Mock Exam 1 Flashcards
(24 cards)
A licence of any FSP may lapse:
Select one:
a.If the licensee is finally liquidated or dissolved.
b.If the business of the licensee has become dormant.
c.In any other case where the licensee voluntarily and finally surrenders the licence to the Authority.
d.All of the above.
d.All of the above.
Araz is a Compliance Officer at Red Financial and has recently become aware of some non-compliance issues. What should she do?
Select one:
a.Decide whether they are material and, if they are, mention it in her compliance report.
b.Discuss it with her colleagues at other financial institutions.
c.Report them to the FAIS Supervision Department for advice.
d.Report them to the Authority immediately.
a.Decide whether they are material and, if they are, mention it in her compliance report.
In terms of the FAIS General Code of Conduct, there is certain information which must be disclosed to the client about the product supplier, the provider and the financial service. With whom does this duty of disclosure lie?
Select one:
a.The Representative
b.The Representative and the insurer.
c.The insured.
d.All of the above.
a.The Representative
There are two main requirements of giving advice. What are they?
Select one:
a.Establishing suitability and keeping a record of advice.
b.Keeping a record of advice and sustainability.
c.Sustainability and establishing suitability.
d.Providing disclosures and keeping a record of advice.
a.Establishing suitability and keeping a record of advice.
With regard to the duties of a supervisor, a supervisor must:
Select one:
a.Observe selected meetings between the supervised Representative and clients by attending such meetings.
b.Observe the manner in which the supervised Representative conducts itself with product suppliers.
c.Record observations and aspects of further development of the supervised Representative.
d.Observe the manner in which the supervised Representative deals with clients telephonically.
c.Record observations and aspects of further development of the supervised Representative.
Supervision means:
Select one:
a.To establish a working relationship between the supervisor and supervised Representative such that the supervisor has oversight of the activities performed by the supervised Representative to enable the transfer of skills.
b.Guidance, instruction and oversight, by any means or medium, by a supervisor using a variety of assessment, observation and oversight methods or tools that are appropriate for the assessed level of competence of the supervised Representative.
c.To mentor and coach the supervised Representative in respect of the financial services and financial products for which they are appointed.
d.The supervision of the financial services rendered by a supervised Representative under the guidance, instructions and supervision of a supervisor on an ongoing basis.
b.Guidance, instruction and oversight, by any means or medium, by a supervisor using a variety of assessment, observation and oversight methods or tools that are appropriate for the assessed level of competence of the supervised Representative.
Khotso has been found guilty of misappropriating a client’s funds by his FSP, BitInsure. What should they do?
Select one:
a.BitInsure should dismiss Khotso immediately.
b.BitInsure should issue Khotso with a fine and command him to compensate his clients.
c.BitInsure should debar Khotso and remove his name from the Representative’s register.
d.BitInsure should inform law enforcement to send a warrant for his arrest.
c.BitInsure should debar Khotso and remove his name from the Representative’s register.
Which of the following statements pertain to the recordkeeping obligations in terms of the General Code?
i. Adequate records of advertisements must be kept for a period of at least five years after publication.
ii. The records must be kept for five years from the inception of the product.
iii. There must be a provision in the systems and procedures for a financial service provider to access and convert voice-logged records to a written format, if required.
iv. Clients must be able to get copies of the telephonic advertisement records within 10 days of request.
Select one:
a.i and iii only.
b.ii and iii only.
c.i, ii and iii only.
d.ii and iv only.
a.i and iii only.
What must either a registered estate agent or financial service provider do for legal compliance?
Select one:
a.Both should register with the Financial Intelligence Centre.
b.Both should register with the Authority of Financial Services.
c.Both should register with suitable guarantees or indemnities in terms of the FAIS Act.
d.They do not have anything in common to register for.
a.Both should register with the Financial Intelligence Centre.
