Fais Re5 Test I

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| By Sicelo Mlotshwa

Sicelo Mlotshwa

Community Contributor

Quizzes Created: 1 | Total Attempts: 5,038

Questions: 50 | Attempts: 5,051 | Updated: Oct 21, 2024

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Questions and Answers

1.

The minimum entry qualification for a Category 1 Rep is
- A.
  
  University degree
- B.
  
  College diploma
- C.
  
  Matric or equivalent
- D.
  
  RE5
Correct Answer
C. Matric or equivalent

Explanation
The minimum entry qualification for a Category 1 Rep is a Matric or equivalent. This means that individuals who have completed their high school education or have an equivalent qualification are eligible to become a Category 1 Rep. A Matric or equivalent qualification is considered as the minimum requirement for this position, indicating that individuals with higher qualifications such as a university degree or college diploma may also be eligible for this role.

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2.

An FSP must keep records for
- A.
  
  Minimum 5yrs
- B.
  
  Minimum 5yrs & if the Registrar requested record you must keep it for 10 years
- C.
  
  Max 5yrs
- D.
  
  Only for 5yrs
Correct Answer
B. Minimum 5yrs & if the Registrar requested record you must keep it for 10 years

Explanation
An FSP (Financial Service Provider) must keep records for Minimum 5 years. Additionally, if the Registrar requests records, the FSP must keep them for 10 years.

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3.

A Rep is authorised to render intermediary services only. The KI realised that the Rep rendered advice to a client. What must the KI do?
- A.
  
  KI must write a letter to the FSCA stating that Rep is only allowed to render intermediary services & will not give advice anymore.
- B.
  
  The KI must debar the Rep.
- C.
  
  The Rep must get experience to render advice.
- D.
  
  The Rep must write a letter to the FSCA asking to be pardoned and give reasons.
Correct Answer
B. The KI must debar the Rep.

Explanation
The correct answer is that the KI must debar the Rep. This means that the KI must take action to prohibit the Rep from continuing to provide intermediary services. Since the Rep has acted outside of their authorized scope by providing advice to a client, it is necessary for the KI to take disciplinary action to ensure compliance and protect the interests of the clients. Writing a letter to the FSCA or asking for pardon would not be sufficient in this case, as it is important to address the issue directly with the Rep and enforce the appropriate consequences.

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4.

The KI disclosed a commission of R4,000 to a client. The Rep noticed an error on the commission & that the commission charged is wrong, it is supposed to be R14,000. The product has been running for 3 years, so what must the Rep do?
- A.
  
  The Rep must call the client and inform them of the correct commission.
- B.
  
  The Rep must replace the product.
- C.
  
  The Rep must deduct the commission not received for the past three years.
- D.
  
  The Rep must keep quiet because this was disclosed by the KI.
Correct Answer
A. The Rep must call the client and inform them of the correct commission.

Explanation
The correct answer is that the Rep must call the client and inform them of the correct commission. This is the appropriate action to take when an error is noticed in the commission charged. It is important to communicate the correct information to the client and rectify any mistakes made. Keeping quiet or replacing the product are not appropriate responses in this situation, and deducting the commission not received for the past three years would not be fair to the client.

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5.

Keith Johnson has been working for 3yrs as a Business Consultant at Standard Bank acting as a Rep. Tired of corporate life, he decides to work their family insurance company, Johnson Legacy Ltd, as a Key Individual. Will the Registrar approve his application to act as a Key Individual for Johnson Legacy Ltd?
- A.
  
  Yes because he was been working as a Representative for 3yrs at a reputable bank.
- B.
  
  Yes provided he first works as a key individual under supervision for at least 1 year.
- C.
  
  No because the FAIS Act doesn't allow for someone to work in their family company.
- D.
  
  No because he does not have the required 1 year experience in an overseer role in an FSP.
Correct Answer
D. No because he does not have the required 1 year experience in an overseer role in an FSP.

Explanation
The correct answer is "No because he does not have the required 1 year experience in an overseer role in an FSP." This means that the Registrar will not approve Keith Johnson's application to act as a Key Individual for Johnson Legacy Ltd because he does not have the necessary experience in a supervisory role within a Financial Service Provider (FSP). Despite his 3 years of experience as a Business Consultant at Standard Bank, it is not sufficient for the specific role he is applying for.

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6.

Category 1 Reps doing execution of sales need only have Matric.
- A.
  
  This is true to some extent
- B.
  
  True
- C.
  
  Grade 10 is also acceptable if they have good command of the English Language
- D.
  
  False
Correct Answer
B. True

Explanation
The given answer is true because it states that reps doing the execution of sales only need to have a Matric qualification. This means that having a Matric qualification is sufficient for this role. However, it also mentions that Grade 10 is acceptable if the candidates have a good command of the English Language, indicating that there is some flexibility in the qualification requirement. Overall, the answer suggests that having a Matric qualification is generally required for reps in sales execution, but there may be exceptions based on language proficiency.

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7.

What is a Board Notice
- A.
  
  Its a notice board found at the FSCA offices
- B.
  
  Its a notice issued by the board of directors of an authorised FSP
- C.
  
  It is a notice issued by the FSCA to amend/update sections of the FAIS Act
- D.
  
