Free FSCA RE5 Practice Exam: Representatives

Try 50 single-answer questions selected from the current Finance Prep question bank. All eight RE5 task areas are represented. This fixed set was refreshed September 17, 2026; reloading the page keeps the same questions and answer order.

These are original Finance Prep practice questions, independent from the FSCA. They are not official FSCA questions, copied live-exam content or exam dumps.

Allow 120 minutes if using this set for pacing practice. The FSCA FAQ specifies four options with one correct answer and a 65% official pass threshold, which requires at least 33 correct answers out of 50. Your result on this practice page is not a validated prediction of passing.

Practice questions

Questions 1-25

Question 1

Topic: Operating as a Representative

An FSP is considering the debarment of Ms Ndlovu, a representative, for allegedly processing a client instruction without authority. The written notice provided the reasons, proposed terms and debarment policy.

Debarment file extract:

11 August: Ms Ndlovu states that the client authorised the switch by telephone.
12 August: The period for initial submissions closes.
14 August: IT recovers the previously unavailable call recording.
Recording: "I am not authorising the switch today. Wait for my email."
15 August: The chair records that an outcome has been drafted but not signed or notified.
The recording has not been provided to Ms Ndlovu.

Which action should the chair take next?

• A. Exclude the recording because the submission period has closed, decide on the existing record, and preserve it for a separate compliance investigation.
• B. Finalise the decision on the existing submissions, provide the recording with the notification, and leave Ms Ndlovu to address it through reconsideration.
• C. Provide the recording and recovery details to Ms Ndlovu, invite focused representations by a reasonable date, and then decide on the complete record.
• D. Have the panel authenticate the recording, consider it with the existing submissions, and decide because Ms Ndlovu has already addressed the alleged instruction.

Best answer: C

What this tests: Operating as a Representative

Explanation: A debarment decision must follow a fair process. Although Ms Ndlovu made initial submissions, the subsequently recovered recording introduces material evidence that directly conflicts with her account. Because no final decision has been signed or notified, the chair should disclose the new evidence and allow her a meaningful opportunity to address its authenticity, context and significance.

Fairness does not require the process to remain open indefinitely. The chair may set a reasonable, fixed deadline for focused representations. After that deadline, the decision-maker should consider the notice, initial response, recording and further representations together before reaching and communicating the final decision. A submission cutoff does not justify automatically excluding relevant evidence received before the decision, while a later reconsideration process does not replace the required pre-decision opportunity to respond.

• Internal authentication does not replace the representative’s opportunity to address the recording’s context and weight.
• The initial submission deadline does not justify excluding material evidence obtained before the final decision.
• Providing the evidence after the outcome leaves the representative unable to address it before the FSP decides.

The material arrived before the final decision, so fairness requires its consideration and a meaningful opportunity for Ms Ndlovu to address it.

Question 2

Topic: Maintaining the FSP Licence

Kopano Wealth (Pty) Ltd is an authorised Category I FSP, number 12345, and may render the advertised financial service relating to the Kopano Growth Plan. Its draft advertisement states:

“The FSCA recommends the Kopano Growth Plan.”

Which replacement wording accurately communicates Kopano Wealth’s licensed status without implying FSCA endorsement?

• A. Kopano Wealth is an FSCA-approved provider of the Growth Plan under FSP number 12345.
• B. The Kopano Growth Plan is authorised by the FSCA under Kopano Wealth’s FSP number 12345.
• C. The Kopano Growth Plan meets FSCA standards because Kopano Wealth holds FSP number 12345.
• D. Kopano Wealth (Pty) Ltd is an authorised financial services provider, FSP number 12345.

Best answer: D

What this tests: Maintaining the FSP Licence

Explanation: An FSP may accurately communicate its authorised status and FSP number. The licence authorises the FSP to render specified financial services within its approved scope; it does not represent FSCA approval, recommendation or quality certification of a particular product. Kopano Wealth may therefore identify itself as an authorised financial services provider because the advertised service falls within its licence scope. The advertisement must not transfer the FSP’s authorised status to the Growth Plan or suggest that holding a licence proves the product meets FSCA standards. Legitimate authorisation information should be retained while unsupported endorsement claims are removed.

• Describing the Growth Plan as authorised incorrectly transfers the FSP’s licensed status to the product.
• Calling Kopano Wealth FSCA-approved implies endorsement beyond its authorised status.
• Claiming the plan meets FSCA standards treats the FSP licence as a product-quality certification.

This wording accurately identifies the authorised FSP and its number without suggesting that the FSCA endorses the provider or product.

Question 3

Topic: Codes of Conduct

A representative plans to send a mobile marketing message to retail clients.

Product file:

• The investment term is five years.
• The annual index-linked return can be 0%-12%.
• Initial capital is repayable only at maturity and depends on the issuer remaining solvent.
• An early exit is paid at market value and may return less than the amount invested.

Draft first screen:

KEEP EVERY RAND AND EARN 12% EACH YEAR MarketLink gives you capital security and market growth.

The accurate product terms appear only in small grey text after the client scrolls. Which replacement opening would most appropriately present the product fairly to a reasonable retail client?

• A. Keep every rand and earn up to 12% a year. The issuer repays capital after five years if solvent, and early exits are market-priced.
• B. Your annual return may be 0%-12%. Capital is repayable after five years if the issuer is solvent; early exit may return less than invested.
• C. Capital protected throughout the five-year term with up to 12% annual growth. Issuer solvency applies, but early exits do not reduce the invested amount.
• D. A secure five-year route to up to 12% annual growth. Capital repayment depends on issuer solvency, and early exits may return less than invested.

Best answer: B

What this tests: Codes of Conduct

Explanation: A financial communication must be assessed according to the overall impression it is likely to create for a reasonable client, not merely whether qualifications appear somewhere in the document. On a mobile screen, a strong headline may shape the client’s understanding before less prominent terms are seen.

The product does not provide a certain 12% return or unconditional capital safety. Its annual return may be zero, repayment at maturity depends on issuer solvency, and an early exit may produce a capital loss. Fair presentation therefore requires wording that makes these material limitations clear rather than leading with claims such as “keep every rand,” “capital protected” or “secure.” Accurate small print does not neutralise a misleading dominant message.

• “Keep every rand” suggests protection throughout the term and conflicts with the stated early-exit loss risk.
• Claiming protection throughout the term and denying any reduction on early exit directly conflicts with the product schedule.
• Describing the investment as “secure” overstates its safety despite the maturity, solvency and early-exit risks.

This wording gives appropriate prominence to the possible zero return, issuer solvency condition and early-exit loss risk.

Question 4

Topic: Codes of Conduct

An FSP publishes a short online promotion stating:

“Invest for 12 months and earn a 12% return.”

Immediately below it, a clearly labelled link titled Full product information, including return conditions, fees and risks opens the disclosure document. That document states that 12% is the maximum return, depends on an index reaching a specified level, and may instead be 0%.

Which conclusion correctly distinguishes the promotion from the route to fuller information?

• A. The link adequately directs clients to fuller information, and the promotion is not misleading because the linked document explains the return conditions.
• B. The link adequately directs clients to fuller information, and the promotion is not misleading if the conditions are explained before a client applies.
• C. The link does not adequately direct clients to fuller information, because the promotion must reproduce all material product terms in the short format.
• D. The link adequately directs clients to fuller information, but the promotion is misleading because it presents a conditional maximum as a stated return.

Best answer: D

What this tests: Codes of Conduct

Explanation: Under the General Code, an advertisement must not create a misleading impression. A short advertisement that provides only part of the information need not reproduce the entire product agreement, but it must clearly refer clients to available further information. The immediately adjacent, descriptive link can satisfy that routing requirement.

However, fuller disclosure does not change the meaning of the published claim. The promotion presents 12% as the return clients will earn, while the disclosure document establishes that 12% is merely a conditional maximum and that the return could be 0%. Clients may therefore be misled before opening the document. A later oral explanation or disclosure cannot retrospectively cure the misleading claim.

• Treating the linked document as curing the return claim confuses access to further information with the advertisement’s own accuracy.
• Requiring every material product term in the short promotion overstates the disclosure obligation; a clear route to fuller information can be sufficient.
• Explaining the conditions before application may support later disclosure, but it does not correct the already published misleading impression.

The clear link provides access to fuller information, but it cannot cure the promotion’s misleading description of the conditional return.

Question 5

Topic: Operating as a Representative

A key individual is preparing a recommendation to the FSP after reviewing the following records.

File extract as at 24 September 2025:

• 8 September: A client signed a risk profile stating capital preservation.
• 9 September: The representative changed the profile to balanced growth and submitted a switch request. The representative says the client verbally corrected the objective; the client disputes this.
• 10 September: The FSP withdrew the representative’s authority to render financial services pending investigation.
• 16 September: During a disciplinary meeting, the representative admitted changing the signed record but denied acting dishonestly.
• 23 September: The representative passed a remedial course on ethical recordkeeping and advice documentation.
• 24 September: The switch was cancelled before implementation, and the client suffered no financial loss. No section 14 notice or invitation to address statutory debarment grounds appears in the file.

Which recommendation most accurately reflects what this evidence establishes?

• A. Treat the reversal and absence of loss as resolving materiality, retain the service restriction until enhanced supervision is arranged, and close the integrity assessment.
• B. Record the passed assessment as restored competence, lift the service restriction, and reopen the statutory suitability assessment only if a similar alteration occurs again.
• C. Record the course as remedial evidence, retain the service restriction, and separately assess whether the alteration establishes an integrity failure or material contravention before any debarment decision.
• D. Treat the admission and passed assessment as sufficient grounds, retain the service restriction, and finalise debarment using the disciplinary meeting as the response process.

Best answer: C

What this tests: Operating as a Representative

Explanation: The certificate establishes that the representative completed and passed remedial training. It may demonstrate corrective effort, but it does not determine why the signed record was altered or whether the conduct reflects an integrity failure or a material contravention.

The absence of client loss may affect the assessment of seriousness and consequences, but it does not automatically remove the statutory concern. Likewise, an internal disciplinary meeting does not replace the debarment process when the representative was not notified of the proposed statutory grounds and given an opportunity to respond to them.

The authority withdrawal remains an immediate service boundary while the FSP investigates. The FSP must assess the evidence against the statutory grounds and follow a fair section 14 process before reaching any debarment decision.

• Passing a remedial assessment does not automatically restore withdrawn authority or justify postponing a current suitability concern until recurrence.
• A disciplinary admission and course result do not establish grounds or provide the required debarment process by themselves.
• Reversal of the transaction and absence of loss do not automatically resolve materiality or the disputed integrity issue.

Course completion demonstrates remediation but does not determine whether the underlying conduct establishes a statutory debarment ground.

Question 6

Topic: Operating as a Representative

Naledi is an appointed representative who still requires supervision for both advice and intermediary services in long-term insurance subcategory B1.

On 1 August, her supervision file contains the following records.

Agreement extract:

• Mandla is the primary supervisor for advice and intermediary services.
• A listed alternate may supervise only after written activation by the key individual and only for the scope recorded in the annexure.
• Naledi may render a service only while the primary supervisor or a validly activated alternate is available to apply the agreement’s required controls for that service.

Annexure:

Key individual’s email:

Mandla will be unavailable from 4 to 15 August. Zanele is activated as alternate supervisor for that period within her approved scope. No other alternate is activated.

Which statement correctly identifies the financial services Naledi may personally render under supervision from 4 August?

• A. Naledi may provide advice under Zanele but may not render intermediary services until another valid supervisor is activated.
• B. Naledi may render intermediary services under Zanele but may not provide advice until another valid supervisor is activated.
• C. Naledi may not provide advice or render intermediary services until Mandla resumes as primary supervisor.
• D. Naledi may provide advice and render intermediary services under Zanele throughout Mandla’s stated absence.

Best answer: A

What this tests: Operating as a Representative

Explanation: A replacement supervisor’s authority depends on the written supervision arrangement, the activation made by the key individual and the activity scope assigned to that supervisor. Mandla’s temporary absence does not automatically end all supervised work because the agreement permits an approved alternate to be activated. Zanele was activated in writing for the relevant period, so Naledi may continue providing advice under her supervision. However, the annexure limits Zanele’s scope to advice. Pieter is the listed alternate for intermediary services, but he is unavailable and was not activated. Naledi must therefore remain within the advice boundary and refrain from personally rendering intermediary services until a valid supervisory arrangement covers that activity.

• The intermediary-services reading reverses Zanele’s activity scope in the annexure.
• Covering both services improperly extends the written activation beyond Zanele’s approved scope.
• Suspending both services overlooks the agreement clause and the valid written activation for advice.

Zanele was validly activated, but her recorded supervisory scope covers advice only.

Question 7

Topic: Maintaining the FSP Licence

A client receives advice through the KopanoTrade portal. Before accepting the service, the client can open and download these records:

Portal and email branding: KopanoTrade
Website footer: KopanoTrade is a trading name of Ubuntu Securities (Pty) Ltd.
Provider disclosure: Ubuntu Securities (Pty) Ltd, authorised FSP 60987.
Service scope: Category I advice on listed shares.
Adviser disclosure: Naledi Mokoena acts for and on behalf of Ubuntu Securities.
Licence copy: Ubuntu Securities (Pty) Ltd, FSP 60987, including listed shares.
Form 5 register extract: Naledi Mokoena appointed under FSP 60987 for listed shares.
Brand schedule: Kopano Digital Holdings owns the KopanoTrade trademark.

