How to Buy a Financial Services Provider  (FSP) in South Africa 

Buying an FSP gives you a fast track into South Africa’s regulated financial sector. Instead of applying for a new license, you acquire an existing one. Here’s what you need to know.

1. Be clear on your goal 

❖ Decide if you want a dormant FSP with no operations or an active FSP with a client base. 

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❖ Check the license categories you need. For example, Category I for advice and intermediary, Category II for discretionary management, or in terms of Products Subcategory I.27 for crypto assets. 

2. Check regulatory fit 

❖ Every FSP is regulated under the Financial Advisory and Intermediary Services  (FAIS) Act. 

❖ The FSCA must approve any change in Key Individual (KI) or directors. ❖ The KI must meet the Fit and Proper requirements: qualifications, regulatory exams, and experience. 

3. Run due diligence 

Review: 

❖ FSP license certificate and FSCA approval letters. 

❖ Compliance history, including past audits and FSCA interactions. 

❖ Bank statements, tax clearance from SARS, and CIPC filings. 

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❖ Shareholder agreements and beneficial ownership records. 

❖ Online Adverse Findings. 

4. Value the FSP 

❖ A dormant FSP may be available depending on categories. 

❖ An operational FSP with clients can cost more depending on turnover and assets  under management. 

❖ Factor in monthly running costs, which cover the Key Individual (KI), AML Officer,  Compliance Officer, and governance. 

5. Draft agreements

❖ Letter of Intent (LOI) or Offer to Purchase (OTP) starts the process. ❖ Share Purchase Agreement (SPA) transfers ownership. 

❖ Power of Attorney (POA) or Limited POA may be needed if a representative acts for  you. 

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6. Complete transfer 

❖ Pay the agreed purchase price. 

❖ Shares transfer to your name. 

❖ Directors update on CIPC. 

❖ FSCA confirms approval of new KI and officers. 

7. Get FSCA approval 

❖ Submit notification of change of ownership. 

❖ Submit new KI, AML, and compliance officer details. 

❖ FSCA review depends on how fast the FSP responds to requests. 

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8. Manage ongoing compliance 

❖ File annual returns with CIPC. 

❖ Submit compliance reports to FSCA. 

❖ Maintain professional indemnity cover. 

❖ Keep required policies updated: AML, Risk Management, TCF, Complaints, Conflict  of Interest, POPIA, and Business Continuity etc. 

Key takeaway 

If you want to enter the South African financial market, acquiring an FSP is quicker than  applying from scratch. Make sure you run due diligence, budget for ongoing compliance, and  get FSCA approval for changes in control.