  Its a notice board that every FSP should display at its offices
Correct Answer
C. It is a notice issued by the FSCA to amend/update sections of the FAIS Act
8.

Which of the following does not form part of the FAIS Act and its subordinate legislation
- A.
  
  POPI Act No. 4 of 2013
- B.
  
  FIC Act No. 1 of 2017
- C.
  
  Board Notice BN194 of 2017
- D.
  
  FAIS General Code of Conduct
Correct Answer
A. POPI Act No. 4 of 2013

Explanation
The correct answer is POPI Act No. 4 of 2013. The FAIS Act and its subordinate legislation include the FAIS General Code of Conduct, the FIC Act No. 1 of 2017, and Board Notice BN194 of 2017. The POPI Act, on the other hand, is not part of the FAIS Act and its subordinate legislation.

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9.

Sean advises gogo Makhubalo to her Old Mutual pension payout is going to be R1800 per month till she dies or gets to age 80 years
- A.
  
  This falls under the definition of advice according to the FAIS Act
- B.
  
  This is not advice according to FAIS because Sean is merely providing information about a financial product without expecting gogo Makhubalo to make a decision about it
- C.
  
  Sean is giving advice about a financial product hence he is considered to be giving advice according to FAIS
- D.
  
  Sean is not providing advice because a pension is not a financial product
Correct Answer
B. This is not advice according to FAIS because Sean is merely providing information about a financial product without expecting gogo Makhubalo to make a decision about it

Explanation
According to the given information, Sean is providing information about a financial product (Old Mutual pension payout) to gogo Makhubalo without expecting her to make a decision about it. This means that Sean is not giving advice according to the FAIS Act, as advice involves providing recommendations or guidance to a client in making a decision about a financial product. Therefore, the correct answer is "This is not advice according to FAIS because Sean is merely providing information about a financial product without expecting gogo Makhubalo to make a decision about it."

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10.

Shane, a financial adviser from Discovery Medical Aid visits Bidvest to do a presentation on the 2020/21 medical aid benefit changes
- A.
  
  Shane is considered to be providing advice according to FAIS
- B.
  
  This not advice as Shane is merely sharing the new benefits that Discovery will be offering to its members in 2021
- C.
  
  Medical Aid products are not financial products according to FAIS
- D.
  
  Shane is providing intermediary services
Correct Answer
B. This not advice as Shane is merely sharing the new benefits that Discovery will be offering to its members in 2021

Explanation
The correct answer is that this is not advice as Shane is merely sharing the new benefits that Discovery will be offering to its members in 2021. This is because advice, according to FAIS, involves making a recommendation or giving guidance on a financial product. In this case, Shane is not recommending any specific financial product or providing guidance on financial matters, but rather sharing information about the changes in medical aid benefits.

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11.

Dlamini sells funeral policies as a Representative under FSP Licence No. 53219. Before starting this funeral business, Dlamini was a minibus taxi driver driver for 30 years. He has no qualifications as he dropped out of school when he was at Standard 3. You are the Key Individual for Mr Dlamini's business and you've been asked to confirm if Mr Dlamini should be debarred for working without qualifications. You will:
- A.
  
  Debar Mr Dlamini for acting as a Rep yet he does not possess any qualifications.
- B.
  
  Mr Dlamini can continue operating as a Rep since he's only selling funeral policies.
- C.
  
  Report Mr Dlamini to the FAIS Registrar
- D.
  
  Advise Mr Dlamini to go back to the taxi industry where there's no government regulation.
Correct Answer
B. Mr Dlamini can continue operating as a Rep since he's only selling funeral policies.

Explanation
Mr Dlamini can continue operating as a Rep since he's only selling funeral policies. This is because selling funeral policies does not require specific qualifications or educational background. As long as he is licensed under FSP Licence No. 53219, he is legally allowed to sell funeral policies without any formal qualifications. The question does not mention any regulatory requirement for qualifications in selling funeral policies, so there is no basis for debarment or reporting to the FAIS Registrar. Advising Mr Dlamini to go back to the taxi industry where there's no government regulation is not relevant to the question.

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12.

Choose the incorrect definition
- A.
  
  Category IV FSPs render intermediary services in relation to the administration of assistance policies on behalf of an insurer as per the mandate. Examples include FSPs selling funeral policies and stokvels.
- B.
  
  Category II FSPs use their own discretion to decide how to handle the client's financial products but without implementing bulking. Examples include fund managers who buy & sell shares on the JSE.
- C.
  
  Category III FSPs are administrative FSPs who render intermediary services using the method of bulking. Examples include Linked Investment Services Providers (LISP).
- D.
  
  Category IIA FSPs are discretionary FSPs who render intermediary services with respect to short-term insurance products. Examples include motor or fire policy.
Correct Answer
D. Category IIA FSPs are discretionary FSPs who render intermediary services with respect to short-term insurance products. Examples include motor or fire policy.

Explanation
Category IIA FSPs are not discretionary FSPs who render intermediary services with respect to short-term insurance products. They are actually discretionary FSPs who render intermediary services with respect to long-term insurance products. Examples include life insurance policies and retirement annuities.

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13.

What is a juristic representative?
- A.
  