The client asks who supplies the financial service and whose licence applies. Which response is best supported by the records?

• A. Ubuntu Securities supplies the service under FSP 60987; KopanoTrade is its trading name and Naledi acts as its appointed representative.
• B. Naledi supplies the service under her representative authority; Ubuntu Securities provides licence support and KopanoTrade provides the client platform.
• C. KopanoTrade supplies the service under FSP 60987; Ubuntu Securities holds the licence and Naledi acts as the brand’s appointed representative.
• D. Kopano Digital Holdings supplies the service as trademark owner; Ubuntu Securities extends its FSP licence to services delivered through the brand.

Best answer: A

What this tests: Maintaining the FSP Licence

Explanation: An FSP licence belongs to the legal entity named on the licence. A trading name may appear on a portal and in correspondence, but it does not become a separately licensed provider. Here, the disclosure identifies Ubuntu Securities, the licence copy carries the same legal name and FSP number, and the representative register records Naledi’s appointment under that FSP for the relevant product scope. Naledi therefore acts for the licensed entity rather than under a personal FSP licence. Ownership of the trademark is also distinct from authority to provide financial services. The linked records allow a remote client to connect the digital brand, legal provider, representative and licence evidence.

• Treating KopanoTrade as the licensee mistakes a trading name for the legal entity named on the licence.
• A representative-register entry records Naledi’s appointment; it does not give her a personal FSP licence.
• Trademark ownership does not transfer the FSP licence or make the holding company the financial-services provider.

The provider disclosure, licence and representative register consistently identify Ubuntu Securities as the licensed FSP for which Naledi acts.

Question 8

Topic: Codes of Conduct

A representative of a licensed FSP recommended an investment product to a client.

File evidence:

• The representative emailed the client a draft disclosure document stating commission of 2% and omitting the FSP’s ownership interest in the product supplier.
• The client relied on that document when indicating that she wished to accept the recommendation.
• The FSP’s archive contains a final document stating commission of 3% and disclosing the ownership interest.
• Email records show that only the draft was sent, with no evidence that the client accessed the final document.
• The application has not yet been signed or submitted.

Which response is most consistent with the General Code disclosure and client protection duties?

• A. Record the draft as the version disclosed; complete the signature under the existing advice, then explain the final and assess whether the client wishes to continue.
• B. Record the draft as the version disclosed; explain the final before signature, reassess the client’s informed decision, and retain evidence of the correction.
• C. Record the final as the version disclosed; resend it before signature, confirm receipt, and continue with the existing recommendation and application.
• D. Record the draft as the version disclosed; send the final before signature, obtain acknowledgement, and continue without reassessing the omitted material information.

Best answer: B

What this tests: Codes of Conduct

Explanation: Disclosure is assessed according to what was actually communicated to the client, not merely what the FSP retained in its archive. The email evidence shows that the client received the draft containing an incorrect commission figure and no ownership-interest disclosure. The archived final document proves internal possession, but not timely delivery.

Because the application has not been signed or submitted, the representative can correct the disclosure before the transaction proceeds. The representative should explain the changes and reconsider whether the corrected remuneration and conflict information affects the client’s informed decision. Both document versions, the delivery evidence, the explanation and the client’s resulting decision should be recorded. A receipt acknowledgement alone does not address the client’s earlier reliance on materially incomplete information.

• Treating the archived final document as the version disclosed confuses internal recordkeeping with evidence of client delivery.
• Obtaining acknowledgement without reassessing the material omissions fails to address the client’s reliance on incomplete information.
• Correcting the disclosure after signature is too late when the omission is known before the transaction is concluded.

The evidence establishes that the draft was communicated, so the material omissions must be corrected and their effect reconsidered before the client proceeds.

Question 9

Topic: Operating as a Representative

Mahlangu Financial Services is authorised as a Category I FSP to provide advice and intermediary services on three investment policies in its approved comparison sheet. Naledi’s job title is Client Administration Assistant.

File extract:

Representative appointment record
Naledi Mokoena: Not appointed
Form 5 representative register: Not listed

12 May - Client: I want to preserve my capital for five years and will not need withdrawals. Which policy suits this?
14 May - Naledi: SecureFive is the right fit because it guarantees the contribution at five-year maturity. I have attached its application.

No appointed representative reviewed Naledi’s reply before it was sent. Which conclusion correctly classifies her conduct on 14 May under FAIS?

• A. It is clerical assistance, and Naledi could send the proposal because she used the FSP’s approved comparison sheet.
• B. It is advice, and Naledi lacked representative authority to send the client-specific policy proposal.
• C. It is intermediary service, and Naledi would require representative authority only when processing the client’s signed application.
• D. It is factual information, and Naledi could identify the matching policy provided she did not complete the application.

Best answer: B

What this tests: Operating as a Representative

Explanation: A person’s actual conduct, rather than a job title, determines whether the activity is clerical or a financial service. Sending a brochure or form selected by a client or authorised representative can remain administrative. Naledi went further: she interpreted the client’s capital-preservation objective, selected one policy and presented it as the appropriate fit. That client-specific proposal constitutes advice even though she used an approved comparison sheet and the client had not signed an application.

The FSP’s licence authorises the organisation within its approved scope; it does not independently authorise every employee to provide advice. A representative appointment confers the relevant individual authority, while the representative register records that appointment. Naledi was neither appointed nor listed and therefore lacked authority to provide this advice.

• Use of an approved comparison sheet does not make a client-specific product selection purely clerical.
• A tailored statement that one policy suits the client’s needs goes beyond neutral factual information.
• Processing a signed application may involve intermediary service, but the earlier product proposal already constitutes advice.

Naledi applied the client’s stated needs to select and propose a specific policy, which is advice requiring representative authority.

Question 10

Topic: Maintaining the FSP Licence

For purposes of this question, assume that a valid declaration under section 34 of the FAIS Act concerning licence-sharing arrangements excludes a bona fide representative arrangement when the representative is properly appointed and recorded, acts within the FSP’s authorised scope and mandate, and remains subject to the FSP’s direction and responsibility.

Thandi:

• Is appointed and recorded as a representative of Ubuntu Financial Services.
• Advises only on products covered by Ubuntu’s licence and her mandate.
• Acts in Ubuntu’s name under its monitoring and control.
• Sources some clients herself and receives permitted commission.
• Does not hold a separate FSP licence.

Which conclusion correctly applies the assumed declaration’s exception?

• A. The exception applies because Thandi operates within a bona fide representative arrangement.
• B. The exception does not apply because sourcing clients makes Thandi an independent licence user.
• C. The exception does not apply because commission makes Thandi’s activity a separate financial-services business.
• D. The exception applies only after Thandi obtains a separate FSP licence for the services.

Best answer: A

What this tests: Maintaining the FSP Licence

Explanation: The substance of the arrangement determines whether the declared undesirable practice exists. Thandi is formally appointed and recorded, acts within Ubuntu’s licence and her mandate, uses Ubuntu’s name, and remains under Ubuntu’s direction and responsibility. Those facts establish the bona fide representative arrangement described by the exception.

Finding clients or receiving permitted commission does not by itself convert a representative into an independent FSP. Requiring Thandi to hold her own FSP licence would also contradict the purpose of lawful representative appointments. If she independently operated outside Ubuntu’s authority, branding or control, the exception could cease to apply. Separately, the sign-on-bonus restriction is contained in General Code section 3A(1A); it should not be described as this formal undesirable-practice declaration.

• Sourcing clients does not displace the appointment, mandate or FSP control established by the facts.
• Permitted commission does not independently determine whether the arrangement is licence sharing.
• A representative acts through the appointing FSP’s authority and need not hold a separate FSP licence.

Every stated condition for the representative-arrangement exception is satisfied.

Question 11

Topic: FIC Act Compliance

Mahlangu Engineering is an existing client of an accountable institution. Kabelo’s identity has been verified, and a company resolution authorises him to obtain valuations and instruct switches between funds in the company’s investment portfolio. The resolution does not authorise withdrawals or redemptions.

Kabelo instructs the institution to redeem the entire portfolio and pay the proceeds into the company’s verified bank account. Which response correctly distinguishes identity verification from authority verification?

• A. The institution should process the redemption because authority to instruct switches within the portfolio also extends to redeeming units from that same portfolio.
• B. The institution should pause the redemption and obtain a valid amended mandate or company resolution expressly authorising Kabelo to give redemption instructions.
• C. The institution should process the redemption because Kabelo’s verified identity and the verified destination account together establish sufficient authority for the instruction.
• D. The institution should refresh Kabelo’s identity and the company’s beneficial ownership information, then process the redemption under the existing limited mandate.

Best answer: B

What this tests: FIC Act Compliance

Explanation: Customer due diligence distinguishes between establishing who an acting person is and establishing what that person may do for the client. Verifying Kabelo’s identity confirms that he is the person presenting the instruction. It does not expand the activities authorised by the company resolution.

The existing resolution covers valuations and switches, while a full redemption is a different activity outside that authority. Payment into the company’s verified bank account may reduce destination risk, but it does not cure the authority gap. Before acting, the institution must obtain and appropriately verify evidence from the company, such as an amended mandate or resolution that expressly authorises Kabelo to give redemption instructions.

• A verified identity and destination account do not prove authority to redeem the investment.
• Authority to switch funds within a portfolio does not imply authority to withdraw the portfolio’s value.
• Refreshed identity or beneficial ownership information would not expand the existing mandate’s scope.

Kabelo’s verified identity does not extend his documented authority beyond valuations and fund switches.

Question 12

Topic: Codes of Conduct

Karoo Crest Financial Services is licensed for the relevant product subcategory, and Naledi is recorded as its appointed representative. A review of Lerato’s client file shows the following evidence.

Comparison sheet given to Lerato:

This document provides factual product information only. No advice is given, and the client remains responsible for selecting a product.

File notes:

• Lerato wanted capital protection over five years and did not require early access.
• Naledi compared a five-year capital-guaranteed product with a flexible market-linked product.
• Naledi emailed: “Based on the needs we discussed, the capital-guaranteed product is the appropriate choice, and I recommend that you apply for it.”
• After Lerato agreed, Naledi completed and submitted the application.
• The required provider and representative disclosure document had been supplied before the recommendation.

Which conclusion most accurately reflects how the actual service and the disclaimer should be treated?

• A. Classify the interaction as advice followed by intermediary service, but treat the disclaimer as excluding suitability and advice-record duties for the transaction.
• B. Classify the interaction as factual product information followed by intermediary service, and assess compliance under the disclosure and implementation duties only.
• C. Classify the interaction as advice followed by intermediary service, and assess the recommendation, disclosures, suitability process, and advice record under the applicable duties.
• D. Classify the interaction as intermediary service only, and treat the email as product guidance incidental to implementing the client’s independently selected transaction.

Best answer: C

What this tests: Codes of Conduct

Explanation: A disclaimer may describe the service that an FSP intends to provide, but the service must be classified according to what the representative actually did. Naledi used Lerato’s personal needs to compare products and recommended a particular product as appropriate. That conduct constitutes advice, even though the comparison sheet described its contents as factual information and Lerato made the final decision.

Completing and submitting the accepted application is also an intermediary service. The interaction can therefore include both advice and intermediary service. The FSP must assess compliance with the duties applicable to the recommendation, including adequate disclosure, suitability, material product information, and the required advice record. Providing the standard disclosure document does not remove these responsibilities. A disclaimer could accurately describe a genuinely neutral comparison, but it cannot override personalised conduct or convert advice into factual information.

• Factual information would require a neutral presentation rather than applying Lerato’s needs to identify an appropriate product.
• Application submission is intermediary service, but it does not erase the advice given before implementation.
• A disclaimer does not exclude suitability or recordkeeping duties once the representative has actually provided advice.

The needs-based recommendation was advice and the later application submission was intermediary service, neither of which was reclassified by the disclaimer.

Question 13

Topic: Operating as a Representative

On Wednesday, 7 January 2026, an FSP makes its final decision to debar a representative after completing a fair process. The prescribed debarment particulars are immediately available, while the complete reasons and supporting record will be ready on 16 January.

Assume calendar days are counted, the decision date is excluded, 8 January is day 1, and no extension applies. Under Notice 17 of 2018, which submission schedule correctly distinguishes Part I from Part II?

• A. File Part I by 12 January to notify the Authority with the prescribed debarment particulars; file Part II by 27 January because its period begins after Part I.
• B. File Part I by 12 January to notify the Authority with the prescribed debarment particulars; file Part II by 22 January with the reasons and supporting material.
• C. File Part I by 12 January with the reasons and supporting material; file Part II by 22 January to notify the Authority with the prescribed debarment particulars.
• D. File Part I by 22 January to notify the Authority with the prescribed debarment particulars; file Part II by 22 January with the reasons and supporting material.