If an FSP voluntarily cancels its licence, the licence will only be lapsed:
Select one:
a.On receipt of a written request from the Key Individual of the FSP or another person in control of the affairs of the licence holder.
b.If all levy payments are up to date.
c.If all annual compliance reports have been received.
d.All of the above.
d.All of the above.
Since 2014, Tonde has been appointed as a Representative at STrx to render financial services to prospective clients interested in shares. STrx is an approved Category II FSP that collects premiums and hold clients’ funds on behalf of their clients. Fit & Proper requirements apply to Tonde. Choose the CORRECT statement.
Select one:
a.Tonde needs to obtain Product Specific Training in shares.
b.Tonde must maintain the Competence requirement by completing Continuous Professional Development activities.
c.Tonde needs to maintain the Financial Soundness requirement.
d.Tonde needs to complete the Class of Business training within three months.
b.Tonde must maintain the Competence requirement by completing Continuous Professional Development activities.
Why should the Key Individual be familiar with the compliance report?
Select one:
a.They are responsible for signing off the report.
b.They should be familiar with all areas of the business.
c.They are responsible for writing the report.
d.They do not need to be familiar with the compliance report.
c.They are responsible for writing the report.
The FAIS Act makes provision for codes of conduct to set principles for enforcing legislation. Why is a code of conduct necessary?
Select one:
a.To ensure any changes in the financial industry can be enforced via legislation.
b.To give financial service providers guidelines and the rules of how to conduct financial services and carry out appropriate business practices.
c.A code of conduct is not relevant.
d.To only act honestly and fairly, and with due skill, care and diligence, in the interest of clients and the integrity of the financial service industry.
b.To give financial service providers guidelines and the rules of how to conduct financial services and carry out appropriate business practices.
Mitchel is a Rep of Finx and needs to disclose the following with regard to the financial service provided to the client:
i. The nature and extent of monetary obligations assumed by the client, directly or indirectly, in favour of the FSP.
ii. Where a financial product is being replaced by another financial product, full details must be disclosed of any incentive, remuneration, consideration, commission, fee or brokerages received, directly or indirectly, by the FSP on the terminated product but it is not required for the FSP rendered financial services on both the terminated and replacement product.
iii. The client’s rights in relation to terminating those obligations and the consequences of terminating or failing to meet those obligations.
iv. The details of the services that are to be provided by the provider or its Reps in exchange therefore.
Select one:
a.i, ii and iv only.
b.i, iii and iv only.
c.ii and iv only.
d.i, ii, iii and iv.
b.i, iii and iv only.
When deciding whether a business is dealing in an undesirable business practice, the FAIS Authority must consider whether the business practice must have, or is likely to have, a direct or indirect effect resulting in:
Select one:
a.Harming the relations between FSPs.
b.Unreasonable prejudice to clients.
c.Deceiving any client.
d.All of the above.
d.All of the above.
The FSCA has completed an investigation of Bitdur and found many areas of non-compliance. Tutsi is the Compliance Officer and she has complained about the lack of resources made available to her by ABC Finance. Bote, the Key Individual, disputes this. Bitdur has four Representatives – Tom, Presly, Monde and Eric.
Who could be charged for misconduct in a personal capacity?
Select one:
a.Bote.
b.Tutsi.
c.Bitdur.
d.Tom, Presly, Monde and Eric.
Bote
Choose one statement below that does NOT describe the aspects that need to be considered before proposing a product to the client.
Select one:
a.The FAIS Act states that a client must be offered a product that matches his specific needs.
b.Establish the amount of additional income the client has to meet his financial goals.
c.Establish the client’s experience and financial know-how.
d.None of the above.
d.None of the above.
The function of the Ombud for Financial Services Providers (FAIS Ombud) is to resolve disputes relating to the rendering of financial services by providers:
Select one:
a.Where they have failed to comply with the FAIS Act.
b.Where, as a result of either wilful or negligent conduct by the provider, the client has suffered.
c.Where, as a result of either wilful or negligent conduct by the provider, the client will potentially suffer prejudice or damage.
d.All of the above.
d.All of the above.