  A representative who is not a natural person
- B.
  
  A representative who does not have jurisdiction in the financial products that they sell
- C.
  
  A representative who does not offer intermediary services
- D.
  
  A representative who offers legal products and services
Correct Answer
A. A representative who is not a natural person

Explanation
A juristic representative is a representative who is not a natural person. This means that they are not an individual human being, but rather a legal entity such as a corporation or organization. They act on behalf of this legal entity in conducting business and making decisions.

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14.

From which date should Category I juristic representatives comply with solvency requirements
- A.
  
  01 March 2019
- B.
  
  01 March 2020
- C.
  
  01 March 2021
- D.
  
  01 March 2022
Correct Answer
A. 01 March 2019

Explanation
Category I juristic representatives should comply with solvency requirements from 01 March 2019. This means that starting from this date, these representatives are required to meet the specified solvency standards and maintain the necessary financial stability.

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15.

Which of the following activities would likely NOT require an FSP (Financial Services Provider) license in South Africa?
- A.
  
  Giving financial advice on retirement planning
- B.
  
  Selling shares or bonds to clients
- C.
  
  Managing a collective investment scheme
- D.
  
  Offering free workshops on basic budgeting skills
Correct Answer
D. Offering free workshops on basic budgeting skills

Explanation
FSP licenses are required for individuals or businesses providing financial advice or intermediary services related to specific financial products, such as investments, insurance, and credit. Offering free workshops on basic budgeting skills, without recommending specific financial products or charging a fee for the service, generally falls outside the scope of activities requiring an FSP license.

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16.

Is it possible to have more than one Key Individual at an FSP?
- A.
  
  Yes. The size and complexity of the financial products the FSP offers will determine how many Key Individuals will be appointed.
- B.
  
  No. Each FSP should have only one Key Individual.
- C.
  
  Yes provided that the FSP applies for dispensation from the Registrar to do so.
- D.
  
  No. Appointing a Key Individual is not necessary under the latest FAIS regulations.
- E.
  
  Option 5
Correct Answer
A. Yes. The size and complexity of the financial products the FSP offers will determine how many Key Individuals will be appointed.

Explanation
The correct answer is Yes. The size and complexity of the financial products the FSP offers will determine how many Key Individuals will be appointed. This means that the number of Key Individuals at an FSP can vary depending on the nature of their financial products.

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17.

One of the Fit & Proper Requirements is Competence. Which of the following does not form part of the competence requirements:
- A.
  
  Honesty, Integrity and Good Standing
- B.
  
  Qualifications
- C.
  
  Experience
- D.
  
  RE Exams
Correct Answer
A. Honesty, Integrity and Good Standing

Explanation
Competence requirements for Fit & Proper Requirements include qualifications, experience, and RE Exams. Honesty, integrity, and good standing, although important qualities, are not specifically mentioned as part of the competence requirements.

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18.

Which of the following does not form part of the FAIS Fit & Proper Requirements
- A.
  
  FAIS Licence
- B.
  
  Product Specific Training
- C.
  
  Class of Business Training
- D.
  
  CPD
Correct Answer
A. FAIS Licence

Explanation
The FAIS Licence is not considered a part of the FAIS Fit & Proper Requirements. The Fit & Proper Requirements refer to the qualifications, knowledge, skills, and experience that individuals in the financial services industry need to possess in order to provide proper advice and services to clients. The FAIS Licence, on the other hand, is a regulatory requirement that individuals must obtain in order to legally operate in the financial services industry in South Africa. While obtaining a FAIS Licence is an important step in complying with the regulatory framework, it is not directly related to the Fit & Proper Requirements themselves.

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19.

John finished college on 01 April 2015 and started working for Investec as a Representative. After 3yrs he left Investec to join Allan Gray. On 01 January 2020 he went back to Investec as a Senior Manager and getting 3 times the salary he used to earn. What is John's DOFA date?
- A.
  
  01 April 2015
- B.
  
  01 April 2018
- C.
  
  01 January 2020
- D.
  
  None of the above
Correct Answer
A. 01 April 2015

Explanation
John's DOFA (Date of First Appointment) is 01 April 2015 because it is mentioned in the question that he finished college on that date and started working for Investec as a Representative. This is the date when he first joined the company and began his career.

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20.

Sibongile has bad relationship with her line manager, Mr Pillay who has dug and discovered that she lied about the salary she was earning at her previous job. Mr Pillay can
- A.
  
  Debar Sibongile and terminate her employment contract
- B.
  
  Report Sibongile to the national newspaper to embarass her
- C.
  
  Advise Sibongile to approach the CCMA and confess her lie to them.
- D.
  
  Do nothing because lying about salary is not related to the provision of financial advice.
Correct Answer
A. Debar Sibongile and terminate her employment contract

Explanation
The correct answer is to debar Sibongile and terminate her employment contract. This is because lying about her previous salary is a serious breach of trust and dishonesty, which can undermine the employer-employee relationship. Terminating her contract is a reasonable consequence for such behavior.

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21.

Operational Ability is one the FAIS Fit & Proper Requirements. It refers to the functional skill, capability and capacity of a person or organisation to perform certain duties, task & obligations. Which of the following is not one of the operational requirements for FSPs
- A.
  