Best answer: B

What this tests: Operating as a Representative

Explanation: Notice 17 of 2018 separates the debarment notification into two submissions. Part I provides prompt notification and the prescribed debarment particulars within five days. Part II provides the reasons and supporting material within 15 days. Both periods run from the debarment decision, not from submission or acknowledgement of Part I.

With 8 January treated as day 1, day 5 is 12 January and day 15 is 22 January. The supporting record becoming available on 16 January permits timely Part II submission but does not extend the Part I deadline. These submissions support regulatory oversight after the decision; they do not replace the preceding fair process or the FSP’s immediate post-debarment responsibilities.

• Reversing the submissions incorrectly assigns the substantiating record to Part I and the initial notification to Part II.
• Starting the 15-day period after Part I incorrectly changes the trigger from the debarment decision.
• Applying the 15-day deadline to both parts overlooks Part I’s separate five-day requirement.

Part I is due within five days and Part II within 15 days of the debarment decision.

Question 14

Topic: Maintaining the FSP Licence

Nandi is authorised to render the relevant intermediary service, subject to a written supervision arrangement. At 11:30, an existing client sends a unit trust switch instruction to Nandi’s personal WhatsApp account. The client wants the switch submitted before the provider’s 14:00 cut-off.

Relevant facts:

• Transaction instructions may be accepted through the secure client portal or recorded business line.
• Nandi must obtain supervisor pre-authorisation before submitting a switch.
• Communications received outside approved channels must be preserved and reported under the incident procedure.
• At 12:00, the client is reachable, the switch has not been submitted, and sufficient processing time remains.

Which response should Nandi take?

• A. Ask the client to upload the WhatsApp screenshot through the secure portal marked 11:30, obtain supervisor pre-authorisation, preserve both records, and process it as the original instruction.
• B. Call the client on the recorded line and obtain a fresh instruction, obtain supervisor pre-authorisation, preserve the WhatsApp message, and defer processing until the incident review is completed.
• C. Call the client on the recorded line to authenticate identity, treat the WhatsApp message as the operative instruction, obtain supervisor pre-authorisation, preserve the message, and log the incident.
• D. Call the client on the recorded line, authenticate and obtain a fresh instruction at the actual time, obtain supervisor pre-authorisation, preserve the WhatsApp message, and log the incident.

Best answer: D

What this tests: Maintaining the FSP Licence

Explanation: Using an unapproved communication channel creates supervision and recordkeeping concerns, but it does not necessarily prevent the client from giving a new instruction through an approved channel. Because the transaction has not been submitted and time remains, Nandi should contact the client through the recorded business line, complete authentication, and obtain a fresh instruction recorded at its true time. The required supervisor pre-authorisation must then occur before submission.

The original WhatsApp communication remains part of the factual trail. It must be preserved and handled through the firm’s incident procedure. Supervisor approval, a screenshot, or a later portal upload cannot retrospectively convert the earlier message into an instruction received through approved controls. Conversely, the control breach does not require the compliant new instruction to be delayed until the incident investigation is closed when the procedure imposes no such restriction.

• Authenticating the client later does not make the earlier WhatsApp message the operative approved-channel instruction.
• Uploading and marking a screenshot with the earlier time attempts to reconstruct the trail rather than record a fresh instruction at its true time.
• Waiting for the incident review would unnecessarily delay a fresh, properly authenticated instruction that can be handled under the supervision arrangement.

This obtains a current instruction through approved controls while preserving and reporting the original communication and complying with supervision.

Question 15

Topic: Operating as a Representative

Lerato was appointed as a representative of Ubuntu Wealth (Pty) Ltd until 31 January 2026.

• On 5 December 2025, while still appointed, she allegedly altered a client’s risk-profile record.
• Ubuntu Wealth had no knowledge or suspicion of the conduct before her departure.
• A forensic review first revealed credible supporting evidence on 10 March 2026.
• The FSP is considering action on 2 April 2026.

Which regulatory response is supported by the timing of the occurrence and discovery?

• A. Refer the matter and supporting evidence to the Authority, since the potential grounds first became known after the representative’s appointment had ended.
• B. Commence its own section 14 process by 10 September 2026, since the six-month period runs from the date the grounds were discovered.
• C. Commence its own section 14 process by 31 July 2026, since the conduct occurred during appointment and the six-month period remains open.
• D. Refer the matter and supporting evidence to the FAIS Ombud, since post-departure discovery places the debarment decision outside the former FSP.

Best answer: A

What this tests: Operating as a Representative

Explanation: For an FSP to debar a former representative under section 14, the reasons must have occurred and become known to that FSP while the person was its representative. The six-month period after cessation governs when an otherwise available former-representative process must be commenced; it does not expand the FSP’s jurisdiction.

Lerato’s alleged conduct occurred during her appointment, but Ubuntu Wealth first learned of it on 10 March 2026, after her appointment ended. The FSP should therefore refer the matter and evidence to the Authority for consideration. The six-month period does not run from discovery and cannot cure the fact that the potential grounds were unknown during the appointment. The FAIS Ombud deals with qualifying financial-service complaints and redress, not regulatory debarment referrals.

• Commencement by 31 July applies only if the grounds also became known while the representative was appointed.
• The six-month commencement period runs from cessation, not from later discovery of the grounds.
• The FAIS Ombud is not the body responsible for considering a regulatory debarment referral from the former FSP.

The FSP’s debarment route is unavailable because the potential grounds became known only after Lerato ceased to be its representative.

Question 16

Topic: Codes of Conduct

A representative is reviewing a client’s query about the first quarterly statement.

Agreed fee disclosure:

• Initial advice fee: 1.25% of the R240,000 gross contribution.
• Ongoing adviser fee: 0.60% per year, charged monthly using that month’s applicable portfolio value.
• Platform administration fee: R115 per month, disclosed separately from the adviser fees.
• All quoted amounts and rates include VAT.

The applicable portfolio values were R238,000 for January, R242,000 for February and R246,000 for March.

Which reconciliation is supported by the agreed fee disclosure?

• A. The supported total is R3,708; the statement is R1,107 too high because the March ongoing fee should be R123.
• B. The supported total is R3,363; the statement is R1,452 too high because the platform charge should form part of the adviser fee.
• C. The supported total is R3,705; the statement is R1,110 too high because the initial contribution should determine one quarterly fee.
• D. The supported total is R3,714; the statement is R1,101 too high because the March value should determine one quarterly fee.

Best answer: A

What this tests: Codes of Conduct

Explanation: The ongoing fee is an annual percentage charged monthly, so the monthly rate is 0.60% / 12. Applying it to each applicable portfolio value gives R119 for January, R121 for February and R123 for March. The initial advice fee is 1.25% of R240,000, which equals R3,000. The separately disclosed platform fees total R345.

The supported charges are therefore R3,000 + R119 + R121 + R123 + R345 = R3,708. The statement reports R4,815 because the March ongoing fee was entered as R1,230 instead of R123, an overstatement of R1,107. VAT must not be added again because all disclosed rates and amounts already include it.

• Using the March value for one quarterly fee conflicts with the agreed monthly calculation basis.
• Excluding the platform fees ignores that they were separately disclosed and charged at R115 per month.
• Using the initial contribution for the ongoing fee substitutes the wrong valuation basis for the supplied monthly portfolio values.

Dividing the annual rate by 12 produces monthly fees of R119, R121 and R123, giving total charges of R3,708.

Question 17

Topic: The FAIS Regulatory Framework

A representative prepares the quarterly monitoring summary for an FSP. The compliance officer reviews the supporting files before finalising the monitoring report. The key individual is the operational owner for advice and disclosure controls.

Submitted summary:

“20 files sampled: 18 compliant and 2 administrative follow-ups. Overall result: no conduct exceptions.”

Underlying file evidence:

• File F07: A supplier relationship created a potential conflict requiring disclosure and was known to the representative before the recommendation. Despite a reasonable opportunity to disclose it before acceptance, the representative confirms that no oral or written disclosure was made until two days after the client accepted the recommendation.
• File F12: This was replacement advice. The reasonably determinable replacement costs and termination consequences were neither analysed nor disclosed before the client accepted the recommendation and submitted the application. The relevant fields remained blank, no equivalent contemporaneous evidence exists, and the representative confirms the omission.

The monitoring scope covers conflict-disclosure timing and completed replacement analysis. The representative confirms that the two cases were omitted because the overall completion rate was 90%.

How should the compliance officer deal with this evidence?

• A. Record the two file exceptions as resolved after retrospective correction, preserve the revised files, and report remaining open items to the key individual.
• B. Record both conduct exceptions and the inaccurate summary, preserve the source evidence, and refer remediation to the key individual as operational owner.
• C. Record the inaccurate summary as a compilation-control exception, preserve the source evidence, and ask the key individual to remediate the reporting process rather than the sampled conduct.
• D. Record a 90% compliance result, preserve the two exceptions in workpapers, and ask the key individual to monitor whether the pattern recurs.

Best answer: B

What this tests: The FAIS Regulatory Framework

Explanation: Compliance monitoring must reflect relevant evidence in the underlying files, not merely the representative’s aggregate characterisation. Both files fall within the stated monitoring scope: one shows late conflict disclosure and the other shows an incomplete replacement analysis when the application was submitted. A 90% completion rate does not erase those exceptions or justify describing the result as clean.

The compliance officer should document the file-level exceptions and the omission from the submitted summary, while preserving the supporting evidence. The representative may correct the schedule and explain the discrepancy, but a later correction does not change what occurred during the financial service. The key individual, as operational owner, remains responsible for ensuring appropriate remediation. Compliance monitoring identifies and reports weaknesses; it does not transfer management accountability to the compliance officer.

• An aggregate compliance rate conceals the specific exceptions, and recurrence is not required before they are reported.
• Treating the matter solely as a compilation problem ignores the underlying advice and disclosure failures.
• Retrospective file corrections cannot erase historical exceptions or justify excluding them from the monitoring report.

The underlying evidence establishes reportable exceptions, while the key individual retains responsibility for operational remediation.

Question 18

Topic: FIC Act Compliance

Kakhulu Wealth, an accountable institution, completed customer due diligence (CDD) for Umoya Logistics (Pty) Ltd on 3 February 2025. On 10 November 2025, before providing another financial service, its representative receives a new share register and shareholder agreement effective from 1 November 2025.

Current structure:

• Naledi Mokoena owns 12% of Umoya directly and 55% of Ubuntu Holdings (Pty) Ltd.
• Ubuntu owns 40% of Umoya.
• Kabelo Dlamini owns the remaining 45% of Ubuntu.
• Six unrelated individuals each own 8% of Umoya and have no joint control arrangements.
• Kabelo may appoint or remove three of Umoya’s five directors.
• The earlier CDD records describe Umoya’s previous shareholders and controlling persons.

For the ownership calculation, multiply percentages through a chain and add the person’s direct and indirect interests. Do not round.

Which result and CDD response should the representative apply?

• A. Calculate Naledi’s effective interest as 34%; note both current relationships but defer refreshed CDD until the next periodic review.
• B. Calculate Naledi’s effective interest as 34%; update CDD for her ownership and Kabelo’s contractual control, retaining prior records as historical evidence.
• C. Calculate Naledi’s effective interest as 52%; update CDD for her ownership and Kabelo’s contractual control, retaining prior records as historical evidence.
• D. Calculate Naledi’s effective interest as 22%; update CDD for her ownership and Kabelo’s contractual control, retaining prior records as historical evidence.

Best answer: B

What this tests: FIC Act Compliance

Explanation: Naledi’s indirect interest in Umoya is 55% of Ubuntu’s 40% holding:

Adding her 12% direct holding gives an effective interest of 34%. This percentage informs the ownership assessment but does not alone determine every form of control. Kabelo’s right to appoint or remove three of five directors is separate evidence of control through other means, despite his smaller indirect economic interest.

Ongoing CDD requires the FSP to keep information about a legal person’s ownership and control structure up to date. The known post-onboarding change therefore requires refreshed identification and reasonable verification of the relevant natural persons. Earlier verified records remain valid historical evidence, but they no longer describe Umoya’s current ownership and control.

• The 22% result includes only Naledi’s indirect holding and omits her 12% direct interest.
• The 52% result attributes Ubuntu’s entire 40% holding to Naledi instead of applying her 55% ownership proportion.
• Waiting for the periodic review would leave known, material ownership and control changes outside the current CDD assessment.

Naledi holds 12% directly plus 22% indirectly, while Kabelo’s director appointment rights require a separate current control assessment.

Question 19

Topic: The FAIS Regulatory Framework

A representative receives the following message and quotation extract for a 10-year investment policy.

Client message:

“I will pay R2,000 every month, the insurer guarantees R410,000 at maturity, and the R150,000 amount is another projection.”

Quotation extract:

Which response most accurately corrects the client’s interpretation?

