Exam Paper for Activities to be Performed under the FAIS Act

Instructions:

• This exam consists of 18 questions.

• Answer all questions.

• Each question's mark allocation is indicated next to the question.

• Write clearly and neatly.

Topic 1: Explain the Purpose of the FAIS Act

1. Explain the reasons why Parliament decided that it was necessary to implement the
FAIS Act in South Africa. (4)

2. Section 1 of the FAIS Act provides us with detailed definitions of a "financial service
provider" (FSP), a "key individual" and a "representative."

a) Summarize the definition of a "financial service provider" (FSP) into no more than 3 lines
without losing the essence of what is meant within the Act. (3)

b) Summarize the definition of a "key individual" into no more than 4 lines without losing the
essence of what is meant within the Act. (4)

c) Summarize the definition of a "representative" into no more than 4 lines without losing the
essence of what is meant within the Act. (4)

3. List and explain the repercussions of ignoring the recommendations of the King IV
Report for an organization. (5)

Topic 2: Apply Principles of Ethics and Professionalism to a Code of Ethics

4. The definition of a "financial product" as included in the Act means exactly that.
However, the definition does not deal with details but with various sub-sectors within
the financial services industry. Name 5 subsectors in the definition. (5)

5. Explain how the FAIS Act protects consumers in South Africa. (5)

6. In section 1 of the FAIS Act, there is a detailed definition of "advice." Summarize this
definition into no more than 5 lines without losing the essence of what is meant within
the Act. (5)

7. List 4 occupations within the financial services industry where FAIS compliance is
required and 4 occupations where this is not. (8)

8. An FSP has a responsibility toward its customers when it appoints representatives.

Establish what these responsibilities are, how they are carried out, and the monitoring
undertaken by the FSCA. (5)

9. The Registrar of Financial Service Providers (at the FSCA) must protect the interests of
clients and has issued the "Fit and Proper Requirements." Name them. (4)
 10. While an FSP is licensed by the FSCA, it is the responsibility of the FSP to license its
representative. Other than the obvious issue of not being "fit and proper," name 3 other
disqualifications that would restrict the FSP from issuing the license. (3)

11. What does the FSCA need to do before it can suspend the license of an FSP? (4)

12. List 5 offences for which the license of an FSP may be withdrawn. (5)

Topic 3: Explain the Mechanisms for Enforcement and the Implications for the
Intermediary and the Industry

13. Briefly explain the role of the FSCA with regards to the "management" of issued licenses
and the steps it can take in cases of non-compliance with the FAIS Act. (6)

14. The office of the FAIS Ombud was created when the FAIS Act was passed to deal with
complaints from clients. Briefly explain the Ombud's role, level of authority, and
functions. (4)

15. Briefly describe the role, duties, and powers of the Courts where a person is upset with a
decision made by the FSCA or the FAIS Ombud. (4)

16. Express an opinion on the impact that a client's right to information and the need for
transparency in financial transactions has had on the financial services industry. (3)

Topic 4: Discuss the Effects of Requirements for Transparency and the Right to Information
on the Financial Services Industry

17. The FSCA has issued a directive on the process that must be followed before a person
may send a complaint to the office of the FAIS Ombud. Briefly explain this process. (4)

18. Express an opinion on the repercussions for your organization if complaints of a similar
nature are constantly being received by the FAIS Ombud. (4)

19. Express an opinion on the repercussions for organizations in a specific subsector of the
financial services sector if complaints of a similar nature are constantly being received
by the FAIS Ombud. (4)