Professionals: Investment » Press Room

FAIS RE 1 Deadline: What happens after 30 June 2012?

By Paul Kruger

Moonstone Information Refinery (Pty) Ltd

Last week we published the following:

“One has until 30 June 2012 to write the level 1 REs. Those who are not successful can write after this date, but have to pass before the end of September 2012.Those who did not write by 30 June, will not be able to write after this date.”

I received a severe reprimand from a reader regarding this last sentence, and rightly so. The full option should have been spelt out.

Of course you will be able to write after the deadline date. The only difference is that it will be under different conditions than if you had written and failed before 30 June 2012.

The REs form part of the competency components of the Fit & Proper requirements. If you fail to write and pass the REs, as prescribed by the regulator, you will no longer be regarded as satisfying the competency requirement, and therefore not be fit and proper to conduct business.

Your own personal situation will determine what will happen, should you find yourself in this situation:

1.

If you are a one-person business, you will technically not be allowed to continue doing business. Please bear in mind that there is also an onus on product providers to ensure that they only conduct business with compliant FSPs. We have recently seen a number of rather heavy penalties inflicted by the regulator’s Enforcement Committee on transgressing product houses who accepted business from unauthorised FSPs. It is not very clear how this will pan out in real life, as the FSB would either need to be informed by the provider itself, or they will have to keep a register and suspend or debar those who did not write the REs within the prescribed time frames.

2.

In a situation where there is one or more key individuals with representatives, there are a number of alternatives which may arise. In the case of a representative, it is relatively straight forward. He or she will most probably need to be debarred, either on 1 July or 1 October 2012, depending on the situation as outlined at the beginning of this article. Where the key individual fails to satisfy the RE requirement, we are of the opinion that such a key individual will most probably be debarred by the FSB. In all likelihood, if the FSP is a juristic entity (e.g. CC, Company or Trust) it will be given a period of grace (say three weeks) to appoint a new key individual who adheres to the RE requirement, or is still within the legal time frame within which to satisfy the requirement. Failure to do would result in suspension and possible withdrawal of the licence of the FSP.

Possibly the most sensible thing to do is to plan to write the regulatory examinations at the earliest opportunity, provided that you prepared properly. This can have several benefits.

1.	You may very well pass the exam, in which case none of the above should be a concern.
2.	You may fail, but have an extended period of writing again.
3.	This will remove a great deal of stress related to last-minute writing, and the possible consequences of failing.
4.	Practical RE experience can make a huge difference in the outcome, the second time around.

The FSB indicated in December that there had been a marked improvement in the monthly pass rate as the exams progressed throughout 2011. The main reasons for the improved results were that people were much better informed about what to expect, and were adequately prepared.

There are less than 20 weeks left before 30 June 2012. This does not leave much time for preparation and writing, if you have not yet started.
 
A positive approach at this stage will gain you far more than a negative one. Please do not delay in taking the bull by the horns, and putting this behind you.

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