar's official capacity. (5) The distributable balance must be distributed on a pro rata basis
to all persons who are affected by the occurrences referred to in subsection (2), and who prove to the reasonable

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satisfaction of the Registrar that they are persons contemplated in that subsection: Provided that no money may
be distributed to a person who has contravened or failed to comply with any provision of this Act.
(6) A Court issuing any order under this section must order it to be published in the Gazette and by such other
appropriate public media announcement as the Court considers appropriate.
(7) The Registrar may withdraw, abandon or compromise any civil proceedings instituted under this section, but
any agreement or compromise must be made an order of Court and the amount of any payment made in terms of
any such compromise must be published in the Gazette and by such other public media announcement as the
Court considers appropriate.
(8) Where civil proceedings have not been instituted, any agreement or settlement (if any) may, on application
to the Court by the Registrar after due notice to the other party, be made an order of Court and must be
published in the Gazette and by such other public media announcement as the Court considers appropriate.

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 DISCUSS THE EFFECTS OF REQUIREMENTS FOR TRANSPARENCY AND
SESSION 4
THE RIGHT TO INFORMATION ON THE FINANCIAL SERVICES
SO 4
INDUSTRY.

 The manner in which complaints are handled by the industry is investigated with
Learning reference to Financial Services Board directives.
Outcomes  The consequences arising from rulings from an approach to a regulatory body by a
(Assessment client are discussed for a specific organisation.
Criteria)  The impact as a result of rulings by the Ombud is discussed for a selected sub-
sector.

Activity

4
Outline the manner in which complaints are handled
Complaints Procedure

Any person who wants to submit a complaint against a regulated entity must follow the following process:
Complaints to the FSB
The FSB will strictly deal with complaints regarding contravention of the Acts it administers. Complaints may
be made to the Registrar by a letter, e-mail or by personal visits. A formal written complaint should always be
submitted to the Registrar. The complainant or a person acting on their behalf e.g. the Ombudsman, the broker
etc. may make complaints. Details of the complainant the efforts made by the person to resolve the matter with
the body concerned reference numbers and copies of any relevant correspondence in the possession of the
complainant should be provided at the time of complaint.
Complaints to the Ombuds
This is a basic guideline to follow when submitting a complaint. It is recommended to get the relevant complaint
procedure to follow from the Ombuds office you would like to submit the complaint to.
• You must submit a formal complaint to the Institution you are experiencing the problem with. The
Institution should be given the opportunity to resolve the problem before it is referred to the Ombudsman /
Adjudicator.
• As a suggestion, please approach the Internal Complaints Officer of the relevant institution as this may
help speed up the process.
• Give the institution 30 working days (6 weeks) to rectify/resolve your complaint.
• Keep a copy of any letters or correspondence between you and the institution.
• If your complaint is not resolved or you are unhappy with the outcome, or you do not receive a
response at all, then you may approach the office of the relevant Ombudsman / Adjudicator.
• Ensure that you provide the Ombudsman with copies of supporting documents referred to in the
complaint, including correspondence with the institution.

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• When you write a letter of complaint, set out the facts as clearly as possible.
• Write down the facts in a logical order and stick to what is relevant. Include important details like your
claim number or your policy number.

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 Assessment Judgement

Competent(Tick/Cross) Not Yet Competent(Tick/Cross)

Action/s required (if any):

By when:
Learner Feedback & Comments

Declaration by the Learner

I ……………………………………………………………………………….. the candidate, declare that I have
received feedback and been informed of my overall competence for the criteria within the assignment.
Declaration by the Assessor
I ……………………………………………............. (Assessor) hereby certify that I have examined the learner
workbook and I am satisfied with the Facilitator Judgment of this assessment.

Learner (Sign) Date Assessor (Sign) Date

Moderator (Sign) Date

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