• A. Treat R2,000 as the level contribution throughout the term; treat R410,000 as a non-guaranteed illustration, with maturity based on actual account value; treat R150,000 as the contractual death benefit while the policy remains in force.
• B. Treat R2,000 as the initial contribution before annual increases; treat R410,000 as a non-guaranteed illustration, with maturity based on actual account value; treat R150,000 as the contractual death benefit while the policy remains in force.
• C. Treat R2,000 as the initial contribution before annual increases; treat R410,000 as a non-guaranteed illustration, with maturity based on actual account value; treat R150,000 as the minimum payable at maturity or earlier death.
• D. Treat R2,000 as the initial contribution before annual increases; treat R410,000 as the contractual maturity entitlement if all contributions are paid; treat R150,000 as the contractual death benefit while the policy remains in force.

Best answer: B

What this tests: The FAIS Regulatory Framework

Explanation: The quoted R2,000 is only the initial monthly contribution because the schedule provides for a 5% annual increase. The R410,000 maturity figure is calculated using an assumed net growth rate. It illustrates a possible outcome but does not promise that return or amount. The contractual maturity benefit is instead the investment account value after charges at maturity, and the quotation expressly provides no guaranteed minimum. The R150,000 nominal amount is a separate contractual death benefit applicable while the policy remains in force. It is not a projected amount or a maturity-value floor. A representative must describe each figure according to the product terms and must not present an illustration as a guaranteed benefit.

• Describing the contribution as level ignores the scheduled 5% annual increases.
• Treating R410,000 as contractual confuses an assumed-growth illustration with the actual maturity entitlement.
• Applying R150,000 at maturity extends a death benefit to an event not covered by that term.

The quotation distinguishes the escalating contribution, illustrated maturity value, actual contractual maturity benefit and separate death benefit.

Question 20

Topic: Operating as a Representative

A representative intends to apply to the Financial Services Tribunal for reconsideration of a debarment decision.

• Debarment notification received: 1 July 2026
• Reasons requested: 7 July 2026
• Requested reasons received: 18 August 2026
• Receipt dates are undisputed.
• No extension was sought or granted.
• Count calendar days, exclude the trigger date, and make no weekend or public-holiday adjustment.

Under FSR Act section 230, what is the latest date for submitting the reconsideration application?

• A. 17 September 2026
• B. 6 August 2026
• C. 31 July 2026
• D. 30 August 2026

Best answer: A

What this tests: Operating as a Representative

Explanation: Because the representative requested reasons and received them before applying, the 30-day route under section 230 applies. The trigger is receipt of the requested reasons, not notification of the debarment or the date on which reasons were requested.

Excluding 18 August, day 1 is 19 August. The period from 19 to 31 August accounts for 13 days, leaving 17 days in September. Day 30 is therefore 17 September 2026.

The separate 60-day period after notification applies where reasons were not requested. It does not govern these facts. An extension may be allowed on good cause, but none was sought or granted here. Filing after 17 September would therefore fall outside the stated period unless an extension were subsequently permitted.

• 30 August applies the 60-day notification route, which is displaced because reasons were requested.
• 6 August incorrectly starts the 30-day period when the reasons were requested rather than received.
• 31 July incorrectly calculates 30 days from notification of the debarment decision.

The applicable period is 30 days after receipt of the requested reasons on 18 August 2026.

Question 21

Topic: Codes of Conduct

Thandi, age 58, asks an authorised representative whether she should replace an existing investment policy.

Client circumstances:

• She needs at least R400,000 in 30 months to settle a home-loan balloon payment.
• She does not expect to need earlier access and cannot accept a material risk of a shortfall.

Products considered:

• Existing paid-up policy: current value of R344,000, net surrender value of R320,000, annual charge of 1.6%, and guaranteed minimum maturity value of R410,000 in 30 months.
• Proposed unit trust: R320,000 invested after surrender, annual charge of 0.7%, daily access, and no capital or maturity guarantee.

The representative has completed the fact-find and has reliable information about both products. Which response best satisfies the suitability and advice-record requirements?

• A. Recommend retaining the policy, and give Thandi a servicing note summarising the surrender quotation, maturity date, continued ownership, and absence of a transaction.
• B. Recommend replacing the policy, and give Thandi a record summarising the products considered, lower charge, liquidity benefit, and reasons for the switch.
• C. Present both products without a recommendation, and give Thandi a selection record summarising their features, her decision, implementation status, and stated preference.
• D. Recommend retaining the policy, and give Thandi a record summarising the information used, products considered, recommendation, and suitability reasons.

Best answer: D

What this tests: Codes of Conduct

Explanation: Suitability is assessed against the client’s disclosed needs, not a single attractive product feature. Thandi needs a minimum amount at a fixed date and does not require daily access. The existing policy’s guaranteed maturity value exceeds her target. Replacing it would crystallise the surrender reduction and expose the remaining capital to market risk. The lower unit-trust charge does not remove those material disadvantages.

A recommendation to retain an existing product is still advice. The record should summarise the information on which the advice was based, the products considered, the recommendation made, and why it is likely to satisfy the client’s needs and objectives. The absence of a replacement transaction does not reduce the interaction to an ordinary servicing contact.

• Replacing the policy gives excessive weight to fees and liquidity while sacrificing the guarantee needed for the fixed objective.
• A servicing note records policy administration but does not capture the required basis and reasoning for the advice.
• Neutral product information and a client selection record do not replace a suitability recommendation when advice was requested and sufficient information was available.

Retaining the policy supports Thandi’s fixed capital requirement, and the resulting advice must be properly recorded despite no new sale.

Question 22

Topic: Operating as a Representative

Naledi receives the following instruction from her key individual:

Please advise a client on the Ubuntu Life SecurePlan next Monday. I will review your recommendation before the client acts on it.

Competence file:

• Appointment: Category I representative working under supervision
• Authority: The FSP’s licence and Naledi’s representative appointment include the proposed product and advice service
• Regulatory examination: RE5 passed
• Class-of-business training: Completed
• Relevant qualification: Incomplete
• Required experience: Incomplete
• Product-specific training for SecurePlan: Not started, with no recognised prior product competence
• Supervision agreement: Valid and covers advice on SecurePlan and the outstanding qualification and experience requirements

When may Naledi provide the proposed advice?

• A. She may provide it now under pre-approval and complete the product-specific training within the supervision schedule.
• B. She may provide it only after completing the product-specific training, qualification and experience, despite the supervision agreement.
• C. She may provide it after completing the product-specific training, while completing her qualification and experience under supervision.
• D. She may provide it after completing the qualification, while completing the product-specific training and experience under supervision.

Best answer: C

What this tests: Operating as a Representative

Explanation: Competence comprises separate requirements, including regulatory examinations, qualifications, experience, class-of-business training and product-specific training. Passing RE5 establishes compliance with the applicable regulatory examination requirement only.

A valid supervision arrangement may permit a representative to render financial services while completing specified qualification and experience requirements. It does not remove the requirement to complete product-specific training before providing a financial service concerning that particular product. Naledi therefore cannot advise on SecurePlan immediately, even if her supervisor reviews the recommendation. Once she completes the SecurePlan training, she may advise within the licensed and documented supervision scope while continuing to complete her qualification and experience requirements.

• Supervisor pre-approval does not overcome missing product-specific training.
• Completing the qualification first would not cure the separate outstanding product-training requirement.
• Requiring every component to be completed first disregards the valid supervision arrangement covering qualification and experience.

Product-specific training must be completed before advising on SecurePlan, while the valid supervision arrangement covers the outstanding qualification and experience.

Question 23

Topic: The Key Individual’s Role

A Category I FSP is licensed for a new product’s subcategory, and the product launch has received commercial approval. Before launch, the key individual establishes that:

• Naledi is appointed to provide advice in the subcategory and has completed the required product-specific training.
• Sipho has the same appointment scope, but his required product-specific training is incomplete.
• Ayesha has completed the training, but her appointment and representative-register entry cover a different product subcategory.
• All three satisfy every other applicable competence, integrity and supervision condition; the listed appointment and training issues are the only outstanding restrictions.
• Existing launch controls and file reviews can be applied to participating representatives.

Which participation decision correctly reflects the effect of key-individual oversight?

• A. Hold all three representatives back from providing advice until the training and appointment checks are complete for the entire launch team.
• B. Permit only Naledi to provide advice at launch; hold Sipho and Ayesha back until their respective readiness issues are resolved.
• C. Permit Naledi and Sipho to provide advice at launch with enhanced review; hold Ayesha back until her appointment scope is confirmed.
• D. Permit Naledi and Ayesha to provide advice at launch with enhanced review; hold Sipho back until his required training is completed.

Best answer: B

What this tests: The Key Individual’s Role

Explanation: Commercial launch approval, the FSP’s licence and each representative’s authority and competence are separate requirements. Key-individual oversight must ensure that representatives participate only within their appointment scope and after satisfying applicable training requirements. Additional file review can manage conduct risk, but it does not complete outstanding training or expand a representative’s appointment.

Naledi may therefore provide advice because the FSP is licensed, her appointment covers the product subcategory and her required training is complete. Sipho’s incomplete training prevents his participation on the stated facts. Ayesha’s training does not overcome the unresolved mismatch in her appointment scope. Readiness is assessed individually, so the unresolved position of two representatives does not require delaying a properly trained and authorised representative.

• Enhanced review does not replace Sipho’s outstanding product-specific training.
• Enhanced review does not extend Ayesha’s appointment into another product subcategory.
• Team-wide readiness is unnecessary where a participating representative individually satisfies the applicable requirements.

Naledi meets both the appointment and training requirements, while each other representative has an unresolved individual limitation.

Question 24

Topic: Codes of Conduct

A representative is preparing a cost disclosure for an investment proposal. The client has not yet accepted the proposal.

• Khula Advice will receive a once-off advice fee of R1,200 on acceptance.
• Khula Advice will receive ongoing servicing remuneration of 0.50% p.a., deducted monthly from the month-end investment value.
• Imbewu Investments will deduct a product charge of 1.00% p.a. monthly using the same valuation basis.
• The product charge includes a 0.25% administration component shown separately in the supplier’s breakdown.

The disclosure will retain the payment timing and valuation basis stated above. Which summary correctly allocates the charges and avoids double counting?

• A. Before acceptance, disclose R1,200 once to Khula Advice and 1.50% p.a. to Imbewu Investments as the combined recurring product charge calculated on the common valuation basis.
• B. Before acceptance, disclose R1,200 once to Khula Advice, 0.50% p.a. to Khula Advice, and 1.00% p.a. to Imbewu Investments, with recurring charges totalling 1.50% p.a.
• C. Before acceptance, disclose R1,200 once to Khula Advice and 1.00% p.a. to Imbewu Investments, then disclose the 0.50% p.a. servicing remuneration after its first deduction.
• D. Before acceptance, disclose R1,200 once to Khula Advice, 0.50% p.a. to Khula Advice, and 1.25% p.a. to Imbewu Investments, with recurring charges totalling 1.75% p.a.

Best answer: B

What this tests: Codes of Conduct

Explanation: Before the client enters the transaction, the representative must disclose relevant charges and remuneration, including the amount or calculation basis and the recipient. A future rand amount need not be known when a clear percentage basis and deduction frequency can be disclosed.

The two recurring percentages can be reconciled because both use the same investment-value basis: 0.50% p.a. plus 1.00% p.a. equals 1.50% p.a. The 0.25% administration component is already included in the supplier’s 1.00% product charge, so adding it again would double count that cost. The disclosure must also distinguish remuneration received by Khula Advice from the charge deducted by Imbewu Investments rather than presenting them as one supplier charge.

• A recurring total of 1.75% incorrectly adds the included administration component a second time.
• Describing the full 1.50% as a supplier charge misidentifies the recipient of the 0.50% servicing remuneration.
• Delaying the servicing disclosure is inappropriate because its percentage basis is already known before acceptance.

This identifies each recipient, discloses the known amount or calculation basis before acceptance, and avoids counting the included administration component twice.

Question 25

Topic: The FAIS Regulatory Framework

A representative intends to send a client communication. The file contains the following evidence.

Client file:

• Product: Living annuity
• Client request: Advice on increasing income while preserving capital

Proposed communication (LA-204 v2):

“Based on your income needs, I recommend increasing your annual drawdown from 5% to 8%.”

Compliance review register:

Review ID: CR-881
Document reviewed: UT-117 v3
Product: Collective investment scheme account
Service: Factual annual fee notification
Result: Acceptable after confirming the current fee

The FSP’s procedure requires pre-issue compliance input for communications containing recommendations, and the reviewed document and service scope must match the communication issued.

What should the representative do before sending LA-204 v2?

• A. Verify the client facts and drawdown figures, obtain product- and advice-specific compliance input covering the final communication, and send only the version covered by that input.
• B. Apply review CR-881 to LA-204 v2, then verify the drawdown figures and obtain key-individual approval before sending.
• C. Rely on CR-881 as approval of the FSP’s client-communication process, then verify the annuity details and document the review limitation before sending.
• D. Reclassify LA-204 v2 as factual information after removing “recommend”, then verify the figures and retain CR-881 before sending.

Best answer: A

What this tests: The FAIS Regulatory Framework

Explanation: Compliance input supports lawful conduct only within the scope of the material actually considered. Review CR-881 applies to a factual fee notification for a collective investment scheme account, not to the living annuity drawdown recommendation in LA-204 v2. The document identifiers, products and services do not match.

