5.4 Offences under the FAIS Act
Key Takeaways
- Section 36 creates statutory offences for listed FAIS contraventions; on conviction, modern RE5 materials teach maxima of a fine up to R10 million and/or imprisonment up to 10 years (or both).
- Core themes include unauthorised rendering of services (s 7(1)), business with unauthorised persons (s 7(3)), licence holding-out failures, representative appointment/debarment failures, records and reporting failures, and false statements.
- Continuing a declared undesirable practice (s 34(4)) or failing to rectify when directed (s 34(6)) are offence-mapped hooks from the undesirable-practices framework.
- Pretending to be an appointed representative of a licensed FSP while serving clients is a specific offence theme (s 36(d)).
- Offences stack with licence action and debarment — representatives avoid them through scope control, truthful declarations, record discipline, and immediate cessation of banned practices.
5.4 Offences under the FAIS Act
Quick Answer: Section 36 of the FAIS Act creates offences for listed contraventions — including rendering financial services without authorisation, certain licence-display failures, representative-appointment and debarment failures, record and reporting failures, continuing a declared undesirable practice, failing to rectify when directed, and false or misleading statements. On conviction, modern RE5 materials teach a maximum of a fine up to R10 million and/or imprisonment up to 10 years (or both). Representatives must design daily habits that avoid these offence pathways.
Task 2 closes with offences because licence maintenance is not only about good intentions. Some failures are criminalised (or quasi-criminal statutory offences) in addition to administrative licence and debarment tools.
What “offence” means on RE5
An offence under section 36 is a statutory wrong that can lead to prosecution and conviction, with fine and/or imprisonment consequences. It is different from:
| Concept | Character |
|---|---|
| GCOC breach | Conduct duty failure; complaints, Ombud, licence and debarment risk |
| Administrative sanction / levy penalty | Regulatory money and licence consequences |
| Section 36 offence | Listed Act contraventions that attract criminal-type penalties on conviction |
| Debarment (s 14) | Industry removal of a person from rendering financial services |
One set of facts can trigger more than one pathway. Unauthorised advice can be an offence and lead to debarment and civil/Ombud exposure.
Penalty scale (teach carefully)
As amended and taught in current RE5 self-study materials, a person convicted of a section 36 offence is liable to:
- a fine not exceeding R10 000 000; or
- imprisonment for a period not exceeding 10 years; or
- both such fine and imprisonment.
Exam discipline:
- Know the maxima as taught for section 36.
- Do not invent a “standard fine for first offenders” or unpublished settlement numbers.
- Older notes sometimes still say R1 million — the modern RE teaching figure after amendment is R10 million / 10 years. If an exam question reproduces the section text, use the reproduced text.
Core offence themes representatives must know
RE5 does not require you to recite every cross-referenced subsection from memory without context, but you must recognise the families of conduct that section 36 criminalises. Study guides map section 36 to contraventions of provisions such as the following themes.
1) Unauthorised rendering of financial services — section 7(1)
No person may act or offer to act as a financial services provider unless licensed under section 8 (subject to exemptions).
Rep angle: You do not escape this by calling yourself a “consultant,” “coach,” or “lead generator” if you are in substance rendering advice or intermediary services as an FSP without authorisation. Working as a representative is lawful only under the representative model for an authorised (or exempt) FSP.
2) Doing financial-services business with unauthorised persons — section 7(3)
An authorised FSP or representative may only conduct financial-service-related business with a person who is lawfully licensed (within conditions) or is a representative as contemplated in the Act.
Rep angle: Do not place business through, or partner with, unlicensed “brokers” for regulated services. Section 7(3) breaches have featured in enforcement examples precisely because distribution chains tried to use unauthorised intermediaries.
3) Licence display / holding-out failures — section 8(8) themes
Failures around displaying the licence, referring to it correctly in business documentation and advertising, and producing it when required, are mapped into the offence framework.
Rep angle: Never use a lapsed, suspended or withdrawn licence (or copy) for business purposes. Never claim FSCA authorisation for product lines you do not hold. Fake licence images in WhatsApp marketing are an honesty/integrity and offence risk.
4) Representative appointment, mandates and reappointment — section 13 themes
Offence mapping includes failures to ensure that:
- a person acts as a representative only for an authorised/exempt FSP;
- clients receive proper confirmation of mandate / FSP responsibility themes;
- debarred persons are not reappointed except in accordance with the Act and BN 82 pathways;
- representatives and key individuals of juristic representatives meet fit and proper requirements and conduct-law duties (section 13(2) themes).
Rep angle: Do not render services before you are properly appointed and on the register for the product subcategory. Do not “help out” for a friend at another firm without a lawful appointment.
5) Debarment duties — section 14(1) themes
Failure by an FSP to debar a representative who no longer meets fit and proper requirements or who has breached the Act in ways requiring debarment is an offence-mapped failure for the provider side — and the underlying misconduct can destroy the representative’s career.
6) Compliance reporting and financial statement duties — sections 17(4), 19(2), 19(4) themes
Failures to submit compliance reports, audited financial statements within required timeframes, and auditor reporting of irregularities are offence-mapped for the governance chain. Representatives should understand these exist even if they do not personally sign the audit opinion.
7) Record-keeping failures — section 18 themes
Failure to maintain and keep required records is offence-mapped. For representatives, poor advice records are both a GCOC problem and part of the firm’s section 18 risk surface.
