11.1 Record-Keeping under the FAIS & FIC Acts

11.1 Record-Keeping under the FAIS & FIC Acts

Quick Answer: Under FAIS, the FSP must keep a register of representatives and related competence/compliance records (section 13 themes) and must maintain section 18 records for at least five years (premature cancellations, complaints, continued compliance, non-compliance with reasons, and continued representative compliance). The GCOC section 3(2) systems duty requires the provider to record, store, retrieve and protect client-service communications and material documentation — generally for five years after product termination (to the provider’s knowledge) or after the financial service. The FIC Act (ss 22–24 themes) separately requires identity/verification, transaction and related reportable-matter records, typically retained for five years from relationship end or transaction conclusion. RE5 tests whether you can apply these layers, not whether you can name a filing cabinet brand.

Why Task 5 is its own task

RE5 Task 5 has only two qualifying criteria, but they are high-yield. Records are how the Authority, the compliance officer, the key individual, the FAIS Ombud and the client reconstruct what happened. A representative who “remembers the advice was suitable” without a contemporaneous file has almost nothing when a complaint arrives two years later.

Earlier chapters already touched pieces of this stack:

• GCOC section 3(2) was introduced under general/specific duties (systems, five-year retention themes, safe from destruction).
• Record of advice content sits with the advice process (Task 4).
• Complaints recording sits with internal complaints handling.
• Section 18 feeds compliance monitoring (Task 1 QC4) and can map into offence themes (Task 2).

This chapter consolidates the statutory map (11.1) and the operating skill of creating, securing and retrieving records correctly (11.2).

Layer 1 — FAIS section 13: register and representative records

What section 13 demands of the FSP (themes for RE5)

Section 13 is best known for the rule that a person may only act as a representative of an authorised FSP under a proper appointment/mandate with provider responsibility for in-scope activities. For record-keeping, the same section’s operational side is equally exam-critical:

An authorised FSP must:

1. Remain satisfied that its representatives (and, where relevant, key individuals of representatives) are competent when rendering financial services on its behalf — taking into account honesty/integrity and competence-type standards aligned with the Act’s fit-and-proper thinking.
2. Take reasonable steps so that representatives comply with applicable codes of conduct and other applicable conduct laws.
3. Maintain a register of representatives (and key individuals of such representatives where applicable) that is regularly updated and available to the Authority for reference or inspection.

What the register typically captures

Training materials and the Act’s register themes expect the register (as maintained and available) to support identification and oversight, including at high level:

The register is not a once-off licensing form. It is a living control. If you change product appointment, move under or off supervision, or leave the FSP, the register and supporting HR/competence files must reflect reality.

Representative-side records that feed section 13

Section 13 is “FSP-owned,” but representatives generate the raw material that proves competence and code compliance:

• Evidence of RE completion, product training, and CPD where applicable;
• Supervision documentation (work under supervision plans, reviews, sign-offs);
• Client files that show the representative actually stayed inside appointment scope and met GCOC duties;
• Prompt disclosure to the FSP of changes that affect honesty, integrity, competence or register particulars.

Exam trap: “I passed RE5, so the FSP need not keep a register about me.” False — the FSP must maintain the register; your RE is only one competence input.

Scenario: register out of date

Facts: Ayanda was appointed for long-term insurance subcategory B1. Six months ago she completed training and was also appointed for short-term personal lines, but the register still lists only B1. She places personal-lines policies daily.

Analysis: If the FSP’s register and supporting appointment records lag, the firm fails the regularly updated register theme. Ayanda’s daily work may be operationally intended, but the control record is false. Authority inspection, debarment disputes, and complaint investigations all start from what the register says. Representatives must escalate appointment changes through firm process — not assume “everyone knows.”

Layer 2 — FAIS section 18: five-year maintenance categories

Section 18 (Maintenance of records) requires an authorised FSP to maintain records for a minimum period of five years regarding specified categories. Classic RE5 teaching lists include:

How to read section 18 on the exam

1. Owner of the duty: the authorised FSP maintains the records. Representatives still create and feed them.
2. Minimum period: five years is the statutory floor taught for these section 18 categories — do not invent shorter “sales-cycle” retention.
3. Substance over form: a spreadsheet titled “complaints” that is empty while the call centre logs hundreds of verbal complaints is not compliance.
4. Link to offences: material record failures can sit alongside section 36 offence themes (record and reporting failures) studied in Task 2 — Task 5 tests the positive duty; Task 2 tests the consequence pathway.

