Financial Service Provider (FSP) – FSCA
What is FSCA and what does it do?
The Financial Sector Conduct Authority (FSCA) is the regulatory body responsible for overseeing the conduct of financial institutions in South Africa, since 2018. FSCA’s vision is to foster a fair, efficient, and resilient financial system that supports inclusive and sustainable economic growth in the region.
Why establish a Financial Service Provider in South Africa?
An established Financial Service Provider (FSP) benefits from:
- South Africa’s sophisticated financial market along with its well-established infrastructure, high liquidity, and advanced regulatory frameworks.
- A well-regulated environment that provides credibility and investor confidence, attracting both local and international clients.
- Favorable tax treaties, exemptions, and incentives for foreign investors.
- South Africa’s well-educated workforce.
- An efficient incorporation process.
- A convenient time zone, allowing seamless business communication between Europe and Asia.
Types and Features of Financial Service Providers
FSP firms can operate through varying business models due to the different combinations of activities and services that can be generated, based on the company’s business plan and vision. FSP entities are distinguished in five categories.
The following table lists the features and specific authorized activities that can be offered under each category.
| Features | Category II | Category IIA | Category III | Category IV | |
|---|---|---|---|---|---|
| Services | Financial Advisory and Intermediary Services: advice on financial products without discretionary management | Discretionary: managing client portfolios with a mandate | Hedge Fund: Rendering intermediary services of a discretionary nature in relation to a particular hedge fund or fund of hedge funds in connection with a particular financial product | Administrative: handling and managing client funds or assets | Assistance Business FSP: services related to assisting clients with claims on financial products |
| Local Key Individual | Mandatory | Mandatory | Mandatory | Mandatory | Mandatory |
| Compliance Officer | Mandatory | Mandatory | Mandatory | Mandatory | Mandatory |
Minimum Regulatory Capital Requirements
All FSP Categories issued by the FSCA mandate minimum capital requirements. To this end, the capital requirement depends on the category and as a rule, the current assets must exceed current liabilities.
Applications Fees
The application fees payable to the FSCA depend on the Category of License to be acquired.
Annual Fees
License renewal fees are fixed and depend on the Category of License held.
Licensing Timeframe
Drawing on our experience with the FSCA, we have concluded that the completion of the application process is estimated to be between 6-12 months. This depends on the quality and completeness of the required information that has been provided and the applicant’s capacity to deliver a clear business plan and vision.
Obtaining a Financial Service Provider License in South Africa with SALVUS
The SALVUS Investment Firms Licensing team manages each licensing project through a project management approach. We leverage our experience in dealing with the FSCA in South Africa to gather all the necessary information and prepare the necessary documentation for the submission of a complete and well-supported application. In addition, we assist our clients with the optimal allocation of their financial resources through a selection of in-house employees, outsourcing arrangements, and third-party providers.
Please contact us at info@salvusfunds.com to discuss your FSP license or other licensing needs. We recognize that your business may encounter distinctive challenges, and we are prepared to assist you in achieving your business goals. We look forward to working together and being of value.