  Business Physical Address
- B.
  
  Telkom Landline
- C.
  
  Communication Facilities
- D.
  
  Bank Account
Correct Answer
B. Telkom Landline

Explanation
The question asks for the operational requirement that is not one of the operational requirements for FSPs. The options given are Business Physical Address, Telkom Landline, Communication Facilities, and Bank Account. The correct answer is Telkom Landline because having a Telkom Landline is not a specific operational requirement for FSPs. While FSPs may need to have communication facilities, such as a telephone line, it does not necessarily have to be a Telkom Landline. The other options, including Business Physical Address, Communication Facilities, and Bank Account, are all operational requirements that FSPs need to have.

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22.

Choose the correct statement from the following statements
- A.
  
  A juristic FSP does not have to appoint a Key Individual
- B.
  
  Juristic Representatives do not have to comply with the Fit & Proper Requirements because they are not FSPs
- C.
  
  Before an FSP can appoint a Juristic Representative, it has to make sure that the Juristic Representative has the operational ability and financial resources to perform the activities they've been appointed to do.
- D.
  
  Operational Ability does not apply to Key Individuals
Correct Answer
C. Before an FSP can appoint a Juristic Representative, it has to make sure that the Juristic Representative has the operational ability and financial resources to perform the activities they've been appointed to do.

Explanation
The correct answer is the only statement that accurately reflects the requirement for an FSP to ensure that a Juristic Representative has the necessary operational ability and financial resources before appointing them. The other statements either make incorrect claims about the appointment of Key Individuals or the compliance of Juristic Representatives with Fit & Proper Requirements.

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23.

The new FSCA regulations require FSP to implement Risk Management protocols to protect consumers of financial products and the integrity of the financial industry. Part of these Risk Management controls include establishment of a Governance Framework. Which of the following does not form part of the Governance Framework for FSPs
- A.
  
  Corporate Social Responsibility (CSR)
- B.
  
  Business Continuity Plan
- C.
  
  Security Policy
- D.
  
  Risk Management Policy
Correct Answer
A. Corporate Social Responsibility (CSR)

Explanation
The Governance Framework for FSPs includes several components such as a Business Continuity Plan, Security Policy, and Risk Management Policy. However, Corporate Social Responsibility (CSR) does not form part of the Governance Framework. CSR is a concept that focuses on a company's responsibility towards society and the environment, whereas the Governance Framework in this context is specifically related to the internal controls and policies that FSPs need to have in place to ensure consumer protection and industry integrity.

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24.

An FSP has to ensure that its Representatives have the operational ability to function as Representatives. Which of the following does not form part of these operational requirements for representatives
- A.
  
  The Rep should not be declared insolvent or under liquidation
- B.
  
  The Rep should not have any ongoing court action that may lead to insolvency/liquidation
- C.
  
  The remuneration of Reps should not be structured in a manner that may increase the chances of unfair treatment of clients
- D.
  
  The Rep should have the required CPD points
Correct Answer
D. The Rep should have the required CPD points

Explanation
The operational requirements for representatives include ensuring that they have the necessary qualifications and skills to perform their duties effectively. This may include having the required CPD (Continuing Professional Development) points to stay updated with industry knowledge and regulations. However, the given answer states that the requirement of having the required CPD points does not form part of these operational requirements.

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25.

Which of the following is not true of Key Individuals
- A.
  
  A Key Individual is responsible for managing & overseeing the activities of an FSP in relation to the rendering of any financial service
- B.
  
  Key Individuals may be appointed to more than one FSP
- C.
  
  Every Juristic Representative should appoint a Key Individual before it can start rendering financial services to clients
- D.
  
  Operational Requirements do not apply to Key Individuals
Correct Answer
D. Operational Requirements do not apply to Key Individuals

Explanation
Key Individuals are responsible for managing and overseeing the activities of a financial service provider (FSP) in relation to the rendering of any financial service. They may be appointed to more than one FSP. Every Juristic Representative should appoint a Key Individual before starting to render financial services. However, operational requirements do apply to Key Individuals. This means that Key Individuals must comply with the operational requirements set out by the regulatory authorities in order to ensure the proper functioning and compliance of the FSP.

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26.

Choose the incorrect statement
- A.
  
  Financial Soundness requirements do not apply to short-term and long-term insurers as well as banks
- B.
  
  An FSP will lose their FSP license if they go into business rescue or get liquidated
- C.
  
  Every FSP should ensure their assets exceed their liabilities at all times
- D.
  
  A Representative should ensure they comply with the financial soundness requirements before they can act as a Representative
Correct Answer
D. A Representative should ensure they comply with the financial soundness requirements before they can act as a Representative

Explanation
The correct answer is "A Representative should ensure they comply with the financial soundness requirements before they can act as a Representative." This statement is incorrect because Representatives are not required to comply with financial soundness requirements before acting as a Representative.

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27.

As part of the new financial soundness requirements for FSPs, Early Warning notices have to be sent to the Registrar if an FSP runs into financial troubles. Which of the following circumstances does not necessitate reporting to the Registrar?
- A.
  
  An insurance company does not have enough money to pay for all the unexpected COVID-19 Business Interruption claims
- B.
  