The proposed wording makes a client-specific recommendation and therefore constitutes advice rather than factual information. Under the FSP’s stated procedure, the correct version must receive compliance input before issue. The representative must verify the client’s circumstances, product facts and drawdown figures, implement relevant amendments, and ensure that compliance input covers the final version issued. Any later material change must receive the matching input required by the procedure before issue. Compliance review does not transfer responsibility for the accuracy or execution of the communication.

• Key-individual approval would not make a compliance record for another document and service applicable to the drawdown recommendation.
• Removing the word “recommend” would not change the client-specific substance of the communication from advice to factual information.
• Recording the review limitation would preserve evidence but would not satisfy the required review of the actual advice communication.

The recorded review concerns a different document, product and service, so the representative must obtain relevant input and remain responsible for the final communication.

Questions 26-50

Question 26

Topic: The FAIS Ombud

A client instructed an FSP to switch her investment from an equity fund to a money-market fund. The FSP confirmed that the valid instruction would be completed within two business days, but it completed the switch after nine business days.

The client notes that the investment had already performed poorly, but claims only the additional decline between the promised completion date and the actual switch date. Assume all other jurisdictional and procedural requirements are met.

Which conclusion correctly applies the FAIS Ombud’s investment-performance boundary?

• A. The Ombud may consider the delay-period loss because it arises from alleged deficient execution, not solely from investment performance.
• B. The Ombud may consider the investment’s entire decline because the processing delay converts the overall return into a service-loss claim.
• C. The Ombud may consider the complaint only if the FSP first concedes that its delayed execution breached the service undertaking.
• D. The Ombud must exclude the complaint because calculating the delay-period loss requires comparing investment values on different dates.

Best answer: A

What this tests: The FAIS Ombud

Explanation: A loss caused solely by ordinary investment performance is not automatically a compensable FAIS complaint. The position differs when the facts indicate a deficient financial service, such as failing to execute a valid switch instruction within an agreed period.

Here, the client separates the earlier poor performance from the later decline allegedly caused by delayed execution. The Ombud may therefore investigate whether the FSP failed to provide the agreed intermediary service and whether that failure caused the claimed delay-period loss. Using investment values to quantify the alleged loss does not convert the matter into a complaint based solely on performance. Jurisdiction permits investigation but does not establish liability or the amount of compensation; the service failure, causation and financial prejudice must still be determined.

• Comparing investment values is a method of quantifying the alleged service-related loss, not a jurisdictional bar.
• An FSP’s concession is not required before the Ombud can investigate disputed conduct.
• The delay does not convert market losses incurred before the promised switch date into service-related losses.

The claimed loss is linked to an alleged failure to execute the instruction as undertaken, rather than merely to poor market returns.

Question 27

Topic: Record Keeping

Lethabo Financial Services is an accountable institution and an authorised FSP. Its business relationship with a client ended on 31 March 2026. An underlying transaction was concluded on 15 February 2026.

A monitoring review identified grounds for a related FIC Act section 29 report after the relationship ended. The report was submitted on 20 June 2026. The compliance team confirms that the records under review are covered by both the business-relationship retention duty and the section 29 report retention duty.

Assume the report was submitted on time, no additional preservation requirement applies, and each five-year period ends on its fifth calendar anniversary, with records retained through that date.

Until what date must the institution retain these records at a minimum?

• A. Retain the records through 15 February 2031.
• B. Retain the records through 20 June 2036.
• C. Retain the records through 31 March 2031.
• D. Retain the records through 20 June 2031.

Best answer: D

What this tests: Record Keeping

Explanation: FIC Act record-retention periods run independently from their applicable triggering events. The business-relationship records must be retained for five years from termination of the relationship, producing an endpoint of 31 March 2031. Records relating to the section 29 report must be retained for five years from submission of that report, producing an endpoint of 20 June 2031. Because the same records are covered by both duties, they must remain available until both periods have expired. The later report therefore extends the minimum retention endpoint beyond the relationship-based date. The periods overlap; they are not added together consecutively.

• 15 February 2031 reflects the underlying transaction date but does not satisfy the later relationship and reporting periods.
• 31 March 2031 satisfies the business-relationship period but leaves the report-related period incomplete.
• 20 June 2036 incorrectly adds two five-year periods consecutively instead of running each from its own trigger.

The later section 29 report created an independent five-year period running through 20 June 2031.

Question 28

Topic: Codes of Conduct

An FSP publishes an advertisement with the prominent headline: “Fund A costs less than Fund B.”

• Fund A: total cost of R38,000 on R500,000 over 10 years.
• Fund B: total cost of R44,000 on R750,000 over 5 years.

Both totals correctly apply each product’s actual fee schedule. The differing investment amounts and periods appear only in materially smaller text at the bottom.

Which assessment best reflects the disclosure requirements applying to this comparison?

• A. It is fair because both totals are accurate applications of the products’ actual fee schedules.
• B. It is unfair because comparative cost advertising requires the products to use the same fee structure and charging method.
• C. It is fair because a reader can reconcile the differing assumptions by reading the note together with the headline.
• D. It is unfair because unlike investment amounts and periods support a headline that appears to make a like-for-like cost comparison.

Best answer: D

What this tests: Codes of Conduct

Explanation: Advertising disclosure is assessed by the overall impression created, not merely by whether individual figures are arithmetically accurate. The total costs cannot fairly support a general claim that Fund A costs less because the calculations use different investment amounts and holding periods. Those assumptions materially affect the totals, while the prominent headline suggests a like-for-like comparison. Smaller text may be factually correct yet insufficient to correct that impression. Comparative advertising is not automatically prohibited when products have different fee structures. A fair comparison could use a common investment amount and period or clearly and prominently limit the claim by explaining the different bases used.

• Accurate calculations do not cure a misleading overall impression created by unlike comparison bases.
• A note is insufficient when its placement and prominence do not adequately qualify the headline.
• Different fee structures may be compared if the basis and material differences are presented fairly and clearly.

The prominent general claim creates an unfair overall impression because the cost totals were calculated using materially different bases.

Question 29

Topic: The FAIS Regulatory Framework

A representative at Ubuntu FSP sends the following bulletin to its public mailing list:

Equity unit trust portfolios may fluctuate materially over short periods. Money-market portfolios invest in short-term instruments and generally have lower volatility. Returns are not guaranteed.

A reader replies that she holds R300,000 in an equity unit trust and needs R120,000 for tuition in 14 months. The representative responds privately:

Given your holding, time horizon and need to protect the tuition amount, I recommend switching R120,000 to the Ubuntu Money Market Portfolio. Contact me if you want the transaction forms.

Which classification best applies to the two communications?

• A. The bulletin is factual product information, while the email is advice about changing an existing investment.
• B. The bulletin is advice to its readers, while the email continues that same general advice for one reader.
• C. The bulletin is factual product information, while the email is intermediary service for changing an existing investment.
• D. The bulletin and email are both factual product information because neither communication completes a switch.

Best answer: A

What this tests: The FAIS Regulatory Framework

Explanation: FAIS classification depends on the substance and context of each communication, not merely on the channel through which it is delivered. The public bulletin objectively describes volatility and product characteristics without recommending that readers take a particular action. It is therefore factual product information.

The private response considers the reader’s actual holding, financial need and time horizon, then recommends a specific switch. That personalised recommendation is advice about changing an existing financial product. A completed transaction is not required before a recommendation can qualify as advice. The email does not itself establish intermediary service because it does not obtain, submit or carry out a switch instruction; it merely invites the reader to request forms. A public communication could also constitute advice if its content contained a financial recommendation, so publication format is not decisive.

• Treating both communications as factual incorrectly assumes that advice exists only when a transaction is completed.
• Treating the bulletin as advice overlooks the absence of any recommendation or proposed action for readers.
• Classifying the email as intermediary service confuses recommending a switch with receiving or carrying out a transaction instruction.

The private email applies the reader’s circumstances to a specific financial recommendation, whereas the bulletin only describes product characteristics.

Question 30

Topic: Maintaining the FSP Licence

A licensed FSP runs a campaign in which representatives recommend replacing clients’ existing motor policies. An internal review finds that:

• comparisons focus on premiums but omit differences in excesses and no-claim benefits;
• client files lack updated needs analyses; and
• representatives receive bonuses for completed replacements.

The compliance officer sends the key individual a memo stating:

The replacement campaign is an undesirable practice and should stop immediately.

Acting for the FSP, the key individual suspends the campaign and orders a review of affected files. The FSCA has not published a notice declaring the practice undesirable or issued a remedial direction.

Which interpretation correctly distinguishes the authority to declare an undesirable practice from the responsibilities of the FSP and its representatives?

• A. Only the Authority can make the statutory declaration; pending publication, the FSP may continue the campaign and representatives may proceed after providing fuller disclosure.
• B. The compliance memo constitutes a statutory declaration for the FSP, requiring statutory rectification by the provider and immediate cessation by its representatives.
• C. Only the Authority can make the statutory declaration; the FSP may impose its suspension and review, and representatives must comply with it and the General Code.
• D. The key individual’s adoption constitutes a statutory declaration for the FSP, requiring notification to the Authority and suspension until regulatory approval is obtained.

Best answer: C

What this tests: Maintaining the FSP Licence

Explanation: A formal declaration that a business practice is undesirable is made by the Authority through the applicable statutory process. A compliance officer’s terminology and a key individual’s management decision do not amount to that declaration.

Nevertheless, the FSP does not need to wait for regulatory action before controlling its own operations. It may suspend the campaign, review affected advice and address weaknesses in its procedures. Representatives must follow the FSP’s lawful instruction. They also remain responsible for complying with General Code duties concerning suitable advice, material disclosures and conflicts of interest. Client consent or additional disclosure would not automatically cure advice based on an inadequate needs analysis or an improperly managed incentive.

An internal finding therefore has organisational and conduct consequences even though it does not trigger the statutory consequences of a formal undesirable-practice declaration.

• A compliance function monitors and advises; its memo cannot exercise the Authority’s statutory declaration power.
• A key individual manages and oversees the FSP but cannot convert an internal decision into a statutory declaration.
• The absence of a published declaration does not override the FSP’s suspension or excuse existing advice, disclosure and conflict duties.

The internal finding does not exercise the Authority’s declaration power, but the FSP can control its operations and representatives remain bound by its instruction and conduct duties.

Question 31

Topic: Codes of Conduct

A representative has not yet implemented the following recommendation.

Advice file, 10 February 2026:

• Naledi received an inheritance of R400,000 intended for a property deposit in approximately six years.
• The purchase date was flexible, and she could defer it if the investment value declined.
• She had a separate emergency fund, a stable monthly surplus and a moderate willingness to accept market fluctuations.
• The representative recommended investing the full R400,000 in a balanced collective investment scheme.

Client email, 20 February 2026:

I have signed an offer to purchase. A deposit of R350,000 is due on 30 June and cannot be postponed. I have no other funds for it. The remaining R50,000 can stay invested for at least five years. My income, emergency fund and comfort with market fluctuations have not changed.

Which response best identifies what the representative should reconsider before implementation?

• A. Record the change and risk acknowledgement, while implementing the original R400,000 balanced-fund recommendation because income, emergency savings and willingness to accept fluctuations are unchanged.
• B. Record the change; reassess only the amount and redemption timing, while retaining the original loss-capacity assessment and balanced-fund recommendation because the investment is accessible.
• C. Record the change; reassess each portion’s horizon and fund suitability, while changing the risk attitude to conservative because the loss capacity for R350,000 has reduced.
• D. Record the change; reassess the amount, June liquidity, capacity for loss and suitability separately for each portion, while retaining the confirmed risk attitude and unaffected financial facts.

Best answer: D

What this tests: Codes of Conduct

Explanation: The new property commitment materially changes how the inheritance may be invested. R350,000 is now required on a fixed date, so the representative must reconsider its investment horizon, liquidity requirements, capacity for loss and suitable product or portfolio. Daily access to a collective investment scheme does not ensure that the required capital will be available after market fluctuations.

The remaining R50,000 has a longer horizon and should be assessed separately. The email expressly confirms that Naledi’s willingness to accept fluctuations, income and emergency fund have not changed. A reduced capacity for loss on money needed soon does not, by itself, mean that her risk attitude has changed. The representative should update the analysis and advice record rather than mechanically retaining or discarding every part of the earlier assessment.

• Accessibility does not remove the risk that R350,000 may lose value before the fixed payment date.
• Reduced capacity for loss is not the same as reduced willingness to accept risk, which the client confirmed remains unchanged.
• Acknowledging market risk does not preserve the suitability of investing money now required for a fixed commitment.

The fixed deposit date materially changes the horizon and loss capacity for R350,000, while the evidence continues to support the client’s stated risk attitude and other unchanged facts.

Question 32

Topic: Maintaining the FSP Licence

An FSP-approved sales script includes the line:

“Secure your place today and lock in the five-year return.”