Scenario: premature cancellation without a trail

Facts: Clients frequently cancel investment contracts within months of placement. The FSP’s sales system shows production; there is no coherent five-year log of known premature cancellations or analysis linking cancellations to particular representatives or product types.

Analysis: Section 18 expressly contemplates premature-cancellation records. Missing them blinds the FSP to churn patterns and leaves the firm unable to answer Authority or Ombud questions about whether advice was suitable. A representative who “only worries about new business” still contributes to cancellation statistics that the firm must be able to evidence.

Layer 3 — GCOC section 3(2): systems for client-service records

Section 18 is not the whole record universe. The General Code of Conduct places a specific duty on providers to run procedures and systems so that client-facing work is documented. Section 3(2) themes (as taught consistently with GCOC text) require a provider to have appropriate procedures and systems to:

1. Record such verbal and written communications relating to a financial service rendered to a client as are contemplated in the Act or Codes;
2. Store and retrieve those records and any other material documentation relating to the client or the financial service; and
3. Keep such client records and documentation safe from destruction.

Retention under the Code

All such records must generally be kept for five years after termination, to the knowledge of the provider, of the product concerned or, in any other case, after the rendering of the financial service concerned.

Additional practical Code points taught for RE5:

Section 18 vs GCOC section 3(2) — do not merge them carelessly

A firm can have a beautiful section 18 complaints spreadsheet and still fail section 3(2) if advice calls and needs analyses cannot be retrieved. Conversely, neat client files without complaint/non-compliance logs still leave section 18 gaps.

Layer 4 — FIC Act record-keeping (ss 22–24 themes)

Many FSPs (or parts of their business) are accountable institutions under the Financial Intelligence Centre Act. FIC record duties sit alongside FAIS/GCOC duties — they are not optional “bank-only” admin.

High-level RE5 map (detail of customer due diligence and reporting expands in the FIC/AML chapter):

Do not collapse FAIS five years into FIC five years without thought

Both regimes often land on a five-year figure, but the trigger events differ:

• FAIS/GCOC: product termination / service rendered / section 18 category events;
• FIC: relationship termination / transaction conclusion / report submission clocks.

A client relationship may end for FAIS product purposes while FIC retention for a particular transaction clock is still running — or the reverse. Operational policy should take the longer applicable obligation for each record type rather than destroying early under a single casual “five-year purge.”

Scenario: FICA file missing at advice review

Facts: Compliance reviews an advice file for a new investment client. The record of advice exists, but there is no copy of identity verification or source-of-funds notes required by the firm’s FIC processes.

Analysis: The file may partially satisfy FAIS advice documentation and still fail FIC record duties. RE5 expects you to recognise that AML/CFT records are not “someone else’s department” when you onboard clients as the face of an accountable institution.

Why records exist — the exam “purpose” answers

Question banks often ask why records of advice and transactions must be kept. Strong answers cluster around:

1. Enable review of the advice or service (KI, supervisor, CO, Authority);
2. Support complaint handling and Ombud processes with facts rather than reconstruction from memory;
3. Demonstrate compliance with the FAIS Act, Codes and (where applicable) FIC Act;
4. Protect clients and the integrity of the industry by creating accountability.

Wrong answers usually claim records exist to maximise commission, to sell data, or to replace the need for a needs analysis.

Representative accountability inside firm-owned duties

Even though sections 13 and 18 name the FSP, RE5 scenarios still ask what you must do:

Key exam traps for 11.1

1. “Five years from first meeting always.” Retention clocks often run from product termination, service rendering, relationship end, or transaction conclusion — learn the theme, not a single casual start date for every document.
2. “Only written advice needs a record.” GCOC systems duties cover verbal and written communications contemplated by the Act/Codes.
3. “FIC records replace FAIS records.” They are parallel stacks.
4. “Register of representatives is optional for small teams.” Section 13 register maintenance is a core FSP duty when representatives are appointed.
5. “If the server crashed, retention did not apply.” Safe-from-destruction and retrievability are positive duties — backups and dual control are part of compliance design (expanded in 11.2).

Master this section as a map: s 13 register + competence records → s 18 five-year categories → GCOC s 3(2) client-service systems → FIC ss 22–24 identity/transaction/report records. Section 11.2 turns the map into daily habits of create, secure, retrieve and never destroy early.