More snags from the FSCA for Key Individuals involving their operational ability

​There is nothing in the FAIS Act that suggests that a Key Individual needs to be positioned internally within the FSP and by this statement, the Authority is an overreach.

Over the past few years, the FSCA has been very inconsistent when reviewing Key Individual applications. It seems as if the Authority is weary of approving Key Individual applications where the Key Individual is already approved on another license. One analyst will start questioning a person’s operational ability once the Key Individual is approved on more than 1 license, while another analyst will only raise operational ability concerns after 3 approvals. At face value, the case-by-case approach that seems to be the modus operandi at the moment is prejudicial as there is really no set criteria for the operational ability test.

Yes, the role of the Key Individual is one that is critical to ensure that the management and oversight role in respect of the financial services and activities is carried out and performed by the FSP. This entails ensuring that the financial services are rendered with utmost good faith, due care, skill and diligence. We also understand that the recent strictness in the application of the operational ability requirement stems from the FSCA seeking to curb rent-a-KI situations within the industry. However, the manner in which the Authority has opted to go about doing so, is more burdensome and somewhat inefficient.

What was also very enigmatic in a recent application, was when an analyst said:

“There is also a clear intent that the FAIS Act requires a key individual to be positioned internally within the FSP to oversee the activities of that FSP as well those of the appointed representatives of the FSP and as such can therefore not be too far removed from the day-to-day activities of the business of the FSP.”

There is nothing in the FAIS Act that suggests that a Key Individual needs to be positioned internally within the FSP and by this statement, the Authority is an overreach.

My suggestion is for the Authority to decide and place on record the exact maximum number of licenses a Key Individual can be on, instead of moving the goal post as and when it is suitable. Otherwise, the “unintended consequence” would be that there will be a vast shortage in the industry thereby limiting access even to new entrants. I say “unintended consequence” because at this rate, we are not really certain of the Authority’s intention. Also, what happened to progressively “cutting the red tape” and ensuring access as stated by the President of the Republic?