The offer remains open until Friday, and the stated return applies only if the product is held for five years. During a Monday call, the representative reads the line but immediately clarifies both facts, explains the costs and early-surrender risk, and sends the disclosures. The client applies on Tuesday.

Which approach should be used to assess the representative’s conduct?

• A. Assess the opening wording alone, because a pressure-creating statement remains decisive even when corrected before the client decided.
• B. Assess the FSP’s approval of the script, because approval establishes compliant use when the representative follows the prescribed sales process.
• C. Assess the recommendation’s suitability alone, because a suitable product makes the script’s pressure and omitted terms immaterial to conduct.
• D. Assess the full interaction, including whether the representative corrected the impression and provided material information before the client decided.

Best answer: D

What this tests: Maintaining the FSP Licence

Explanation: A sales script is not automatically compliant because the FSP approved it, nor is every scripted interaction automatically unsuitable. The representative’s actual conduct must be considered. Relevant facts include whether the wording created a false sense of urgency, whether an important product condition was obscured, and whether the representative corrected the impression and supplied adequate information before the client acted. Here, the representative clarified that the offer remained open until Friday and that the return depended on holding the product for five years. The client received further disclosures and did not apply during the call. Product suitability remains important, but it does not replace the separate duty to communicate accurately and avoid misleading pressure.

• Judging the opening wording alone ignores the timing and adequacy of the correction before any client decision.
• Product suitability does not make misleading pressure or inadequate disclosure irrelevant.
• Internal script approval does not remove the representative’s personal conduct duties.

The timely correction and adequate information are material when assessing whether the client was improperly rushed or misled.

Question 33

Topic: Operating as a Representative

A representative is authorised to advise on standard-risk long-term insurance products under a written supervision agreement.

Competence review:

• He has completed the applicable class-of-business and product-specific training.
• Six months of observed client meetings and file reviews show consistent compliance, with no material exceptions.
• His regulatory examination remains outstanding, but its applicable completion deadline has not passed.
• The agreement permits documented changes in supervision intensity as competence develops.

The supervisor and key individual propose replacing pre-transaction review of every advice file with weekly post-transaction sampling. The representative must still consult the supervisor on unusual cases, remain within the existing product scope, complete the outstanding examination and disclose that he acts under supervision.

Which conclusion correctly describes the proposed change?

• A. The intensity must remain at pre-transaction review until every competence requirement is completed, despite the documented performance evidence.
• B. The intensity may be reduced after the Authority approves the revised control, while the representative continues under the existing supervision period.
• C. The intensity may be reduced for the existing scope, with the revised control documented while supervision status and continuing duties remain in effect.
• D. The intensity may be reduced for routine cases, with those cases treated as unsupervised while unusual cases remain subject to supervision.

Best answer: C

What this tests: Operating as a Representative

Explanation: Supervision should reflect the representative’s demonstrated competence, experience, activities and associated risks. Documented improvement may therefore justify changing from continuous or pre-transaction oversight to a less intensive control permitted by the supervision agreement.

A reduction in intensity does not itself release the representative from supervision. Here, the regulatory examination remains outstanding, although the completion deadline has not passed. The representative must consequently continue complying with the arrangement, stay within its authorised product and service scope, obtain assistance when required, disclose supervised status and complete the outstanding examination on time. The revised monitoring approach should also be documented. Prior approval from the Authority is not ordinarily required merely to adjust oversight intensity within a valid supervision arrangement.

• Requiring unchanged pre-transaction review overlooks that oversight intensity may be adjusted when reliable evidence demonstrates developing competence.
• Treating routine cases as unsupervised incorrectly converts a monitoring adjustment into partial release from supervision.
• Requiring prior Authority approval confuses an internal, documented supervision adjustment with a regulatory approval process.

The documented competence supports a permitted reduction in oversight intensity, but the outstanding examination means that supervision and its continuing obligations remain in effect.

Question 34

Topic: Operating as a Representative

Lerato applies to be appointed as a representative of an FSP.

Applicant facts:

• She accurately discloses that an industry professional body reprimanded her 18 months ago for submitting an annual membership return three months late.
• The disciplinary decision found administrative negligence, but no dishonesty, false information or client prejudice.
• She paid the penalty, completed remedial training and has had no further incidents.
• Her professional membership is again in good standing, and the FSP has verified the records.
• She meets the applicable competence and other appointment requirements.

A member of the appointment committee argues that every formal sanction automatically means an applicant lacks honesty, integrity and good standing. How should the FSP respond?

• A. Refer the event to the FSCA for an integrity ruling before making any appointment decision.
• B. Assess the event, candid disclosure, remediation and subsequent conduct before reaching its own integrity conclusion.
• C. Refuse the appointment because a formal professional sanction conclusively disproves the applicant’s good standing.
• D. Approve the appointment because restored professional membership conclusively resolves the applicant’s integrity status.

Best answer: B

What this tests: Operating as a Representative

Explanation: An adverse event can be relevant to honesty, integrity or good standing, but its existence does not automatically determine the outcome. The FSP must consider the nature and seriousness of the conduct, the surrounding circumstances, the accuracy of the applicant’s disclosure, any remediation and subsequent behaviour.

Here, Lerato disclosed the reprimand accurately. The verified disciplinary record identified administrative negligence rather than dishonesty, false information or client prejudice. She also remedied the breach and had no further incidents. These facts may support a finding that she meets the integrity requirement, but neither candid disclosure nor restored membership is conclusive by itself. The FSP remains responsible for reaching its own fair, evidence-based conclusion before appointing her.

• Automatic refusal wrongly treats every sanction as conclusive, regardless of its nature and surrounding evidence.
• Restored membership is relevant evidence, but it does not replace the FSP’s own integrity assessment.
• Prior FSCA clearance is not required for the FSP to perform its appointment assessment.

The FSP must fairly assess the nature and surrounding facts of the disclosed event rather than treat the reprimand as an automatic disqualification.

Question 35

Topic: Codes of Conduct

A client complains that her existing investment was surrendered and replaced without informed authority, and that an early termination charge was not disclosed.

FSP file extract:

13 May: Advice record recommends replacement; signed by representative only.
13 May: Record refers to a replacement comparison, but none is on file.
14 May: Client signed the new product application; it does not authorise surrender.
15 May: Existing investment surrendered and charge deducted.
17 May: Representative recorded: "Client confirmed switch telephonically on 14 May."
Call archive: No recording or separate surrender instruction located.
Representative statement: Standard practice was followed; no specific recollection.

The FSP rejected the complaint, stating that a signed replacement comparison and recorded call proved informed authority and disclosure.

Which action should the complaints officer take now?

• A. Conclude that disclosure was not proved but authority was proved, relying respectively on the absent comparison and signed application, and issue a split outcome.
• B. Maintain the rejection after amending its reasons to rely on the signed application and CRM note as sufficient evidence of authority and disclosure.
• C. Uphold the complaint immediately, treating the missing comparison and call recording as conclusive proof that authority and charge disclosure never occurred.
• D. Reopen the investigation, seek retrievable source evidence, weigh all records and contradictions, and issue a fresh outcome supported by the file.

Best answer: D

What this tests: Codes of Conduct

Explanation: A complaint outcome must follow adequate investigation and rely on evidence actually considered. The rejection cites a signed comparison and recorded call, but the file contains neither. The signed new-product application supports acceptance of that application, but it does not by itself establish authority to surrender the existing investment or informed disclosure of the termination charge. The CRM note and representative’s statement remain relevant evidence, but their weight must be assessed against the complaint and the missing source records.

Missing evidence weakens the FSP’s ability to substantiate its position, but it does not automatically prove that authority or disclosure was absent. Fair treatment therefore requires further investigation where possible, balanced consideration of the available evidence, and a fresh outcome giving accurate and adequate reasons.

• An amended rejection would give excessive weight to documents that do not establish both surrender authority and charge disclosure.
• Immediate upholding incorrectly treats evidentiary gaps as conclusive proof that the relevant events did not occur.
• A split outcome assumes that the signed application proves surrender authority, although it does not address the existing investment.

The rejection relies on evidence absent from the file, while the available records do not conclusively resolve authority or disclosure.

Question 36

Topic: The Key Individual’s Role

On 3 February 2026, Thandi is preparing to assist a client. The firm’s records contain the following:

• FSP licence: Category I advice and intermediary services for Long-term Insurance subcategory B1 and collective investment schemes.
• Thandi’s appointment and representative register entry: Advice and intermediary services for B1; competence complete; not under supervision.
• Proposed change: Extension of Thandi’s appointment to collective investment schemes is pending and has not been approved.
• Team-change record: Masego became the FSCA-approved key individual for both product areas on 1 February 2026.
• Working review schedule: Masego must review replacement analyses and records of advice before recommendations are communicated. The compliance officer tests adherence monthly but does not approve client work.
• Client request: Review an existing B1 policy, consider a replacement and recommend a suitable unit trust.

Which interpretation correctly identifies the work Thandi may perform and the concern that remains?

• A. Continue the B1 review after the compliance officer’s approval; defer unit-trust advice until Thandi’s appointment is formally extended.
• B. Continue both reviews and communicate either recommendation after Masego’s review; update the representative register when the proposed unit-trust extension is approved.
• C. Continue the B1-policy review and communicate B1 advice only after any required Masego review; defer recommending replacement with a unit trust until Thandi’s appointment is formally extended.
• D. Continue the B1 review and communicate its recommendation without pre-issue review; defer unit-trust advice until Thandi’s appointment is formally extended.

Best answer: C

What this tests: The Key Individual’s Role

Explanation: The team change does not suspend Thandi’s existing B1 appointment. Masego’s approved key-individual role, together with the documented pre-issue review process and clear allocation of responsibilities, provides continuing oversight for that authorised work. Thandi may therefore review the existing B1 policy and communicate advice within her B1 authority after any review required by the working schedule.

A recommendation to replace the B1 policy with a unit trust also concerns the destination collective investment scheme. Although the FSP is licensed for collective investment schemes and Masego oversees that product area, Thandi’s proposed appointment extension remains pending. She therefore cannot provide the requested unit-trust replacement recommendation. Her status as not under supervision does not remove the internal review requirement, while key-individual or compliance review cannot expand her representative authority.

• The FSP’s wider licence and the key individual’s oversight do not expand Thandi’s personal appointment while the extension remains pending.
• A recommendation to replace the B1 policy with a unit trust is not confined to B1 merely because the existing product is a B1 policy.
• Completion of formal supervision does not permit Thandi to disregard the recorded pre-communication review process.
• Monthly compliance monitoring is distinct from the pre-issue review assigned to the key individual.

Thandi may act within her existing B1 appointment and must follow the applicable working-review requirement, but neither Masego’s review nor the FSP’s wider licence authorises Thandi to recommend the unit trust.

Question 37

Topic: Maintaining the FSP Licence

Lerato, a representative of a Category I FSP, discovers the following records before the client has complained:

• Client instruction, 14 May: Switch all units from the Balanced Fund to the Stable Income Fund.
• Platform confirmation, 14 May: All units were switched to the Growth Equity Fund.
• Authority schedule: Lerato may receive and transmit instructions and communicate verified transaction facts, but may not authorise corrective trades or client compensation.
• Control structure: Suspected processing errors are handled through formal incident oversight by compliance, while the operations manager alone may approve remediation and compensation.

No corrective transaction or remedy has yet been approved. What should Lerato do?

• A. Open an incident and preserve the records, submit the corrective trade under the signed instruction, seek operations-manager ratification, and promptly inform the client of the mismatch.
• B. Open an incident and preserve the records, refer correction and compensation to the operations manager, and promptly inform the client of the verified mismatch and review status.
• C. Obtain a fresh client instruction, process a current-date switch to the intended fund, preserve both transaction records, and refer any resulting loss to the operations manager.
• D. Open an incident and preserve the records, refer correction and compensation to the operations manager, and inform the client after the final remedy has been approved.

Best answer: B

What this tests: Maintaining the FSP Licence

Explanation: The platform confirmation proves that the client’s instruction was implemented incorrectly. Lerato must not treat a later transaction as if it removes the original service error. The instruction, incorrect confirmation and incident record must remain available as evidence.

Lerato’s appointment permits her to receive and transmit instructions, but the authority schedule does not permit her to authorise a corrective trade or compensation. Those decisions must therefore be referred to the operations manager, with compliance receiving the required incident report. The client should promptly receive accurate information about what occurred and the status of remediation. This communication need not wait until the final financial outcome is known, provided Lerato distinguishes verified facts from a remedy that is still under review.

• A fresh current-date instruction would create a new transaction rather than properly addressing and reporting the original implementation error.
• Later ratification does not cure Lerato’s lack of authority to initiate the corrective trade.
• Waiting for final approval delays the required factual communication about the discovered error.

This preserves the evidence, reports the error promptly, protects the client and keeps remediation within Lerato’s authority.

Question 38

Topic: Record Keeping

Ubuntu Horizon FSP stores electronic advice records with an external archive. The Authority gives the FSP seven days to make the records supporting a replacement transaction available for inspection. The records officer assigns representative Naledi to retrieve the file.

