Overview
The South Africa Financial Service Provider (FSP) license is the primary authorization required to offer financial advisory and intermediary services within Africa's most developed financial market. Issued by the Financial Sector Conduct Authority (FSCA), the FSP license enables firms to provide advice on, and intermediate, a broad range of financial products including securities, insurance, collective investment schemes, derivatives, forex instruments, and crypto assets.
South Africa's FSP regime is widely regarded as one of the most robust regulatory frameworks on the African continent. It offers licensed firms credibility with institutional and retail clients, access to a sophisticated domestic capital market, and a strategic gateway to over 53 African countries. Compared to licenses in jurisdictions such as the UK (FCA), EU (MiFID II), or Australia (AFSL), the FSP license is considered more cost-effective while still maintaining internationally recognized regulatory standards.
The FSCA replaced the former Financial Services Board (FSB) in April 2018 under the Financial Sector Regulation Act 9 of 2017, consolidating market conduct regulation and supervision across the financial sector.
Regulatory Framework
The FSP license is governed by the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act), which establishes the legal requirements for any person or entity providing financial advisory or intermediary services in South Africa.
Key subordinate legislation includes:
- •Board Notice 194 of 2017 -- Determination of Fit and Proper Requirements for FSPs, Key Individuals, and Representatives
- •Board Notice 123 of 2009 -- Professional Indemnity and Fidelity Insurance Cover requirements
- •General Code of Conduct for Authorised FSPs -- Conduct standards that all licensed providers must observe
Additional applicable laws include the Financial Intelligence Centre Act 38 of 2001 (FICA) for anti-money laundering obligations, the Financial Markets Act 19 of 2012, and the Long-term Insurance Act 52 of 1998 and Short-term Insurance Act 53 of 1998 for insurance-related activities.
The FSCA holds authority over licensing, supervision, on-site inspections, off-site monitoring, and enforcement actions under the FAIS Act.
License Categories
The FSCA issues FSP licenses across five distinct categories, each corresponding to a specific type of financial service activity:
- •Category I -- Advisory and Intermediary Services FSP: The most common license type, authorizing firms to furnish advice and intermediary services on a non-discretionary basis. Covers the broadest range of financial product subcategories including insurance, securities, derivatives, crypto assets, and retirement funds.
- •Category II -- Discretionary FSP: Authorizes the provider to make investment decisions on behalf of clients without requiring specific instruction per transaction. Applies to portfolio management, asset management, and discretionary investment management services.
- •Category IIA -- Hedge Fund FSP: A specialized discretionary license for firms rendering intermediary services of a discretionary nature specifically in relation to hedge funds or funds of hedge funds.
- •Category III -- Administrative FSP: Covers firms that handle and manage client funds or assets on an administrative basis, including administration of collective investment schemes and other pooled investment vehicles.
- •Category IV -- Assistance Business FSP: Authorizes administration of assistance business, specifically funeral insurance policies (Long-term Insurance Subcategory A) and Friendly Society Benefits.
Each license specifies the approved financial product subcategories the FSP may service, allowing for granular authorization across products such as long-term and short-term insurance, collective investment schemes, securities, derivatives, forex instruments, retirement funds, health service benefits, deposits, and crypto assets.
Capital and Financial Requirements
Unlike many international jurisdictions, the South Africa FSP regime does not impose a fixed minimum share capital amount. Instead, financial soundness is assessed through solvency and liquidity ratios defined in Board Notice 194 of 2017.
Solvency requirement: Adjusted assets must exceed adjusted liabilities at all times, and current assets must exceed current liabilities on a continuous basis.
