Key Individual chapter 3

Source: Section 35 (1) (c) and 17 (1) (a) of FAIS ACt

Source: Section 17 of FAIS Act

Monitor compliance with the ActSupervise the compliance function

Make recommendations to FSP on any aspect of compliance and monitoring functions

Submit reports to the Registrar as required by FAISTrain 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;

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.

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

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

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

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

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

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.

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.

Source: Epsilon Compliance Consultants

Statutory Policy Operational procedures Client Engagement

Category confirmation Compliance function Comply license License and experience disclosure

Key Individual Record maintenance Verify FSP compliance Services and costs

Fit and Proper Conflict of interest Identify unregulated products

Know your client

Representatives Furnishing advice Verify functions on short term lines

Product and accreditation

Supervision Custody of products Verify reps compliance FICA

Qualifications Risk management plan Record keeping Fact finding and analysis

Approved Products list Advertising Verify disclosures Minutes

Unregulated products Complaints resolution Record of advice Proposal and ROA

Source: Epsilon Compliance Consultants

Statutory Policy Procedure Client Engagement

Monitor and verify Termination of services Code of conduct Quotes

Indemnity Business Continuity Custody of client assets Reviews

Maintain records FICA Advertising Communication

Operational ability Risk management Waiver of rights

Financial management Financial management and audit

FICA

Short term premium collection

Forex

Health administration

•Framework and manual

•Framework and manual

•Risk plan, continuity plan and anti-money laundering

•Risk plan, continuity plan and anti-money laundering

•Identify, assess , advise, monitor, report

•Identify, assess , advise, monitor, report

•Internal and External

•Internal and External

Compliance officer

Roles and responsibilities

Compliance policy

Risk management

An independent function that identifies, assesses,

advises on, monitors and reports on the FSP’s

Compliance risk, that is, the risk of Legal- or

regulatory sanctions, financial loss, or loss to

reputation a FSP may suffer as a result of its

failure to comply with all applicable laws,

regulations, codes of conduct and standards of

good practice (together “laws, rules and

standards”)”.