3.9 Registration of Consultants: Eligibility, Fit and Proper, Duration, Variation and Revocation

Why Consultants Are Regulated

Everyone involved in marketing and distributing UTS and PRS is "dealing in unit trusts" or "dealing in PRS". Distributors must be licensed for these regulated activities under Schedule 2 of the CMSA or be "registered persons" under Schedule 4, and they act through Consultants who must be registered with FIMM.

The aim is a minimum standard of knowledge, because Consultants are often the investor's first contact (and, for PRS, the employer's). Consultants owe investors a duty of care to:

1. act with honesty, integrity and dignity, professionally and ethically;
2. treat investors with respect and disclose all pertinent information; and
3. not misrepresent the scheme, its funds or past performance.

A Consultant must show proof of FIMM registration in the manner FIMM specifies, and must carry out a suitability assessment before recommending an unlisted capital market product (Chapter 4).

Eligibility

Under the FCR, an applicant must:

Fit and proper (Chapter 4 of the FCR)

The applicant submits a statutory declaration (now a fit-and-proper self-declaration in the FIMM Core System) to the intended Principal. The criteria must be met continuously: failing them is a breach that can lead to suspension or revocation. Distributors must monitor their Consultants and immediately notify FIMM if a Consultant is no longer fit and proper.

Rules Distributors Must Enforce

1. A Consultant may represent only one Principal.
2. A Consultant may deal only in the schemes of his Principal, or schemes it distributes, and cannot arrange to sell other providers' schemes.
3. A UTS/PRS Consultant of a UTMC, PRS Provider, IUTA or IPRA who holds a CMSRL for financial planning and wants to join a CUTA or CPRA must first terminate the existing registration.
4. IUTAs and IPRAs may register only full-time employees as Consultants, unless the IUTA/IPRA is a UTMC, a CMSL holder, a licensed insurer or a registered takaful operator.
5. CUTAs and CPRAs may register only full-time employees who hold a CMSRL for financial planning or who meet FIMM's exemption criteria.

Duration and Renewal

A Consultant's registration lapses on 31 December each year unless renewed under FIMM's Registration Manual. FIMM's CPD rule (FCR Rule 7.1.1) requires at least 16 CPD points in a year before a renewal is considered. FIMM can still suspend or revoke a registration at any time under the FCR.

Variation, Re-registration and Termination

Suspension and Revocation

FIMM may suspend or revoke a Consultant's registration if:

1. the Consultant no longer meets an eligibility requirement;
2. the Consultant's CMSRL is suspended or revoked by the SC;
3. the Consultant breaches FIMM rules, SC regulations or guidelines, or securities or other laws;
4. the SC directs FIMM to suspend or revoke; or
5. information in the statutory declaration is false, in part or in whole.

A registration may also be suspended or revoked if the Principal's registration is revoked or suspended, or the Principal ceases operations.

From Application to Registration (Registration Manual)

1. The applicant chooses the scheme type (UTS, PRS or both), approaches a Distributor as the intended Principal and creates a login in the FIMM Core System (FCS).
2. The Distributor accepts the applicant, verifies the documents and pays the fees through its prepayment account.
3. The applicant completes the fit-and-proper self-declaration and books the FCE.
4. After passing, the FCS runs pre-registration screening, including a bankruptcy check; an undischarged bankrupt cannot proceed.
5. FIMM issues an individual FIMM number, which the Consultant quotes in all later dealings with FIMM.

Only after step 5 may the Consultant market or distribute schemes.