Liquidity requirements by category (minimum liquid assets as a fraction of annual expenditure):
- •Category I: liquid assets greater than or equal to 4/52 weeks of annual expenditure
- •Category II: liquid assets greater than or equal to 8/52 weeks of annual expenditure
- •Category IIA: liquid assets greater than or equal to 13/52 weeks of annual expenditure
- •Category III: liquid assets greater than or equal to 13/52 weeks of annual expenditure
Professional Indemnity (PI) and Fidelity Insurance:
- •Category I FSPs: minimum PI cover of R1,000,000
- •Higher categories and those holding client funds: up to R5,000,000
- •FSPs receiving or holding client financial products or funds: fidelity insurance cover of at least R1,000,000
Early warning thresholds: The FSCA must be notified immediately in writing if assets exceed liabilities by less than 10%, or if current assets exceed current liabilities by less than 10%. During early warning periods, FSPs are restricted from making payments for loans, advances, bonuses, dividends, or capital repayments to directors, officers, partners, or shareholders without prior FSCA approval.
Application Process and Timeline
The FSP license application follows a structured process through the FSCA FAIS online application system:
- •Register a South African company (Pty Ltd is the typical structure)
- •Open a local South African bank account
- •Appoint at least one Key Individual (preferably two); at least one must be a South African resident
- •Key Individuals must pass required regulatory examinations (RE1 at minimum; RE3 for Category II/IIA; RE4 for Category III)
- •Appoint a dedicated compliance officer (may be outsourced to a third-party compliance practice)
- •Appoint an external auditor
- •Prepare documentation including a detailed business plan, risk management framework, compliance policies and procedures (including AML/CFT), financial statements with forward-looking projections, and proof of PI and fidelity insurance
- •Submit the application via the FSCA online portal
- •FSCA review follows, with the Licence Committee meeting once per month to approve applications
- •Respond to any FSCA queries or requests for additional information
Timeline estimates: FSCA processing turnaround is approximately 8 to 12 weeks from a complete application. The realistic end-to-end timeline including company formation, Key Individual approvals, banking setup, and compliance preparation is 3 to 6 months. For crypto asset service provider (CASP) applications, processing times of 9 to 10 months have been reported. Common delays arise from incomplete documentation, weak risk management procedures, or insufficient Key Individual qualifications.
Fees and Levies
Application fees (effective 1 October 2024, per FSCA General Notice 1 of 2024):
- •Category I: R2,697 (approximately USD 153)
- •Category II: R16,313 (approximately USD 923)
- •Category IIA: R16,313 (approximately USD 923)
- •Category III: R49,015 (approximately USD 2,774)
- •Category IV: R2,697 (approximately USD 153)
- •A 10% discount applies for applications covering multiple categories simultaneously
- •A 20% discount applies to Category IV applications when the applicant already holds another category license
Annual levies (2025/26, reflecting a 4.4% increase):
- •Category I and IV FSPs: base amount of R3,983.90 per annum, plus R575.45 per representative and Key Individual
- •Category II, IIA, and III FSPs: base amount of R8,299.80 per annum, plus a variable amount of 0.0020578% on investments under management
- •Maximum levy cap across all categories: R2,766,600
- •The special 7.5% levy that applied in 2023/24 and 2024/25 has been discontinued
Additional levies: Financial Services Tribunal levy of 2.76% of FSCA levies, FAIS Ombud levy of R1,100 base plus R720 per Key Individual and representative.
Permitted Activities
The FSP license authorizes activities based on approved financial product subcategories specified on the license. The main product categories available under FAIS include:
- •Long-term Insurance (Subcategories A through C, covering assistance policies, risk-only products, and investment-linked policies)
- •Short-term Insurance (personal and commercial lines)
- •Retirement funds (pension, provident, and retirement annuities)
- •Collective investment schemes (unit trusts)
- •Securities and instruments (shares, equities, bonds, money market instruments)
- •Derivatives (including OTC derivatives and contracts for difference)
- •Health service benefits
- •Long-term and short-term deposits
- •Forex investment business (foreign currency denominated instruments)
- •Crypto assets (declared a financial product under FAIS effective 19 October 2022)
Category I FSPs may advise on and intermediate any approved subcategory. Category II FSPs may make discretionary investment decisions across their approved subcategories. Category IIA FSPs operate specifically with hedge funds and funds of hedge funds. Category III FSPs provide custody and administrative services for client funds and assets. Category IV FSPs are limited to assistance business products. Crypto assets are available as a subcategory across Categories I, II, IIA, and III.
