Financial soundness asks whether the FSP has enough capital. This task's 11 QCs ask a different question entirely: does the FSP actually have the practical infrastructure — systems, accounts, insurance, continuity planning — to operate properly and protect client interests day to day?
QC1 — Describe the operational ability requirements prescribed in the FAIS Act
QC2 — Confirm adequate storage/filing systems for safekeeping of records, communications and correspondence
QC3 — Verify that the FSP has the required bank accounts
QC4 — Implement and maintain the prescribed guarantees, professional indemnity or fidelity insurance cover
QC5 — Ensure disaster recovery and business continuity plans are in place
QC6 — Describe the financial soundness requirements for a FSP
QC7 — Confirm that the financial soundness requirements are met
QC8 — Describe the requirements when outsourcing an administration or systems function
QC9 — Ensure written service level agreements are in place where activities are outsourced
QC10 — Check processes exist to ensure suitable providers are selected for outsourced functions
QC11 — Confirm that outsourced entities providing financial services are authorised FSPs
QC1–QC5: The Infrastructure Checklist
Operational ability isn't a single requirement — it's a set of practical, checkable items a KI is expected to actively verify, not assume. QC2 requires storage and filing systems that let records actually be retrieved within a reasonable time — not just "somewhere on a shared drive." QC3 requires the FSP's required bank accounts, including a separate account for client monies where the General Code applies.
QC4 covers professional indemnity and fidelity insurance, governed by Board Notice 123 of 2009 — a Notice that survived the 2017 Fit and Proper overhaul untouched. A lapse here triggers automatic licence suspension under Task 3, making this one of the highest-stakes calendar items a KI personally tracks. QC5 requires genuine disaster recovery and business continuity planning — addressing key-person risk, not just data backups.
QC6–QC7: Financial Soundness, Applied to the FSP
Financial soundness applies to the FSP and to representatives — not to KIs, who are specifically exempt under Task 4. This distinction is one of the most heavily tested KI facts across the whole exam. QC7 makes clear this is an ongoing verification duty, not a once-off check at licensing — soundness can deteriorate over time and must be monitored continuously.
QC8–QC11: Outsourcing Doesn't Outsource Accountability
Handing a function to a third party transfers the operational task. It never transfers the FSP's regulatory accountability for that function's outcome.
Verbal or informal understandings with a service provider aren't sufficient — a genuine written SLA must cover scope, data security, and performance standards. And QC11 closes a gap that's easy to miss: if the outsourced entity itself renders financial services, rather than just administration, that entity must independently hold its own FAIS authorisation. You cannot outsource a regulated function to an unauthorised party.
Quick Recap
- Operational ability is about practical infrastructure — systems, accounts, insurance, continuity — separate from financial soundness
- PI insurance is governed by Board Notice 123 of 2009, which survived the 2017 overhaul untouched
- Financial soundness applies to FSPs and representatives, never to KIs
- Outsourcing a function never outsources the regulatory accountability for it, and an outsourced FSP still needs its own authorisation
Infrastructure Is a Governance Obligation, Not Admin
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