  Standard Bank issued a loan to an international investment group and they fail to honour their obligations to pay back the loan
- C.
  
  The FSP and/or its Juristic Representative fails to meet any of the FAIS Financial Soundness Requirements
- D.
  
  The liabilities of the FSP exceed their assets
Correct Answer
A. An insurance company does not have enough money to pay for all the unexpected COVID-19 Business Interruption claims

Explanation
The correct answer is "An insurance company does not have enough money to pay for all the unexpected COVID-19 Business Interruption claims." This circumstance does not necessitate reporting to the Registrar because it is a specific situation related to the COVID-19 pandemic and not a general financial trouble that affects the overall financial soundness of the FSP. The other options, such as a loan default, failure to meet financial soundness requirements, and excessive liabilities, are all indicators of financial troubles that would require reporting to the Registrar.

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28.

FAIS Board Notice BN194 of 2017 introduced new Financial Soundness Requirements for FSPs. Which of the following does not form part of these requirements
- A.
  
  Every insurance company should have at least R1m in their bank account to cater for unexpected claims that may arise
- B.
  
  Current assets should always exceed current liabilities
- C.
  
  Cat IIA and Cat III FSPs should have assets that exceed their liabilities by R3m or more
- D.
  
  Cat I FSPs that collect premiums and Cat IV FSPs must submit a Liquidity Calculation Declaration (LCD) once a year together with their Annual Financial Statements whilst Cat II, IIA and III FSPs must do so twice, every 6 months
Correct Answer
A. Every insurance company should have at least R1m in their bank account to cater for unexpected claims that may arise
29.

Direct Marketing is the sale of financial products by way of telephone, internet, media insert, direct mail, or electronic mail, excluding advertisements where no financial transaction is concluded. Which of the following requirements does not apply to Direct Marketers
- A.
  
  Direct Marketers should inform their clients at first contact of their business name, confirmation that they are an authorised FSP, contact details of their Compliance Department and confirmation that they hold Professional Indemnity Insurance
- B.
  
  Ensure that they meet clients in person before finalizing any financial transaction so they can explain the terms & conditions of the financial product before the client commits
- C.
  
  Conduct a client needs analysis to ensure that the financial products will meet the needs of the client
- D.
  
  If the client takes up the product, provide client with disclosure documents within 30 days outlining, inter alia; the product supplier and their contact details, the income the direct marketer will earn from the sale, complaints & escalation procedure, etc
Correct Answer
B. Ensure that they meet clients in person before finalizing any financial transaction so they can explain the terms & conditions of the financial product before the client commits

Explanation
The requirement that does not apply to Direct Marketers is to meet clients in person before finalizing any financial transaction so they can explain the terms & conditions of the financial product before the client commits. This means that Direct Marketers are not obligated to have face-to-face meetings with clients in order to explain the terms and conditions of the financial product. They can provide this information through other means such as telephone, internet, or mail.

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30.

A Record of Advice (ROA) is a document you provide to each and every client confirming the financial advice that has been rendered to them. Which of the following does not need to be included in a ROA document
- A.
  
  A summary of the information on which the advice was based
- B.
  
  A summary of the client's financial goals and risk tolerance.
- C.
  
  The financial products that were recommended with an explanation of why the products were selected
- D.
  
  The financial status of the FSP
Correct Answer
D. The financial status of the FSP

Explanation
The financial status of the FSP does not need to be included in a ROA document. The purpose of a ROA is to confirm the financial advice provided to the client, including the information on which the advice was based and the recommended financial products with an explanation of why they were selected. The financial status of the Financial Service Provider (FSP) is not relevant to the advice given to the client and therefore does not need to be included in the ROA document.

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31.

A financial needs analysis is carried out by a qualified financial planner to ascertain the current state of your finances and your future financial needs. It also ensures that you are not sold any particular financial product without an overall assessment of your finances and existing financial portfolio. Frank sold a retirement annuity to Mrs Thompson without doing a financial needs analysis because Mrs Thompson called Frank a Rep for Allan Gray and specifically requested assistance to buy a retirement annuity. Which of the following statements is correct
- A.
  
  There was no need for a financial needs analysis in this instance because the client already knew what they wanted to buy
- B.
  
  Frank will not be held responsible for the choice of financial product that Mrs Thompson selected because she never asked for his advice when she called
- C.
  
  Frank failed in his role as a Rep to conduct a full financial needs analysis to determine whether or not a retirement annuity is the the most suitable financial product for Mrs Thompson with regard to her current financial situation and future financial goals
- D.
  
  Frank should decline providing any financial service to Mrs Thompson because she seems to know it all
Correct Answer
C. Frank failed in his role as a Rep to conduct a full financial needs analysis to determine whether or not a retirement annuity is the the most suitable financial product for Mrs Thompson with regard to her current financial situation and future financial goals

Explanation
The correct answer is that Frank failed in his role as a Rep to conduct a full financial needs analysis to determine whether or not a retirement annuity is the most suitable financial product for Mrs Thompson with regard to her current financial situation and future financial goals. This is because even though Mrs Thompson specifically requested assistance to buy a retirement annuity, it is still Frank's responsibility as a financial planner to conduct a thorough analysis of her finances and goals to ensure that the chosen product is the most suitable for her needs. By not conducting this analysis, Frank did not fulfill his role properly.