Ross has been requested to provide Layo with advice with regard to short-term deposit options. Layo is very busy and in meetings and so cannot meet with Ross to provide information on his financial situation or objectives. Layo advises Ross to make a decision on his behalf. What does Ross have a duty to do? Choose the CORRECT option below.
i. Choose a product that Ross thinks is suitable, complete the record of advice and send it to Layo within 30 days, as Aubrey has given him full discretion to do so.
ii. Advise Layo that a full needs analysis was not done, and there might be limitations to the advice provided.
iii. Advise Layo to consider by himself whether the advice provided is appropriate to his needs.
iv. Assist Layo in every way he can, and to do as Layo requested.
Select one:
a.ii and iii only.
b.i, ii and iii only.
c.i and iii only.
d.iv only.
a.ii and iii only.
Which of the following must be disclosed to clients as soon as possible?
i. Detail about the legal relationships between the financial service provider, product supplier and Representative (if any), so that it is clear to the client who accepts responsibility for the actions of the financial service provider or Representative or the extent to which the client must accept such responsibility.
ii. Names and contact details of the relevant legal departments or, in the case of a Representative, the contact details of the Representative.
iii. Details of the financial services which the provider is authorised to provide and of any conditions or restrictions applicable to the licence.
iv. Whether a Representative of a provider is rendering services under supervision.
Select one:
a.i, iii and iv only.
b.i, ii and iii only.
c.iii and iv only.
d.i and iii only.
c.iii and iv only.
Any person who benefits from illegal activities under the FIC Act is guilty of an offence. The penalties are harsh and include one of the following:
Select one:
a.A maximum fine of R10 million.
b.Imprisonment of up to 30 years.
c.A maximum fine of R10 million and imprisonment of up to 30 years.
d.None of the above.
d.None of the above.
In terms of Section 68 of the FIC Act:
A person convicted of an offence mentioned in this Chapter, other than an offence mentioned in subsection (2), is liable to imprisonment for a period not exceeding 15 years or to a fine not exceeding R100 million.
A person convicted of an offence mentioned in Section 55, 62A, 62B, 62C or 62D, is liable to imprisonment for a period not exceeding five years or to a fine not exceeding R10 million.
In order to meet the requirements for displaying a licence, the FSP must:
Select one:
a.Display copies of the licence in a prominent and durable manner.
b.Display copies of the licence in every head office only.
c.Ensure that all business documentation, advertisements and other promotional material refers to the licence.
d.Ensure that all business documentation, advertisements and other promotional material reflect the FSP licence number.
c.Ensure that all business documentation, advertisements and other promotional material refers to the licence.
Mpho and Lebo are sisters and work for the same financial service provider. Mpho is a Compliance Officer and Lebo is a Representative for the financial service provider. Mpho is aware of suspicious activities in Lebo’s department and is concerned that there may be a conflict of interest. Explain to Mpho what conflict of interest means in respect of the compliance function.
i. One of the qualifying criteria for approval of a Compliance Officer by the Authority is the avoidance of conflicts of interest between the duties of the Compliance Officer with the duties of other employees, internal audit and control, and functions of Representatives.
ii. Conflict of interest only applies with regard to the independence of the compliance function from internal audit.
iii. If there are conflicts of interest across the functions, the Compliance Officer will not be able to perform the function objectively, nor identify and report on instances of non-compliance or irregularities.
iv. Conflict of interest for Compliance Officers mean that they are not allowed to accept any gifts or financial interest.
Select one:
a.i, iii and iv only.
b.i and iii only.
c.iii and iv only.
d.ii and iv only.
b.i and iii only.
When you lodge a complaint with the FAIS Ombud, do you as a client have to pay a fee?
Select one:
a.A standard administration fee.
b.A fee as determined by the Ombudsman.
c.There is no cost.
d.A standard administration fee which is determined by the Ombudsman.
c.There is no cost.
