FSCA Fit and Proper Requirements: CPD Hours, Class of Business Training and the Competence Register

South Africa's competence regime for financial services providers is more prescriptive than most people expect and more precise than most compliance summaries make it sound. It sets a numbered CPD requirement, two distinct kinds of training with different rules about who may deliver them, examinations that must be passed before appointment rather than within a grace period, and a register with a five-year retention rule attached to parts of it.

The instrument is the Determination of Fit and Proper Requirements for Financial Services Providers, 2017 — Board Notice 194 of 2017, published in Government Gazette 41321 on 15 December 2017 under the Financial Advisory and Intermediary Services Act 37 of 2002. It came into operation on 1 April 2018, with several provisions phased in later under section 53(1). It was amended by Board Notice 707 of 26 June 2020. This guide is written from that text, section by section.

CPD: six, twelve or eighteen hours

Section 33(1) sets the hours by reference to what the person is authorised, approved or appointed to do:

• 6 hours per CPD cycle — a single subclass within a single class of business (s 33(1)(a))
• 12 hours — more than one subclass within a single class (s 33(1)(b))
• 18 hours — more than one class (s 33(1)(c))

The classes and subclasses themselves are in Annexure Four. The CPD cycle is defined in section 1 as "a period of 12 months commencing on 1 June of every year and ending 31 May of the following year" — the same cycle for everyone, with no individual anniversary dates and no carry-over provision in the text.

Where someone has been authorised for less than a full cycle, section 33(4) gives a pro-rata formula: annual hours divided by twelve, multiplied by the number of months authorised.

What actually counts as a CPD activity

This is the provision firms most often get wrong. Section 1 defines a CPD activity as one accredited by a Professional Body, allocated an hour value by that body, and verifiable. "Professional Body" is itself defined as a body recognised by SAQA as a professional body for the purposes of the NQF Act.

So the FSCA does not accredit CPD activities. Nowhere in the notice does the Authority, the Registrar or the former FSB appear as an accreditor. A vendor claiming "FSCA-accredited CPD" is describing something the notice does not provide for. What matters is whether a SAQA-recognised professional body has accredited the activity and allocated it hours.

Two things are expressly excluded: an activity performed towards a qualification, and product specific training. Both are real learning and neither earns CPD hours. "Verifiable" is defined as capable of objective verification, including evidence of the identity of the person and proof of completion.

The June 2020 amendment tightened this definition's structure: verifiability now sits inside the accreditation limb, so the professional body must confirm that the activity is verifiable.

Who is exempt from CPD

Section 31(2) carves out Category I persons authorised only for Long-term Insurance subcategory A and/or Friendly Society Benefits, and Category I representatives appointed only to render a financial service in respect of a Tier 2 product or an intermediary service in respect of a Tier 1 product.

Worth noting, because it catches people: the CPD exemption and the training exemption are not the same. The CPD carve-out in section 31(2)(b)(ii) refers to a Tier 1 intermediary service; the training carve-out in section 28(2)(b)(i) refers to Tier 1 execution of sales. A representative can fall inside one and outside the other.

Reductions for absence

Section 34 allows an FSP to reduce hours pro rata during continuous absence for maternity, paternity or adoption leave, long-term illness or disability, or caring for a family member with a long-term illness. Section 34(3) prevents reductions in consecutive cycles unless the absence is continuing, and section 34(4) caps the arrangement at three consecutive CPD cycles.

Class of business training and product specific training

Section 29(1) requires both, completed "prior to the rendering of any financial service in respect of a particular financial product". Section 29(2) applies class of business training to key individuals before they manage or oversee the rendering of a financial service.

They are different obligations. Class of business training covers the range of products within a class — section 29(4) lists the content, including typical fee structures, charges and other costs, appropriateness for different client types, and the relevant industry standards and codes. Product specific training covers one product: section 29(5) requires, among other things, how it is structured and priced, its intended target market, and the identity of the product supplier.

