In 2020, the FSCA and the Prudential Authority [“PA”] published Joint Standard 1 of 2020: Fitness, propriety and other matters relating to significant owners.

When the Joint Standard was published certain entities were exempted from the application of the Standard. Accordingly, when the Joint Standard was made final, significant owners of FSP`s were exempted from the requirements of the Joint Standard.

Definition of Significant Owners: a person is a significant owner of a financial institution if the person, directly or indirectly, alone or together with a related or inter-related person, has the ability to control or influence materially the business or strategy of the financial institution. Without limitation a person has the ability referred to in the previous sentence if:

Ø  the person, directly or indirectly, alone or together with a related or inter-related person, has the power to appoint 15%of the members of the governing body of the financial institution;

Ø  the consent of the person, alone or together with a related or inter-related person, is required for the appointment of 15% of the members of a governing body of the financial institution; or

Ø  the person, directly or indirectly, alone or together with a related or inter-related person, holds a qualifying stake [i.e. 15%] in the financial institution.

Reassessment of Joint Standard: Following the publication of the Joint Standard, the FSCA initiated a cross-sector project born by the need to identify owners of financial institutions more effectively, considering the extent to which such owners are able to influence and control the business of financial institutions. In addition, the FSCA has reassessed the requirements in the Joint Standard to determine the extent to which such requirements should apply to significant owners of FSP`s.

In this regard, the following was concluded by the FSCA:

Ø  The main aim of the Joint Statement is to ensure [on an annual basis], that significant owners are honest and have the necessary integrity. The FSCA decided in September 2022 to withdraw the initial exemption of this stipulation for FSP`s in the Joint Standard;

Ø  The Joint Standard requires significant owners to have procedures in place for assessing and attesting to, on an annual basis, its fitness and propriety, as per the requirements of this Joint Standard. The FSCA decided in September 2022 to withdraw the initial exemption of this stipulation for FSP`s in the Joint Standard.

Ø  An Accountable Institution must provide for, and record, the manner in which Honesty and Integrity, and Fitness and Propriety, will be conducted

It might be noted that the longer -term objective of the FSCA is to make a proposal to National Treasury pertaining to the potential amendment of the FSR Act, to create an enabling framework for the regulation and supervision of beneficial owners of financial institutions.

As we all know the Regulators issue requirements on WHAT Accountable Institutions need to comply with, but guidelines on HOW to do it is normally limited.

Based on above-mentioned withdrawals of the said initial exemptions REGSERV [Pty] Ltd, which is an FSCA approved Compliance Practice, compiled a Significant Owners Questionnaire to facilitate with the compliance requirements in this regard.

Please contact us on our website “contact space” [www.regserv.co.za] or via email: service@regserv.co.za for a free copy of the above-mentioned Significant Owners Questionnaire.

Visit our REGSERV website blog frequently for HELP offerings with the HOW regarding FIC, FSCA and related Compliance matters.