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32.

A direct marketer must record all telephone conversations with clients in the course of direct marketing and must have appropriate procedures and systems in place to store and retrieve such recordings. Within how many days should voice-logged records be availed to the client or Registrar upon request
- A.
  
  30 days
- B.
  
  45 days
- C.
  
  60 days
- D.
  
  7 days
Correct Answer
D. 7 days

Explanation
The requirement to provide voice-logged records within a specific timeframe ensures transparency and accountability in direct marketing practices. The prompt availability of these records (within 7 days) helps address any issues or disputes that may arise efficiently and effectively.

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33.

Automated or Robo Advice is the furnishing of advice through an electronic medium that uses algorithms and technology without the direct involvement of a natural person. Which of the following does not form part of the requirements for FSPs that provide automated advice
- A.
  
  FSPs should monitor and review the automated advice generated by algorithms to ensure the quality and suitability of the advice in compliance with the Act
- B.
  
  FSPs should identify the risks to clients arising from the automated advice and alert the client of these
- C.
  
  FSPs should understand the risks and rules underpinning the algorithms
- D.
  
  FSPs should print out and file every automated advice given to clients in case of future complaints
Correct Answer
D. FSPs should print out and file every automated advice given to clients in case of future complaints

Explanation
The requirement for FSPs to print out and file every automated advice given to clients in case of future complaints does not form part of the requirements for FSPs that provide automated advice. This is because automated or robo advice is delivered through electronic mediums, and therefore, the need for physical copies is not necessary. The other options mentioned are important requirements for FSPs providing automated advice, such as monitoring and reviewing the advice generated by algorithms, identifying risks to clients, and understanding the underlying rules and risks of the algorithms.

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34.

Execution of sales means an intermediary service performed by a representative by means of a script on an instruction of a client to buy, sell, deal, invest in, replace or vary one or more financial products. What is the minimum qualification for a Rep to conduct execution of sales transactions
- A.
  
  Diploma
- B.
  
  Grade 12
- C.
  
  BCom Degree
- D.
  
  Hons Degree
Correct Answer
B. Grade 12

Explanation
The minimum qualification for a representative to conduct execution of sales transactions is Grade 12. This implies that a high school diploma is the minimum educational requirement for someone to perform the intermediary service of executing sales transactions.

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35.

How many years from their DOFA does a Rep have to obtain their RE5
- A.
  
  1 year
- B.
  
  2 years
- C.
  
  3 years
- D.
  
  4 years
Correct Answer
B. 2 years

Explanation
A Rep has to obtain their RE5 within 2 years from their DOFA. This suggests that there is a time limit for Reps to acquire their RE5 qualification, which is likely a requirement for their profession. The answer implies that Reps have a specific timeframe in which they need to complete this qualification after starting their job.

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36.

How many years does a supervised Rep have from their DOFA to do Class of Business training
- A.
  
  1 year
- B.
  
  2 years
- C.
  
  3 years
- D.
  
  4 years
Correct Answer
A. 1 year

Explanation
A supervised Rep has 1 year from their DOFA (Date of First Appointment) to complete the Class of Business training. This training is necessary for them to be qualified and authorized to sell specific financial products or services. It is important for supervised Reps to complete this training within the given time frame to ensure they have the necessary knowledge and skills to perform their job effectively and in compliance with regulations.

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37.

Which of the following best describes a Financial Services Board (FSB) registrar?
- A.
  
  A government official appointed to regulate the financial services industry.
- B.
  
  An industry body responsible for setting ethical standards in financial services.
- C.
  
  A legal entity established to manage pension funds in South Africa.
- D.
  
  A professional organization overseeing compliance in the insurance sector.
Correct Answer
A. A government official appointed to regulate the financial services industry.

Explanation
The FSB registrar is a government official appointed to regulate and oversee the financial services industry in South Africa, ensuring compliance with regulatory standards and protecting consumer interests.

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38.

Reps working under supervision do not have to comply with CPD requirements
- A.
  
  True
- B.
  
  False
- C.
  
  It depends on their DOFA date
- D.
  
  None of the above
Correct Answer
B. False

Explanation
Reps (representatives) working under supervision are still required to comply with Continuing Professional Development (CPD) requirements. CPD is essential for maintaining and enhancing professional skills and knowledge. Supervision does not exempt them from this requirement. Compliance with CPD ensures that all representatives, regardless of their supervision status, remain competent and up-to-date in their field.

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39.

The minimum entry requirement for Cat II, IIA, or III FSPs is a recognised full qualification
- A.
  
  False
- B.
  
  True
- C.
  
  Depends on the experience of the Rep
- D.
  
  None of the above
Correct Answer
A. False

Explanation
The minimum entry requirement for Cat II, IIA, or III FSPs is not a recognized full qualification.

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40.

For how long should adverts for financial services be kept for
- A.
  
  5 years
- B.
  
  10 years
- C.
  
  2 years
- D.
  