Archive delivery on day 3:

• Signed product application
• Disclosure acknowledgement and FICA verification records
• Product brochure
• An unsigned draft record of advice

The transaction log identifies a separate final signed record of advice containing revised fees and replacement consequences. That version is absent from the delivery but remains listed under another archive scan ID. The product is active, and the seven-day period has not expired.

Which response should Naledi take to meet the record retrieval obligation?

• A. Annotate the unsigned draft from the transaction log and give that combined evidence to the records officer within seven days.
• B. Give the current package to the records officer within seven days and supply the final scan if the Authority requests it again.
• C. Continue retrieving the separate final scan and give the complete responsive file to the records officer within the seven-day period.
• D. Prepare a dated reconstruction from the transaction log and give it with the archived package to the records officer within seven days.

Best answer: C

What this tests: Record Keeping

Explanation: When records are stored externally, the FSP remains responsible for making the required records available for Authority inspection within seven days. Speed alone does not establish compliance. The material produced must be complete and responsive to the request.

Here, the Authority requested the records supporting the replacement transaction. The archive supplied several documents, but omitted the identified final record of advice containing the operative fee and replacement information. The unsigned draft, application and transaction log do not become the final record merely because they were retrieved quickly. Because the archive index identifies another scan and the deadline has not expired, retrieval must continue so that the operative version forms part of the file made available for inspection.

• Supplying the partial package and waiting for another request leaves the specifically requested final record outstanding.
• Annotating an earlier draft does not convert it into the operative version used for the transaction.
• A later reconstruction may document a records problem, but it does not replace an existing original version that can still be retrieved.

The operative final record remains outstanding and must be made available within the applicable seven-day inspection period.

Question 39

Topic: Codes of Conduct

Lerato’s investment remains in force. She terminates Kamo FSP’s servicing mandate, appoints Ndlovu FSP and gives Kamo written authority to send Ndlovu the relevant client and service information. On the same date, her representative resigns from Kamo.

Which statement correctly distinguishes Kamo’s obligations?

• A. Kamo may transfer the authorised information, must preserve its own required records for five years newly measured from the transfer date, and must record the representative’s cessation separately.
• B. Kamo may transfer the authorised information, may rely on Ndlovu’s file to satisfy Kamo’s remaining retention obligations, and must record the representative’s cessation separately.
• C. Kamo may transfer the authorised information, must preserve its own required records under the applicable existing retention triggers, and must record the representative’s cessation separately.
• D. Kamo may transfer the authorised information, must preserve its own required records under the applicable existing retention triggers, and may record the representative’s resignation as ending Kamo’s mandate.

Best answer: C

What this tests: Codes of Conduct

Explanation: Written client authority permits Kamo to disclose relevant information within the authority’s scope, supporting an accurate and orderly transition. The transfer does not shift Kamo’s statutory recordkeeping responsibility to Ndlovu or create a universal new retention period.

Under the General Code, the five-year trigger depends on termination of the product to the provider’s knowledge, or on the service date where no product is concerned. Lerato’s investment remains in force, so the transfer date does not replace the applicable trigger. Any applicable FIC Act retention periods also retain their own triggers.

The representative’s resignation ends that individual’s appointment and authority at Kamo. It must be handled separately from termination of the FSP’s servicing mandate, which resulted from Lerato’s instruction.

• Ndlovu’s possession of the transferred file does not discharge Kamo’s responsibility for its own required records.
• Starting every five-year period on the transfer date disregards the event-specific retention triggers and the continuing investment.
• Treating the resignation as the mandate-ending event confuses cessation of individual authority with the client-FSP relationship.

The authorised transfer does not shift Kamo’s recordkeeping responsibility or make the representative’s resignation the termination event.

Question 40

Topic: Codes of Conduct

A representative reviews the daily reconciliation of an FSP’s separate client bank account. Verified payment references show the clients who made each cleared deposit.

The bank statement closing balance is R175,000. There are no withdrawals, reversals, fees or items in transit.

Which reconciliation adjustment is supported by the evidence?

• A. Increase Nandi’s ledger by R15,000 and deposit R15,000 into the bank; leave Themba’s ledger unchanged.
• B. Decrease Nandi’s ledger by R15,000 and increase Themba’s by R15,000; leave the bank balance unchanged.
• C. Increase Nandi’s ledger by R15,000 and decrease Themba’s by R15,000; leave the bank balance unchanged.
• D. Increase Nandi’s ledger by R15,000 and decrease Lerato’s by R15,000; leave the bank balance unchanged.

Best answer: C

What this tests: Codes of Conduct

Explanation: A matching bank balance and aggregate client ledger establish that the total amount is present, but they do not prove that each client’s allocation is correct. Nandi deposited R72,500 but has only R57,500 recorded, creating an underallocation of R15,000. Themba deposited R42,500 but has R57,500 recorded, creating an equal overallocation. Lerato’s allocation agrees with the verified deposit.

The correction is therefore between the individual client ledgers. No money needs to be added to or removed from the bank account. Client-money controls must support both aggregate reconciliation and accurate client-level records so that payments and other transactions are processed against the correct client’s funds.

• Reversing the direction of the adjustment would increase both existing allocation errors.
• Reducing Lerato’s ledger is unsupported because Lerato’s deposit and ledger already agree.
• Adding R15,000 to the bank treats an allocation error as a cash shortage and leaves Themba overallocated.

Nandi is underallocated by R15,000 and Themba is overallocated by the same amount, while the bank total is correct.

Question 41

Topic: Operating as a Representative

Naledi began rendering financial services under supervision on 1 April 2024.

Timetable:

• Her valid supervision arrangement set an original completion date of 31 March 2026.
• The applicable statutory outer limit falls after all the dates below.

Agreement extract signed on 1 April 2024:

A formally approved interruption pauses the timetable. Each complete calendar month of interruption shifts the completion date by one calendar month. Other personal leave does not pause the timetable.

Chronology:

• A written amendment approved an interruption from 1 September through 30 November 2024.
• Naledi later took discretionary personal leave from 1 through 28 February 2025, but remained appointed and obtained no interruption amendment.

Which completion date should the key individual record?

• A. Retain 31 March 2026
• B. Set 30 June 2026
• C. Set 31 July 2026
• D. Set 31 May 2026

Best answer: B

What this tests: Operating as a Representative

Explanation: The written amendment created a permitted interruption lasting three complete calendar months: September, October and November 2024. Under the valid supervision arrangement, those months do not count toward the completion timetable. Adding three calendar months to the original date of 31 March 2026 produces 30 June 2026.

The February 2025 personal leave does not add another month. Naledi remained appointed, and the leave was not recorded as a formally approved interruption under the arrangement. Personal circumstances or an absence from work do not create an extension by themselves. The key individual must therefore apply the documented interruption provision rather than informally adjusting the competence timetable.

• Retaining 31 March ignores the documented three-month interruption.
• Moving the date to 31 May counts only two of the three complete approved months.
• Moving the date to 31 July improperly treats the later personal leave as an approved interruption.

Only the three complete months of formally approved interruption pause the timetable, moving 31 March 2026 to 30 June 2026.

Question 42

Topic: Maintaining the FSP Licence

A complaints officer reviews the following client email:

“Please refund the R575 administration charge. I also complain that no one disclosed that Cape Coast Advice owns 20% of Koru Fund Managers before its fund was recommended. I would not have invested had I known. The refund will not resolve this second concern.”

All numbered days below are business days.

File extract:

• Day 0: The email was received and recorded as an ordinary query.
• Day 2: Accounts confirmed that the charge was improper and refunded R575.
• The conflicts register confirms that the ownership relationship existed when the advice was given.
• The advice file contains no record of an ownership disclosure.
• Day 5: No investigation or written outcome addressed the disclosure allegation.
• Day 6: The query status was changed to Closed - fee refunded.

Which action should the FSP take?

• A. Close the original complaint as upheld, refer the ownership allegation to compliance monitoring, and retain the refund and review records.
• B. Issue the ownership disclosure retrospectively, close the original complaint as fully remediated, and retain the email, disclosure, and refund records.
• C. Keep the original complaint open as reportable, investigate the ownership allegation, and retain the refund, investigation, and outcome records.
• D. Close the charge component, register the ownership allegation as a new Day 6 complaint, and retain both linked complaint files.

Best answer: C

What this tests: Maintaining the FSP Licence

Explanation: Refunding the improper charge provides financial reparation for one part of the client’s submission, but it does not dispose of the separate complaint about an undisclosed ownership relationship. The client raised both matters on Day 0 and expressly stated that the refund would not resolve the disclosure concern. Because that concern remained unresolved after five business days, the original submission cannot be closed merely as a query upheld within the permitted period. It must continue through the reportable complaints process using the original receipt date. The FSP should investigate whether the required disclosure occurred, communicate the outcome, and retain evidence of the complaint, refund, investigation and decision. The absence of a disclosure record is important evidence, but it does not by itself conclusively establish that no disclosure occurred.

• Compliance monitoring may examine the conduct issue, but it does not replace handling the client’s unresolved complaint.
• Registering a new complaint on Day 6 incorrectly resets the receipt date because the disclosure allegation appeared in the Day 0 email.
• Retrospective disclosure does not establish whether the original advice process complied or provide a reasoned complaint outcome.

The refund resolved only the charge, while the disclosure allegation in the original complaint remained unresolved after five business days.

Question 43

Topic: Codes of Conduct

A representative’s file contains the following records:

• FSP licence: Covers deposits and collective investment schemes.
• Initial disclosure, 4 April: The client acknowledged: “Our advice is restricted to 12-month fixed deposits from Cape Bank and Highveld Bank. We do not compare other banks or product classes.”
• Needs analysis, 7 April: The client requires capital repayment after 12 months, a fixed return, and no access during the term.
• Advice record, 8 April: The representative compared the two disclosed deposits and recommended one that met those requirements.
• Application, 9 April: The client accepted the recommendation and signed the application.

Which conclusion best follows from these records?

• A. Treat the restriction as inadequately communicated because the FSP’s broader licence required the representative to compare products beyond the approved panel.
• B. Treat the restriction as inadequately communicated because the disclosure identified the included range but did not list every excluded supplier and alternative product.
• C. Treat the restriction as inadequately communicated because disclosure before the needs analysis was premature and had to be given only with the final recommendation.
• D. Treat the restriction as appropriately communicated because its scope was clear before advice and commitment, and the recommended deposit matched the client’s recorded needs.

Best answer: D

What this tests: Codes of Conduct

Explanation: A representative may legitimately operate within a limited product range if the limitation is described accurately and early enough for the client to evaluate the offering before committing. Here, the initial disclosure identified both included suppliers and expressly stated that other banks and product classes would not be compared. The client received this information before the needs analysis, recommendation and application.

A limited range does not remove the duty to provide suitable advice. The recommended deposit still had to meet the client’s recorded objectives and circumstances. The advice record confirms compatibility with the required term, fixed return, capital repayment and lack of access. The FSP’s broader licence establishes the outer boundary of authorised services; it does not require every representative to conduct a whole-market comparison.

• Early disclosure is not premature merely because the detailed needs analysis follows it; the client can consider the limitation throughout the advice process.
• A clear description of the included range and comparison boundary need not catalogue every excluded supplier or product.
• Broader licensed authority permits a wider service but does not itself prohibit an accurately disclosed, suitable restricted offering.

The client received an accurate description of the limited offering before committing, and the resulting recommendation remained suitable for the recorded needs.

Question 44

Topic: Codes of Conduct

A representative of an authorised FSP sends a client the following mobile campaign message:

“Personal retirement investment recommendation. No advice fee. Start in five minutes.”

The fee itself is permitted under the client’s mandate. The service record shows:

09:02 Client selected "Start".
09:08 Client completed the needs analysis.
09:18 Representative presented a personal recommendation.
09:21 Client selected "Continue with recommendation".
09:24 Review page displayed "Submit application".
09:24 A collapsed "Fees and legal information" link stated:
      "The no-advice-fee offer applies only where no personal
      recommendation is provided. Recommended investments carry
      an initial advice fee of 1.00%."
09:26 Client had not yet submitted the application.

Which assessment of the communication is most appropriate?

• A. The disclosure is effective because it accurately distinguishes self-directed execution from personal advice despite their shared campaign journey.
• B. The disclosure is ineffective because every fee qualification must use exactly the same type size and placement as the opening headline.
• C. The disclosure is ineffective because the collapsed qualifier reverses the dominant no-fee claim after the client selected the advised recommendation.
• D. The disclosure is effective because the exact fee remains available before submission and the client can still decline the application.

Best answer: C

What this tests: Codes of Conduct

Explanation: Disclosure must enable an informed decision rather than merely place correct words somewhere in the service journey. The opening message expressly promises a personal recommendation with no advice fee. The client then receives and selects that recommendation before a collapsed link reveals that the promise applies only to execution-only business and that advised business carries a 1.00% fee. Although the fee appears before final submission, its timing and presentation do not adequately neutralise the dominant claim. The FSP should communicate the distinction and applicable fee clearly and prominently before the client selects the advised service. Prominence is assessed contextually; it does not depend on a universal rule requiring identical type size or placement.

