Key Individual chapter 3

CO must submit reports to Registrar Phase 1 and Phase 2 qualifications and experience CPD requirements Registrar may withdraw approval if contravention of Act occurs Registrar may make known in gazette or public media FSP must establish and maintain procedures to be followed FSP with more than 1 KI or Rep must appoint CO Suitable qualifications and experienceCO approved by Registrar Source: Section 35 (1) (c) and 17 (1) (a) of FAIS ACt

Source: Section 17 of FAIS Act Monitor compliance with the Act Supervise the compliance function Make recommendations to FSP on any aspect of compliance and monitoring functions Submit reports to the Registrar as required by FAIS Train Key Individuals and representatives on FAIS legislation FAIS requires the Compliance Officer to provide the FSP with written reports on Compliance monitoring duties and make recommendations to the FSP Monitor compliance with the Act Supervise the compliance function Make recommendations to FSP on any aspect of compliance and monitoring functions Submit reports to the Registrar as required by FAIS Train Key Individuals and representatives on FAIS legislation FAIS requires the Compliance Officer to provide the FSP with written reports on Compliance monitoring duties and make recommendations to the FSP

Source: Section 17 of FAIS Act Compliance Officers should take steps to encourage FSP’s ( Key Individuals) to improve their Compliance function, particularly when they become aware of deficiencies. Compliance Officers are required to supervise the Compliance function. Compliance Officer must ensure that the requirements of FAIS are met through procedures which the FSP (Key Individual) must establish. Direct examination of the Compliance function at the time of license application; Compliance Officers should take steps to encourage FSP’s ( Key Individuals) to improve their Compliance function, particularly when they become aware of deficiencies. Compliance Officers are required to supervise the Compliance function. Compliance Officer must ensure that the requirements of FAIS are met through procedures which the FSP (Key Individual) must establish. Direct examination of the Compliance function at the time of license application;

Source: Section 17 of FAIS Act Direct examination of the Compliance function as part of the general on-site inspections of the FSP, which may be conducted either on a regular basis or pursuant to a risk- based approach; Direct examination of the internal Policies, operational procedures and controls Periodic assessment which should be filed with the regulators for review; revising and re-examination of the Compliance function where issues had previously been identified with the FSP about the operation of the function. Direct examination of the Compliance function as part of the general on-site inspections of the FSP, which may be conducted either on a regular basis or pursuant to a risk- based approach; Direct examination of the internal Policies, operational procedures and controls Periodic assessment which should be filed with the regulators for review; revising and re-examination of the Compliance function where issues had previously been identified with the FSP about the operation of the function.

Effective organisational structure FSP operates effective organisation and administration Monitors measures designed to ensure steps taken To prevent COI from affecting all stakeholders Effective organisational structure FSP operates effective organisation and administration Monitors measures designed to ensure steps taken To prevent COI from affecting all stakeholders Segregation of duties Key activities which led to COI must be segregated Adequate internal processes regulate activities Activities carried out with appropriate level of independence Segregation of duties Key activities which led to COI must be segregated Adequate internal processes regulate activities Activities carried out with appropriate level of independence Governance FSP /board is responsible for ensuring COI policies issued Compliance Officer monitors compliance with regulation and internal rules Governance FSP /board is responsible for ensuring COI policies issued Compliance Officer monitors compliance with regulation and internal rules

Business is about profits and not usually about compliant profits CO who is part of FSP management team will have difficulty in acting independently and objectively in all management and oversight functions Compliance Officer must at all times act independently and objectively and should where possible have functions segregated from production and profitability of the FSP The concept of independence does not mean that the Compliance function cannot work closely with management and staff in the various business units Source: Basel Committee on Banking Supervision April 2005

The independence of the Compliance Officer and any other staff having Compliance responsibilities may be undermined if they are placed in a position where there is a real or potential conflict between their compliance responsibilities and their other responsibilities. Where possible compliance function staff should perform only compliance responsibilities. This may not be practicable in smaller businesses. In these cases, therefore, compliance function staff may perform non-compliance tasks, provided potential conflicts of interest are avoided. The independence of compliance function staff may also be undermined if their remuneration is related to the financial performance of the business line for which they exercise compliance responsibilities. The independence of the Compliance Officer and any other staff having Compliance responsibilities may be undermined if they are placed in a position where there is a real or potential conflict between their compliance responsibilities and their other responsibilities. Where possible compliance function staff should perform only compliance responsibilities. This may not be practicable in smaller businesses. In these cases, therefore, compliance function staff may perform non-compliance tasks, provided potential conflicts of interest are avoided. The independence of compliance function staff may also be undermined if their remuneration is related to the financial performance of the business line for which they exercise compliance responsibilities. CO should not be placed in a position where there is a possible conflict of interest between their compliance responsibilities and any other responsibilities they may have.

Internal controls are the process effected by an FSP to provide reasonable assurance regarding the achievement of objectives in these categories: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws, regulations and internal policies In essence it is the management of business risks and is a dynamic process that changes as personnel and circumstances change. The process includes organizational design, written policies and procedures, operating Policies and practices and physical barriers to protect all assets and personnel. Internal controls are the process effected by an FSP to provide reasonable assurance regarding the achievement of objectives in these categories: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws, regulations and internal policies In essence it is the management of business risks and is a dynamic process that changes as personnel and circumstances change. The process includes organizational design, written policies and procedures, operating Policies and practices and physical barriers to protect all assets and personnel.

Source: Epsilon Compliance Consultants StatutoryPolicyOperational proceduresClient Engagement Category confirmationCompliance functionComply licenseLicense and experience disclosure Key IndividualRecord maintenanceVerify FSP complianceServices and costs Fit and ProperConflict of interestIdentify unregulated products Know your client RepresentativesFurnishing adviceVerify functions on short term lines Product and accreditation SupervisionCustody of productsVerify reps complianceFICA QualificationsRisk management planRecord keepingFact finding and analysis Approved Products listAdvertisingVerify disclosuresMinutes Unregulated productsComplaints resolutionRecord of adviceProposal and ROA

Source: Epsilon Compliance Consultants StatutoryPolicyProcedureClient Engagement Monitor and verifyTermination of servicesCode of conductQuotes IndemnityBusiness ContinuityCustody of client assetsReviews Maintain recordsFICAAdvertisingCommunication Operational abilityRisk managementWaiver of rights Financial managementFinancial management and audit FICA Short term premium collection Forex Health administration

Framework and manual Risk plan, continuity plan and anti-money laundering Identify, assess, advise, monitor, report Internal and External Compliance officer Roles and responsibilities Compliance policy Risk management

A n i n d e p e n d e n t f u n c t i o n t h a t i d e n t i f i e s, a s s e s s e s, a d v i s e s o n, m o n i t o r s a n d r e p o r t s o n t h e F S P ’ s C o m p l i a n c e r i s k, t h a t i s, t h e r i s k o f L e g a l - o r r e g u l a t o r y s a n c t i o n s, f i n a n c i a l l o s s, o r l o s s t o r e p u t a t i o n a F S P m a y s u f f e r a s a r e s u l t o f i t s f a i l u r e t o c o m p l y w i t h a l l a p p l i c a b l e l a w s, r e g u l a t i o n s, c o d e s o f c o n d u c t a n d s t a n d a r d s o f g o o d p r a c t i c e ( t o g e t h e r “ l a w s, r u l e s a n d s t a n d a r d s ” ) ”.