The delivery requirement differs too, and this is easy to miss. The section 1 definition of class of business training says it is "provided and assessed by an accredited provider or an education institution". The product specific training definition says only that the training is assessed. There is no provider requirement for product specific training — which is why it is almost always delivered by the product supplier itself.

A recognised qualification does not exempt anyone from class of business training. Section 29(6) allows the training to be undertaken in combination with a qualification where the content demonstrably meets the criteria, which is a combination permission rather than an exemption. Section 28(3) does exclude Category II, IIA and III FSPs and their representatives from product specific training, and key individuals of all categories, provided they comply with section 12.

The examinations have no grace period

Section 26 sets the regulatory examinations by category: RE 1 for Category I and IV FSPs and key individuals; RE 1 and RE 3 for Category II and IIA; RE 1 and RE 4 for Category III; and RE 5 for representatives across all categories.

Section 26(6) is the part worth reading twice: a person "must successfully pass the applicable regulatory examinations before that person's authorisation, approval or appointment". There is no post-appointment window in section 26. The only relief is section 52(18), inserted in 2020, which deems examinations passed under the repealed 2008 notice to satisfy the requirement.

Equally, section 23 requires a qualification recognised by the Registrar under section 24, and sets no deadline for obtaining it. Section 24(2)(e) requires degree-level qualifications for Category II, IIA and III; there is no degree requirement for Category I or IV.

The register, and the retention rule

Section 13(5) requires a competence register recording qualifications, examinations, class of business and product specific training, and CPD. The timing rules are specific:

• Training entered in the register within 15 days after it occurs (s 30(a))
• Training documents retained for not less than five years after the person ceases the relevant service (s 30(b))
• Representatives and key individuals submit CPD evidence to the FSP within 15 days after the cycle ends (s 33(2))
• CPD recorded in the register within 30 days after the cycle ends (s 32(3)(a))
• CPD evidence and reduction records retained five years from the end of the cycle (s 32(3)(e))

Section 32(2) also requires a CPD policy and a training plan for each cycle, and section 32(1)(c) requires the CPD to address identified needs and gaps rather than whatever happens to be available. Note what is not given a retention period: the competence register itself, examination records and qualification records. That is a real silence in the text.

The architecture here — a register, dated entries, a retention rule and a plan that has to respond to identified gaps — is close to what the UK requires of regulated firms, and firms operating across both will find the mapping straightforward. Our guide to the FCA's training and competence records requirements under TC 3 and SYSC 28 sets that regime out in the same way.

The sentence that matters most

Section 13(8) states that compliance with the minimum requirements in Parts 2 to 5 "does not in itself serve as evidence" that a person meets the general competence standard in section 12 — adequate, appropriate and relevant skills, knowledge and expertise, maintained over time.

That is an explicit statement that the hours, the exams and the training are a floor and not a defence. A firm whose entire competence case is "everyone has their 18 hours" has not met section 12, and the notice says so in terms. Section 16(1) adds a related trap: experience lapses after five consecutive years without rendering the service in question.

Three things to check

First, whether the CPD your representatives completed last cycle was accredited by a SAQA-recognised professional body and allocated hours by it, rather than simply attended. Second, whether anyone was appointed before passing RE 5, because section 26(6) gives no grace period. Third, whether your competence register entries carry the dates the 15-day and 30-day rules require, since an undated register cannot evidence compliance with either.

For the healthcare side of the same market, the HPCSA's CPD requirements work on a quite different basis, and firms with mixed obligations should not assume one model transfers. Structured CPD and professional development programmes need to be built against whichever framework applies.

Limitations: this guide is written from Board Notice 194 of 2017 as amended by Board Notice 707 of 26 June 2020. Amendments after that date have not been verified for this guide, and Annexure Five's examination criteria tables were not read in full. Check the current gazetted text and take your own advice before relying on any specific provision.