  3 years
Correct Answer
A. 5 years

Explanation
Financial services adverts should be kept for 5 years. This is because regulations require companies in the financial industry to retain records of their advertising activities for a certain period of time. By keeping these adverts for 5 years, companies can ensure compliance with legal and regulatory requirements, as well as provide documentation in case of audits or investigations. This timeframe allows for a sufficient retention period while also balancing the need for storage space and efficient record management.

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41.

An FSP did a telephonic advert. Within how many days should a record of this advert be provided to the Registrar upon request
- A.
  
  7 days
- B.
  
  30 days
- C.
  
  45 days
- D.
  
  60 days
Correct Answer
A. 7 days

Explanation
According to the given question, an FSP (Financial Service Provider) conducted a telephonic advert. The question asks for the timeframe within which a record of this advert should be provided to the Registrar upon request. The correct answer is 7 days, implying that the FSP is required to provide the record within a week of the request being made by the Registrar.

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42.

If an FSP does a telephonic advert but it doesn't result in a financial service being rendered, for how long should this record be retained by the FSP
- A.
  
  45 days
- B.
  
  30 days
- C.
  
  5 years
- D.
  
  12 months
Correct Answer
A. 45 days

Explanation
The correct answer is 45 days. This means that if a financial service provider (FSP) conducts a telephonic advertisement that does not lead to the provision of a financial service, they should retain the record of this advertisement for a period of 45 days. This is likely to ensure that the FSP can maintain a record of their advertising activities and comply with any regulatory requirements or potential investigations that may arise within this timeframe.

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43.

How long after the conclusion of a telephonic financial service should the client be provided with disclosure documents?
- A.
  
  7 days
- B.
  
  30 days
- C.
  
  45 days
- D.
  
  60 days
Correct Answer
B. 30 days

Explanation
After the conclusion of a telephonic financial service, the client should be provided with disclosure documents within 30 days. This timeframe allows the financial service provider enough time to gather and prepare the necessary documents, ensuring that the client receives the required information in a timely manner. It also gives the client sufficient time to review and understand the disclosure documents before making any decisions or taking further actions related to the financial service.

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44.

What is a Supervised Representative?
- A.
  
  A Rep that reports to a supervisor
- B.
  
  A Rep who doesn't meet one or more of the Fit & Proper competency requirements and who renders financial services under supervision
- C.
  
  A Rep that failed to obtain the required number of CPD points in a particular cycle
- D.
  
  None of the above
Correct Answer
B. A Rep who doesn't meet one or more of the Fit & Proper competency requirements and who renders financial services under supervision

Explanation
A Supervised Representative is a representative who does not meet one or more of the Fit & Proper competency requirements and is therefore required to render financial services under supervision. This means that they are not fully qualified or competent to provide financial services independently and must be supervised by someone who meets the necessary requirements.

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45.

What is the correct period for a CPD Cycle
- A.
  
  1 January to 31 December
- B.
  
  1 June to 31 May
- C.
  
  01 March to 28 February
- D.
  
  1 January to 30 June
Correct Answer
B. 1 June to 31 May

Explanation
The correct period for a CPD (Continuing Professional Development) cycle is from 1 June to 31 May. This means that professionals should engage in CPD activities and keep track of their development and learning during this period. It allows for a consistent and standardized timeframe for professionals to reflect on their skills, acquire new knowledge, and maintain their competence in their respective fields.

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46.

How many days after the end of the CPD cycle should Reps and KI's submit evidence of their CPD activities
- A.
  
  1 month
- B.
  
  15 days
- C.
  
  90 days
- D.
  
  60 days
Correct Answer
B. 15 days

Explanation
Reps and KIs should submit evidence of their CPD activities within 15 days after the end of the CPD cycle. This allows for a timely and efficient evaluation of their professional development progress and ensures that they are actively engaging in continuous learning and improvement. It also allows for any necessary adjustments or interventions to be made if their CPD activities are not meeting the required standards.

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47.

What are the minimum CPD hours for a Rep doing only a single subclass of business
- A.
  
  18 hours
- B.
  
  6 hours
- C.
  
  62 hours
- D.
  
  None of the above
Correct Answer
B. 6 hours

Explanation
The minimum CPD hours for a Rep doing only a single subclass of business is 6 hours. This means that a representative who is solely engaged in one specific area of business is required to complete at least 6 hours of continuing professional development (CPD) training. This ensures that the representative stays updated and knowledgeable in their specific field of expertise.

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48.

What are the minimum CPD hours for a Rep doing more than one subclass of business within a single class of business
- A.
  
  12 hours
- B.
  
  22 hours
- C.
  
  30 hours
- D.
  
  24 hours
Correct Answer
A. 12 hours

Explanation
The minimum CPD hours for a Rep doing more than one subclass of business within a single class of business is 12 hours. This means that regardless of the number of subclasses within a single class, the Rep is only required to complete a minimum of 12 hours of CPD training.

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49.

A Rep cannot start providing financial services (advice/intermediary) before undergoing Class of Business Training but a supervised Rep has 12 months to do Class of Business training
- A.
  
  True
- B.
  
  False
- C.
  
  Depends on their position
- D.
  
  None of the above
Correct Answer
A. True

Explanation
A representative (Rep) must undergo Class of Business Training before they can start providing financial services. However, a supervised Rep is given a 12-month period to complete the Class of Business training. This means that a supervised Rep can start providing financial services but must complete the training within the specified time frame. Therefore, the statement "A Rep cannot start providing financial services before undergoing Class of Business Training but a supervised Rep has 12 months to do Class of Business training" is true.

