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Level 1 Questions

1. The FAIS Act requires that the FSP/Key Individual must ensure that the Representatives are fit and proper at recruitment and appointment stage and secondly that the Representatives remain fit and proper throughout their employment.

Consider the following statements carefully and then choose the statement that is FALSE.

a) To ensure honesty and integrity you can check the data bureau. b) To ensure honesty and integrity you should only rely on the applicant's disclosure of information as the FAIS Act prohibits any checking of information submitted by prospective Representatives. c) To ensure honesty and integrity you can check the validity of membership of professional bodies or other institutions. d) To ensure honesty and integrity you can check the FSB website to see if a Representative has been debarred.

2. Consider the following statements carefully and then choose the statement that is FALSE. a) The definition of "advice" includes any recommendation, guidance or proposal of a financial nature given to a client about buying, investing in a financial product. b) In order to qualify as advice in terms of the FAIS Act, the advice must be given in writing. c) "Advice" is not an analysis or report on a financial product without an express or implied recommendation, guidance or proposal that a transaction in respect of the product meet the client's needs, investment objectives or financial situation. d) Intermediary service is defined in the FAIS Act as any act other than the furnishing of advice, performed by a person for or on behalf of a client or product supplier, which results in a transaction.

3. Which of the following requirements are not applicable to Custody of Client Funds and Premiums? a) The FSP must have a separate bank account at a bank.
b) The bank account must be designated to receive funds and premiums from clients. c) The account may contain other funds of the FSP.
d) The FSP is responsible for bank charges except deposit or withdrawal charges.

4. Consider the following statements carefully and then choose the statement that is FALSE. a) The FAIS Act was introduced to regulate the business of all Financial Service Providers who give advice or provide intermediary services to clients, regarding a wide range of financial products. b) Administration of the FAIS Act is done by the FAIS Registrar. The Registrar has defined functions, powers and obligations. c) The FAIS Act only applies to Financial Service Providers who give advice in relation to financial products. d) The enforcement part of the FAIS Act deals with the FAIS Ombud and related matters. It also deals with civil remedies, undesirable practices, offences and penalties, voluntary sequestration, winding-up and closure.

5. Which of the following statements are TRUE regarding record keeping obligations in terms of the Act? a) The FSP must ensure that records are kept for a minimum of fifteen years except if the Registrar allowed specific exemptions in this regard. b) The FSP, and by implication it will be part of the management duties of a Key Individual, must ensure that records are kept for a minimum of five years except if the Registrar allowed specific exemptions in this regard. c) The FSB, and by implication it will be part of the management duties of a Key Individual, must ensure that records are kept for a minimum of two years. d) The FAIS Registrar, and by implication it will be part of the management duties of a Key Individual, must ensure that records are kept for a minimum of five years except if the Registrar allowed specific exemptions in this regard.

6. Consider the following statements carefully and then choose the statement that is FALSE. a) A FSP must ensure that a compliance function exists or is established as part of the risk management framework of the business. b) FSPs are not allowed to outsource the...
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