8) Undesirable practices — sections 34(4) and 34(6)
Two exam-critical offence hooks from Chapter 5’s earlier sections:
| Hook | Conduct |
|---|---|
| s 34(4) | Carrying on a business practice after it was declared undesirable |
| s 34(6) | Failing to rectify within the directed period after a section 34(5) direction |
9) False statements and concealment — section 36(b)/(c) themes
It is an offence to:
- in any application under the Act, deliberately make a misleading, false or deceptive statement, or conceal a material fact;
- give an appointed auditor or compliance officer false/misleading information or conceal material facts in the execution of duties under the Act.
Rep angle: Lying on fit and proper declarations, hiding debarments, doctoring CPD evidence, or feeding false client files to the compliance officer is not “admin cleverness” — it is offence territory and almost always honesty/integrity death for appointment purposes.
10) Pretending to be a representative — section 36(d) themes
Pretending to be an appointed or mandated representative of a licensed FSP while providing financial services to clients is specifically mapped as an offence theme.
Rep angle: Using another person’s mandate letter, dual-employing without disclosure, or claiming “I’m with Firm Z” when you are not appointed there is a classic section 36(d) pattern.
Processes to avoid offence-level conduct (practical controls)
RE5 materials expect more than fear — they expect prevention habits:
- Verify authorisation before collaborating with another FSP or “broker.”
- Stay inside appointment scope on the register of representatives.
- Stop declared undesirable practices the day the declaration publishes.
- Tell the truth on all FSCA, FSP and compliance questionnaires.
- Keep records contemporaneously (advice, disclosures, client instructions).
- Escalate illegal instructions; do not execute them.
- Never market with suspended/lapsed/withdrawn licence credentials.
- Support debarment and remediation processes when misconduct is found — covering up multiplies offence risk.
How offences interact with other Chapter 5 tools
Unauthorised / false / banned conduct
│
├─► Section 36 offence (fine / imprisonment maxima)
├─► Section 9 licence suspension/withdrawal (firm)
├─► Section 14 debarment (person)
├─► Section 34 rectification directions (if undesirable practice)
└─► Civil / Ombud / court client remedies
For a representative, the personal nightmare scenario is: offence exposure + debarment + unemployability in the industry, even if the firm also faces licence action.
Worked scenarios
Scenario A — Unlicensed side hustle: Sipho is appointed at Firm A for short-term personal lines. At night he advises friends on CIS investments “as a private coach” for a fee, with no FSP licence and no appointment for CIS.
Analysis: He is acting as an unauthorised provider for those services (section 7(1) themes) and may also be pretending to operate outside the representative model. Offence + debarment risk is severe.
Scenario B — Banned practice continues: After a Gazette declaration, sales staff keep using the banned script for a month to “protect income.”
Analysis: Section 34(4) continuation is an offence-mapped contravention; managers who ordered it share accountability themes; section 34(5)/(6) rectification may follow.
Scenario C — False application: A candidate conceals a fraud conviction on a representative appointment declaration.
Analysis: Deliberate false statement / concealment of material fact — section 36(b) themes plus honesty and integrity failure under BN 194.
Scenario D — Fake mandate: A person shows clients a forged “appointed representative” letter for a well-known bank FSP.
Analysis: Section 36(d) pretending themes; also section 7 unauthorised rendering if services are provided.
Scenario E — Business with unlicensed introducer: A rep pays an unlicensed person to give product advice to clients and then “just does the paperwork.”
Analysis: Section 7(3) themes — financial-services-related business with a person who is not lawfully authorised/appointed for those services.
Exam traps
| Trap option | Why it fails |
|---|---|
| “Only FSPs can commit offences; representatives never can.” | Section 36 applies to any person who commits the listed acts; reps can offend. |
| “Offences replace debarment.” | Tools stack; they are not mutually exclusive. |
| “If the client was happy, no offence is possible.” | Client happiness does not legalise unauthorised services or banned practices. |
| “WhatsApp advice is never FAIS.” | Medium is irrelevant if the substance is advice/intermediation in respect of a financial product. |
| Invented fine of “R50 000 fixed for all offences.” | Use statutory maxima / given facts — do not invent fixed tariffs. |
Linking back to Task 2 — maintaining the licence
Offence-free conduct is how representatives contribute to maintaining the FSP licence:
- Unauthorised activity and false statements put the firm’s section 9 status at risk.
- Undesirable-practice offences show the firm cannot control its methods.
- Record and reporting failures suggest governance collapse.
Your RE5 competence is not only knowing definitions — it is refusing the shortcut that becomes a section 36 stem in next year’s paper.
RE5 exam tips for section 36
- Memorise the big families: unauthorised services; business with unauthorised persons; licence holding-out; rep appointment/debarment failures; records/reporting; s 34(4)/(6); false statements; pretending to be a rep.
- Know the R10 million / 10 years maximum teaching figure (use exam text if supplied).
- Connect offences to stop-and-check behaviours from sections 5.1–5.3.
- When a scenario smells like crime + conduct failure, consider offence + debarment + licence together in your reasoning even if only one is asked.
Which statement best describes FAIS section 36 as taught for RE5?
Which conduct is a classic section 7(1) offence theme?
After a practice is declared undesirable, a representative keeps using it for new clients. Which offence-mapped provisions are most directly engaged?
A person who is not appointed shows clients a forged letter claiming to be a representative of a licensed FSP and gives product advice. Which section 36 theme is most clearly illustrated?