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50.

Reps & KI's appointed prior to 01 April 2018 need not do the class of business training as their experience is considered adequate to meet the requirements of the act.
- A.
  
  True
- B.
  
  False
- C.
  
  Not always
- D.
  
  None of the above
Correct Answer
A. True

Explanation
The statement suggests that representatives and key individuals appointed before 01 April 2018 do not need to undergo class of business training because their experience is considered sufficient to meet the requirements of the act. Therefore, the answer "True" indicates that the statement is correct.

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Current Version
Oct 21, 2024

Quiz Edited by
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Sep 23, 2020

Quiz Created by
Sicelo Mlotshwa

Fais Re5 Test I

The minimum entry qualification for a Category 1 Rep is

An FSP must keep records for

A Rep is authorised to render intermediary services only. The KI realised that the Rep rendered advice to a client. What must the KI do?

The KI disclosed a commission of R4,000 to a client. The Rep noticed an error on the commission & that the commission charged is wrong, it is supposed to be R14,000. The product has been running for 3 years, so what must the Rep do?

Category 1 Reps doing execution of sales need only have Matric.

What is a Board Notice

Which of the following does not form part of the FAIS Act and its subordinate legislation

Sean advises gogo Makhubalo to her Old Mutual pension payout is going to be R1800 per month till she dies or gets to age 80 years

Shane, a financial adviser from Discovery Medical Aid visits Bidvest to do a presentation on the 2020/21 medical aid benefit changes

Choose the incorrect definition

What is a juristic representative?

From which date should Category I juristic representatives comply with solvency requirements

Which of the following activities would likely NOT require an FSP (Financial Services Provider) license in South Africa?

Is it possible to have more than one Key Individual at an FSP?

One of the Fit & Proper Requirements is Competence. Which of the following does not form part of the competence requirements:

Which of the following does not form part of the FAIS Fit & Proper Requirements

John finished college on 01 April 2015 and started working for Investec as a Representative. After 3yrs he left Investec to join Allan Gray. On 01 January 2020 he went back to Investec as a Senior Manager and getting 3 times the salary he used to earn. What is John's DOFA date?

Sibongile has bad relationship with her line manager, Mr Pillay who has dug and discovered that she lied about the salary she was earning at her previous job. Mr Pillay can

Operational Ability is one the FAIS Fit & Proper Requirements. It refers to the functional skill, capability and capacity of a person or organisation to perform certain duties, task & obligations. Which of the following is not one of the operational requirements for FSPs

Choose the correct statement from the following statements

An FSP has to ensure that its Representatives have the operational ability to function as Representatives. Which of the following does not form part of these operational requirements for representatives

Which of the following is not true of Key Individuals

Choose the incorrect statement

As part of the new financial soundness requirements for FSPs, Early Warning notices have to be sent to the Registrar if an FSP runs into financial troubles. Which of the following circumstances does not necessitate reporting to the Registrar?

FAIS Board Notice BN194 of 2017 introduced new Financial Soundness Requirements for FSPs. Which of the following does not form part of these requirements

Direct Marketing is the sale of financial products by way of telephone, internet, media insert, direct mail, or electronic mail, excluding advertisements where no financial transaction is concluded. Which of the following requirements does not apply to Direct Marketers

A Record of Advice (ROA) is a document you provide to each and every client confirming the financial advice that has been rendered to them. Which of the following does not need to be included in a ROA document

Automated or Robo Advice is the furnishing of advice through an electronic medium that uses algorithms and technology without the direct involvement of a natural person. Which of the following does not form part of the requirements for FSPs that provide automated advice

Execution of sales means an intermediary service performed by a representative by means of a script on an instruction of a client to buy, sell, deal, invest in, replace or vary one or more financial products. What is the minimum qualification for a Rep to conduct execution of sales transactions

How many years from their DOFA does a Rep have to obtain their RE5

How many years does a supervised Rep have from their DOFA to do Class of Business training

Which of the following best describes a Financial Services Board (FSB) registrar?

Reps working under supervision do not have to comply with CPD requirements

The minimum entry requirement for Cat II, IIA, or III FSPs is a recognised full qualification

For how long should adverts for financial services be kept for

An FSP did a telephonic advert. Within how many days should a record of this advert be provided to the Registrar upon request

If an FSP does a telephonic advert but it doesn't result in a financial service being rendered, for how long should this record be retained by the FSP

How long after the conclusion of a telephonic financial service should the client be provided with disclosure documents?

What is a Supervised Representative?

What is the correct period for a CPD Cycle

How many days after the end of the CPD cycle should Reps and KI's submit evidence of their CPD activities

What are the minimum CPD hours for a Rep doing only a single subclass of business

What are the minimum CPD hours for a Rep doing more than one subclass of business within a single class of business

A Rep cannot start providing financial services (advice/intermediary) before undergoing Class of Business Training but a supervised Rep has 12 months to do Class of Business training

Reps & KI's appointed prior to 01 April 2018 need not do the class of business training as their experience is considered adequate to meet the requirements of the act.