Compliance and Ongoing Obligations
Licensed FSPs must maintain comprehensive ongoing compliance with FSCA requirements:
Financial reporting: Full accounting records must be maintained on a continual basis and updated monthly. Annual financial statements must be submitted within 4 months of financial year-end. Category II, IIA, III, and IV FSPs must also submit Form A (Liquidity Calculation) on a half-yearly or annual basis.
Audit requirements: An external auditor must be appointed and is required to report irregularities or suspected irregularities directly to the FSCA. The FSCA conducts regular on-site inspections and off-site monitoring.
FICA compliance: As accountable institutions under the Financial Intelligence Centre Act, FSPs must implement a Risk Management and Compliance Programme (RMCP), conduct Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD), perform sanctions screening, and file Suspicious Transaction Reports (STRs), Cash Threshold Reports (CTRs), and Terrorist Property Reports (TPRs). Non-compliance penalties include administrative sanctions, fines up to R100 million, and potential imprisonment.
Fit and proper maintenance: FSPs must maintain a competence register for all Key Individuals and Representatives, ensure ongoing compliance with Continuous Professional Development (CPD) requirements, and adhere to the General Code of Conduct for Authorised FSPs at all times.
Key Individual requirements: At least one Key Individual must pass the RE1 examination (80 questions, 65% pass mark). Representatives must pass the RE5 examination (50 questions, 65% pass mark). Both must hold FSCA-recognized qualifications.
Advantages of South Africa FSP Licensing
The South Africa FSP license offers several strategic advantages for financial services firms:
- •Gateway to Africa: South Africa is the continent's most developed financial market and serves as a hub for broader access to over 53 African countries with growing demand for financial services
- •Cost-effective entry: Compared to FCA, MiFID II, or AFSL licenses, the FSP license offers competitive application fees (from R2,697) and no fixed minimum capital requirement
- •Solvency-based capital model: The liquidity ratio approach rather than a fixed minimum capital threshold allows firms to scale financial requirements proportionally to their business size
- •Crypto asset coverage: Since October 2022, crypto assets are regulated under FAIS, enabling a single license to cover both traditional and digital asset services
- •Consumer protection framework: Mandatory PI cover, access to the FAIS Ombud for dispute resolution, and enforceable conduct standards build trust with clients and partners
- •International credibility: The FSCA is a recognized regulator, facilitating partnerships with international financial institutions that require regulated counterparties
- •Broad product scope: A single Category I license can cover insurance, securities, derivatives, forex, collective investments, and crypto assets depending on approved subcategories
- •Favorable tax environment: Corporate income tax of 27%, standard VAT of 15%, and favorable withholding tax treatment on certain categories
Recent Regulatory Changes
COFI Bill (Conduct of Financial Institutions Bill): The COFI Bill is expected to be tabled in Parliament in Q1 2026 and is anticipated to become law during 2026. It will replace the FAIS Act, the Collective Investment Schemes Control Act, and the Long-term and Short-term Insurance Acts with a single consolidated conduct framework. The Bill introduces activity-based licensing in place of the current product-category approach, meaning every FSP will need to apply for new licensing under COFI during a transition period of approximately 3 years after enactment. The regulatory focus will extend to the entire client relationship lifecycle including post-sale service, complaints handling, and redress mechanisms.
Crypto asset regulation under FAIS: On 19 October 2022, the FSCA declared crypto assets as financial products under the FAIS Act. The CASP licensing process formally opened on 1 June 2023 with an application deadline of 30 November 2023 for existing providers. As of December 2025, the FSCA had received 512 applications, approved 300, declined 14, and 121 were voluntarily withdrawn. CASPs were required to be fully FAIS-compliant by 1 July 2025. The Financial Intelligence Centre implemented the Travel Rule for crypto asset transfers effective 30 April 2025 under Directive 9. Penalties for unauthorized crypto services include fines up to R10 million and imprisonment up to 10 years.
2025/26 levy adjustments: Annual FSP levies increased by 4.4% for the 2025/26 period, lower than the initially proposed 5% increase. The special 7.5% levy that applied in the previous two years has been discontinued.