Transcription
Task 1 talks about demonstrating an understanding of the Phase Act as a regulatory framework. Task 1 has four qualifying criteria. Let's look at Task 1's qualifying criteria. For example, describe the role and function of a compliance officer.
Let's focus on another key player: an FSP's compliance officer. We will talk about their role and responsibilities. There are two types of compliance officers that can be approved by the FSCA: one is an in-house or internal compliance officer who is a natural person. This officer offers his or her services to the FSP that has employed him or her only. The other is an external compliance officer or practice. This one can be both a natural person or a legal entity that will employ natural persons. This type of compliance officer can offer its services to multiple FSPs. Compliance officers must be approved by the FSCA, but only after they have met the fit and proper requirements that are set out for them in the Phase Act. Once approved by the FSCA, compliance officers may be appointed by an FSP to help with compliance requirements of the Phase Act.
The role and responsibilities of a compliance officer can be explained as follows: 1. To oversee the compliance function insofar as the Phase Act is concerned; 2. To monitor compliance of an FSP with this Phase Act. This relates particularly to the compliance procedures which an FSP and its representatives should follow in order to ensure compliance; 3. To identify issues of non-compliance within the FSP and bring those to the attention of the FSP. This can be done by preparing written reports for the FSP on a regular basis. A compliance officer must also physically visit the premises of the FSP from time to time to inspect the FSP's operations; 4. To train the FSP on how to rectify the non-compliance issues; and 5. To communicate with the registrar by means of an annual compliance report.
Let us talk more about the oversight role of the compliance officer. An FSP must ensure that it establishes a compliance function, processes, and controls. Once that is done, the compliance officer should then recommend improvements and train where weaknesses are identified. Part of the oversight role of the compliance officer is to check that non-compliance issues that have been identified are rectified. This means the compliance officer must follow up with an FSP to see that a remedial action was taken. Then, when it comes to the monitoring function, the compliance officer must create procedures and systems that allow monitoring of compliance to take place. This refers to processes and controls. In this role, a compliance officer will undertake the following: 1. Identify weak and vulnerable areas in the FSP's business that may lead to non-compliance; 2. To ensure compliance processes and controls are implemented and are effective. This is to say that the controls are serving their purpose; and 3. Constantly test and review controls.
Then we come to the role of communicating and reporting to the registrar. We mentioned that a compliance officer must prepare regular reports for an FSP, which include updates on compliance matters, recommended improvements, and training on compliance controls. The compliance officer must also prepare an annual compliance report on behalf of the FSP. The annual compliance report must be signed by the FSP's key individual and submitted to the FSCA. Please remember that when we refer to the FSCA, we are referring to the registrar.
Do you know when a compliance officer must be appointed by an FSP? An FSP that has one or more representatives or more than one key individual must appoint a compliance officer. The compliance officer, whether in-house or external, must remain objective and independent at all times. Furthermore, a compliance officer must also comply with the fit and proper requirements of the Fees Act when performing its duties.
Now that we have discussed the role and responsibilities of a compliance officer, let us go through some questions to test our knowledge. Does an FSP always have to appoint a compliance officer in the following instances? What if it has one key individual and no representative? No. What if an FSP has one key individual and one representative? Yes. What if an FSP has more than one representative? Yes. Does an FSP always have to appoint a compliance officer in the following instances where an FSP has two or more key individuals? Yes. What about where an FSP is a sole proprietor with one representative? Yes.
What are the duties of a compliance officer? Is it a compliance officer's duty to ensure that a compliance function exists or is established as part of the risk management framework of the business? No. The responsibility to establish a compliance function rests with an FSP. A compliance officer can recommend improvements to an FSP's compliance environment; however, the FSP, perhaps through its key individual, is responsible for ensuring that a compliance function exists. Is it a compliance officer's duty to report on material non-compliance issues? Yes. Is it a compliance officer's duty to ensure all staff are adequately skilled and trained? No. This is another responsibility of the FSP through its key individual. Is it a compliance officer's duty to make recommendations to the FSP as regards any aspect of the required compliance or monitoring functions? Yes. Is it a compliance officer's duty to monitor compliance with the Phase Act and supervise the compliance function? Yes. Is it a compliance officer's duty to manage compliance with the Phase Act and manage the compliance function? No. Is it a compliance officer's duty to ensure all staff receive their Phase qualifications? No. This is also the responsibility of the FSP through its key individual. Is it a compliance officer's duty to inform the key individual of cases of non-compliance and mention it on the compliance report? Yes.
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