FIA 06/2/17: FIT AND PROPER REQUIREMENTS: NEW PRODUCT CATEGORIES AND HOW THEY AFFECT YOUR CURRENT LICENSE

The new Fit and Proper Requirements (Board Notice 194 of 2017) introduces a new categorisation of financial products and section 52 (14 -17) contains provisions how these products will be dealt with in respect of your license.

Section 52 addresses transitional arrangements whereby some of the new products will automatically be included with corresponding products already on the license, while the FSP will have to formally apply for the inclusion of other new products to the license. The FSB will in due course give details of this application process.

New product categories: (see definitions in section 1)

Subcategory name Description
Long-term insurance subcategory B1-A Long-term insurance policies that need no or limited underwriting and defined in long-term insurance subcategory B1

Long-term insurance subcategory B2-A Long-term insurance policies where the investment portfolio is managed by the policyholder to request a change or amendment and defined in long-term insurance subcategory B2.

Short-term insurance personal lines A1 Short-term insurance personal lines policies with no or limited underwriting with a contract term of less than 24 months, not subject to the principle of average and which meet certain conditions in respect of policy benefits and exclusions

Structured deposit A combination of a long-term or short-term deposit with another Tier 1 product, or a long-term or short-term deposit where the return value depends on or is derived from the performance of an underlying product or index

Securities and instruments Securities and instruments that have not already been defined in the Board Notice

Participatory interest in a hedge fund Participatory interest in a hedge fund

Products automatically included:

On 1 April 2018 the products in column A below will automatically include the products in column B and the FSP will be deemed to have been authorized for the products in column B from the date the FSP was first authorized for the products in column A. See definitions of these products in section 1 of the Notice.

Column A
Short-term Insurance personal lines Column BShort-term Insurance personal lines A-1

Long-term Insurance subcategory B1 Column BLong-term Insurance subcategory B1-A

Long-term Insurance subcategory B2 Column B Long-term Insurance subcategory B2-A

Note: The FSP must within three months from 1 April 2018 update the central representative register to correctly reflect the financial products for which a representative is appointed.

Products that will need formal approval:

An FSP that is on 1 April 2018 already authorized for the products in column A below will be granted authorization for the corresponding products in column B but only after a formal application has been made to the Registrar to render services in respect of the products in column B.

Column A Column B
Participatory interest in collective investment schemes
Comumn B Participatory interest in a CIS hedge fund
Short-term deposit
Column B Structured deposit
Long-term deposit
Column BStructured deposit

Note: The FSP must submit the application for approval within three months from 1 April 2018. Until a response to the application has been received from the Registrar the FSP is deemed to have been authorized for the column B products and may therefore provide financial services in respect of the column B products.

Note: If the FSP fails to apply for approval by the deadline date of 30 June 2018, the FSP may no longer render financial services in respect of the column B products from such deadline date.