• Availability before the final submission does not resolve that the client had already followed and selected the advertised advised service.
• An accurate distinction between service types does not cure an opening claim that specifically promises a fee-free personal recommendation.
• Prominence and clarity are assessed from the communication as a whole, not through an exact type-size or placement formula.

The material limitation appeared too late and too inconspicuously to correct the client’s understanding of the advertised advised service.

Question 45

Topic: Maintaining the FSP Licence

On 18 February 2026, Naledi is asked to recommend a medical scheme to a client and submit the resulting membership application. The compliance file contains:

• FSP licence: Active Category I authorisation for advice and intermediary services in product subcategory 1.16, Health Service Benefits.
• Representative register: Naledi has an active appointment for advice and intermediary services in product subcategory 1.16.
• CMS broker-organisation accreditation: The FSP’s applicable accreditation is current.
• CMS certificate: Naledi’s individual broker accreditation was valid until 31 January 2026.
• Renewal communication: Naledi applied for renewal on 20 January 2026. On 2 February, the Council for Medical Schemes stated:

The renewal application remains under assessment. The previous accreditation has expired, and this communication does not authorise broker services pending the decision.

Which conclusion correctly interprets the records for the proposed service?

• A. Naledi must postpone both services until CMS renews her accreditation; the existing FAIS authority already covers the product and services.
• B. Naledi may give advice but must postpone the application because CMS accreditation is required only for intermediary services.
• C. Naledi may give advice and submit the application because the timely renewal application keeps her previous CMS accreditation effective.
• D. Naledi must postpone both services and the FSP must seek a FAIS licence variation because the CMS expiry removed its product authority.

Best answer: A

What this tests: Maintaining the FSP Licence

Explanation: FAIS authority and medical-scheme broker accreditation are separate, cumulative requirements. The active FSP licence and Naledi’s recorded appointment authorise advice and intermediary services for Health Service Benefits under the FAIS framework. They do not replace accreditation required for medical-scheme broker services.

The CMS certificate expired before the proposed service date. The renewal communication expressly confirms that the pending application does not continue or restore accreditation. Naledi therefore cannot advise the client on selecting a medical scheme or submit the membership application until accreditation is renewed. However, expiry of her CMS accreditation does not itself amend the FSP’s licence or remove Naledi’s recorded FAIS product scope. The evidence consequently does not support requiring a FAIS licence variation.

• Submitting the renewal application before expiry does not preserve accreditation where CMS confirms that the certificate expired and the pending application grants no authority.
• Limiting accreditation to application submission overlooks that the proposed medical-scheme advice is also broker service.
• Expiry of personal CMS accreditation does not automatically remove the FSP’s separately recorded FAIS product authority.

Both approvals are required, and the records confirm valid FAIS authority but expired CMS accreditation.

Question 46

Topic: Operating as a Representative

A Category I FSP offers Naledi a trainee position for an authorised insurance product.

Current status:

• Her employment offer expressly states that it does not appoint her to render financial services.
• She has completed the applicable product training.
• The FSP has determined that she may work under supervision while completing outstanding competence requirements.
• Her representative mandate and written supervision agreement have not been signed.
• She has not been entered in the FSP’s representative register.

The manager wants Naledi to complete internal role-plays, forward client applications and join calls to identify suitable products for clients.

Which instruction correctly states what Naledi may do now and what must occur before she renders a financial service?

• A. Restrict her to fictional role-plays and internal onboarding; start advice or application handling only after appointment and supervision are effective, with the FSP’s certified confirmation available.
• B. Allow her to receive and forward applications under live supervisor review; delay advice until appointment, using supervisor transaction sign-offs as interim confirmation of representative authority.
• C. Allow her to identify suitable products during supervisor-led calls; delay application handling until register entry, using that entry as confirmation that representative authority exists.
• D. Restrict her to fictional role-plays and internal onboarding; start advice after the employment offer and training records are filed, finalising supervision after monitored client cases.

Best answer: A

What this tests: Operating as a Representative

Explanation: A job offer, training completion or intention to appoint does not by itself authorise a person to act as a representative. Forwarding applications may constitute intermediary service, while identifying a suitable product for a client may constitute advice. Direct supervision does not cure the absence of an appointment.

Before Naledi performs these activities, the FSP must appoint her through the applicable employment or mandate arrangement and be able to provide certified confirmation that it accepts responsibility for services within her authority. Because she still has outstanding competence requirements, the written supervision arrangement must also be effective before she begins supervised financial services. The FSP must maintain its representative register, but a register entry does not replace the underlying appointment and supervision conditions. Fictional role-plays and internal onboarding may continue because they do not involve rendering a financial service to a client.

• Receiving and forwarding applications can be intermediary service; transaction sign-offs do not create representative authority.
• Matching products to client needs can amount to advice; supervisor participation and a register entry do not replace an appointment mandate.
• Training records support competence, but they do not replace appointment or permit supervision arrangements to be completed after client advice begins.

The employment offer and training do not establish representative authority, so appointment and the required supervision arrangement must be effective before regulated services begin.

Question 47

Topic: The Key Individual’s Role

Naledi is a representative of Kopano Financial Services, a Category I FSP. A client review scheduled for 10 March 2026 involves advice and intermediary services in Long-term Insurance subcategory B1 and Retail Pension Benefits.

Authority communication dated 6 March 2026:

• The FSP’s licence remains active for both relevant product subcategories.
• Themba Maseko’s key-individual approval is withdrawn at close of business on 9 March following a personal honesty and integrity finding.
• Zanele Ndlovu is approved as key individual for the same licence scope from 10 March.
• Maseko intends to seek reconsideration, but no suspension order has been granted.

Provider records:

• Naledi remains actively appointed and authorised for advice and intermediary services in both product subcategories.
• The board allocated Ndlovu oversight of the relevant representatives and client files from 10 March.
• The client mandate appoints Kopano Financial Services and remains effective until terminated. No termination notice has been received.

Which action is most consistent with these records?

• A. Defer the scheduled advice and intermediary service until the client signs a new mandate, because withdrawal of Maseko’s approval ended mandates accepted during his oversight.
• B. Continue the scheduled advice and intermediary service under Maseko’s oversight until his reconsideration period expires, then transfer the files if the withdrawal remains effective.
• C. Continue the scheduled intermediary service under Ndlovu’s oversight, but defer advice until the Authority separately reapproves Naledi’s representative appointment for the new reporting line.
• D. Continue the scheduled advice and intermediary service within her recorded product scope under Ndlovu’s oversight, relying on the existing FSP mandate unless the client changes it.

Best answer: D

What this tests: The Key Individual’s Role

Explanation: A key individual’s approval, a representative’s appointment and the FSP’s licence are distinct regulatory matters. Maseko’s approval ends on 9 March, while Ndlovu’s approval and documented oversight begin on 10 March for the same licence scope. Naledi’s appointment and authorised product scope remain unchanged, so she does not require fresh approval merely because the key individual changes.

The client appointed the FSP rather than Maseko personally, and the mandate has not been terminated. The management change therefore does not itself interrupt client continuity or require a replacement mandate. Maseko’s intended reconsideration application also does not suspend the withdrawal. Naledi may continue the scheduled work under Ndlovu’s oversight while observing the usual advice, disclosure and record-keeping duties.

• Separate reapproval of Naledi is unnecessary because her appointment and authorised scope remain active.
• The existing mandate continues because it appoints the FSP and has not been terminated.
• Maseko cannot retain oversight after the effective withdrawal merely because he intends to seek reconsideration.

The active licence, unchanged representative appointment, approved replacement and continuing FSP mandate support uninterrupted service within Naledi’s recorded scope.

Question 48

Topic: The FAIS Regulatory Framework

A representative reviews a client’s objectives, cash-flow needs and an existing investment’s costs and benefits. The representative then recommends that the client retain the investment unchanged. No purchase, replacement or other transaction results.

How should the representative’s communication be classified under FAIS?

• A. Advice concerning the existing financial product
• B. Factual information concerning the existing financial product
• C. An intermediary service concerning the existing financial product
• D. A non-regulated communication concerning the existing financial product

Best answer: A

What this tests: The FAIS Regulatory Framework

Explanation: Advice is identified by the substance and personal relevance of the communication, not by whether it produces a sale or commission. The representative assessed the client’s objectives, needs and the product’s merits before making a recommendation. The recommendation to retain the investment therefore constitutes advice even though the product remained unchanged.

Factual information would describe product features without applying judgment to the client’s circumstances. An intermediary service generally involves an act connected with administering or facilitating a financial product rather than providing a recommendation. The absence of a resulting transaction does not place a personalised financial recommendation outside the FAIS framework.

• Factual information does not include a personalised judgment about whether the client should retain the product.
• An intermediary service concerns product-related facilitation or administration, not the recommendation described here.
• A regulated recommendation does not become non-regulated merely because it produces no new transaction.

The communication applies financial judgment to the client’s circumstances and recommends retaining the product.

Question 49

Topic: Operating as a Representative

Ubuntu Financial Services is licensed for advice and intermediary services involving collective investment schemes. A file review identifies the following records.

Representative register extract:

Representative: Mpho Dlamini
Status: Active
Product category: Collective investment schemes
Authorised service: Intermediary service only

Client communication:

Client: “I need access to some of the money within three years and prefer limited volatility. Please help me decide which portfolio to use.”

Mpho: “After considering those needs, the Stable Income Portfolio is the appropriate choice for you. I have completed the application for your signature.”

Transaction records:

• The signed application states: “I selected the portfolio without receiving a recommendation.”
• The workflow log shows that Mpho submitted the application to the product supplier.

Which assessment most accurately reflects the services Mpho rendered and her appointment authority?

• A. The file shows intermediary service only; the signed instruction made the client the decision-maker, placing the submission within Mpho’s recorded appointment.
• B. The file shows factual information and intermediary service; the portfolio discussion remained neutral, and the execution-only declaration kept Mpho within her appointment.
• C. The file shows advice only; application submission remains administrative until supplier acceptance, so Mpho exceeded the appointment only through the recommendation.
• D. The file shows advice and an intermediary service; the personalised selection exceeded Mpho’s appointment, and the execution-only declaration cannot reclassify the conduct.

Best answer: D

What this tests: Operating as a Representative

Explanation: FAIS classification follows the substance of the interaction rather than the label placed on the transaction. Mpho used the client’s liquidity needs, investment period and volatility preference to identify one portfolio as appropriate. This was personalised advice, not neutral factual information.

Mpho also completed and submitted the application to the product supplier for the client. That conduct constituted an intermediary service connected with entering into the transaction. Both types of service therefore occurred.

Although the FSP was licensed for both services, Mpho’s appointment authorised only intermediary services for collective investment schemes. Her recommendation fell outside that authority. The client’s signed execution-only declaration cannot retrospectively remove the advice or expand Mpho’s appointment. The FSP must assess the file according to the actual conduct and address the unauthorised advice rather than relying on the transaction label.

• A signed instruction does not supersede personalised advice already provided during the interaction.
• Factual product information remains neutral; identifying a suitable product from personal circumstances is a recommendation.
• Submission of an application for a client is an intermediary act and does not depend on supplier acceptance.

Mpho made a personalised product recommendation and submitted the application, so she rendered both services while lacking appointment authority for advice.

Question 50

Topic: Codes of Conduct

An FSP reviews a representative’s recommendation.

• Client facts: The client needs access to the capital in 18 months and has a low tolerance for investment loss.
• Recommendation: A five-year market-linked product with capital fluctuations and early-exit charges.
• File: All required forms and fields are complete. The client facts, disclosures and signatures are accurate, but the stated reason for the recommendation is only “long-term growth potential.”

Which assessment correctly distinguishes administrative record completeness from suitable advice?

• A. The file is administratively complete, but the advice remains unsupported because the recorded objective and risk tolerance conflict with the recommended product.
• B. The file supports suitable advice because early-exit risk was disclosed, so the liquidity objective affects client consent rather than product selection.
• C. The file establishes a reasonable advice process because all material client facts were gathered accurately before the recommendation was accepted.
• D. The file’s deficiency is documentary only, and adding a fuller description of the product’s long-term growth potential would establish suitable advice.

Best answer: A

What this tests: Codes of Conduct

Explanation: Accurate and complete records provide evidence of what information was gathered, disclosed and accepted. They do not prove that the representative properly analysed that information or recommended a suitable product. Here, the client’s 18-month liquidity need and low tolerance for loss conflict with a five-year market-linked product carrying capital fluctuations and early-exit charges. A generic reference to long-term growth does not explain how those features meet the client’s needs. The substantive problem cannot be corrected merely by adding paperwork or expanding the product description. Disclosure and a client’s signature also do not cure an unsupported recommendation. The representative must use the relevant client information to form and record a reasonable basis for the advice.

• Gathering accurate facts is necessary, but suitability also requires analysing and applying those facts.
• Expanding the generic growth description would not resolve the conflict with liquidity and risk needs.
• Disclosure and consent do not change a suitability factor into a matter of client acceptance alone.

Suitability requires a reasonable connection between the recommendation and the recorded client facts, not merely a complete file.

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