RE1 exam for South African brokers: prerequisites, coverage and how to pass

Contents

1. Who has to write the RE1
2. When it must be passed: before approval, not after
3. Format and pass mark
4. What the RE1 covers: the 16 tasks
5. A study plan built on the FSCA's own advice
6. Turning the RE1 syllabus into daily practice
7. Frequently asked questions

The RE1 exam is the regulatory examination for financial services providers, key individuals and compliance officers in all categories of FSPs in South Africa. It is a closed-book, multiple-choice paper of 80 questions, written in two and a half hours, with a pass mark of 65%: at least 52 correct answers. Unlike the RE5 for representatives, the RE1 is not something you can complete later under supervision. Board Notice 194 of 2017 requires the applicable regulatory examination to be passed before the person's authorisation, approval or appointment. For a broker who wants to open their own FSP or be approved as a key individual, the RE1 is the entry ticket to the management side of the business.

Who has to write the RE1

The FSCA regulatory examinations FAQ lists four examinations and states that the RE1 applies to FSPs, key individuals and compliance officers in Categories I, II, IIA, III and IV. Table A in section 26 of Board Notice 194 of 2017, the fit and proper determination, sets out the combinations:

FSP category	FSP and key individuals	Representatives
Category I (most insurance brokerages)	RE1	RE5
Category II and IIA	RE1 and RE3	RE5
Category III	RE1 and RE4	RE5
Category IV	RE1	RE5

The RE3 and RE4 are shorter papers of 30 questions each, written in addition to the RE1 by discretionary and administrative FSPs. A short-term or long-term insurance brokerage licensed in Category I does not need them. A principal who manages the business and also gives advice will usually need both the RE1 and the RE5 for representatives, because they wear both hats.

There is one carve-out in section 25 of the same notice: the regulatory examination requirements do not apply to a Category I FSP and its key individuals that are authorised or approved only for Long-term Insurance subcategory A and/or Friendly Society Benefits. A funeral-only operation can therefore be licensed without the RE1. The moment it adds short-term personal lines or other long-term products, the requirement applies.

When it must be passed: before approval, not after

Section 26(6) of Board Notice 194 of 2017 is short: an FSP, a key individual and a representative must successfully pass the applicable regulatory examinations before that person's authorisation, approval or appointment. Representatives get relief through FAIS Notice 86 of 2018, the exemption for services under supervision, which gives them two years from their date of first appointment. The RE1 has no equivalent window in that notice for a key individual seeking approval. In practice:

• a broker leaving a large firm to set up their own FSP should pass the RE1 before the licence application is submitted, not while it is pending;
• a brokerage that loses its only key individual has to approve a replacement who already holds the RE1, which is why succession planning starts with the exam;
• a compliance officer applying for approval is also tested on the RE1 content.

Before relying on anyone's claimed result, check the public record: our guide on how to check a name on the FSCA register shows what the FSP search displays.

Format and pass mark

The figures below come from the FSCA FAQ and the preparation guide for the RE1 and RE5 (version of 1 July 2024).

Feature	RE1
Number of questions	80, multiple choice, four options each
Value per question	1.25%
Duration	2 hours 30 minutes
Pass mark	65%, which means at least 52 correct answers out of 80
Book	Closed book, no material in the examination room
Negative marking	None: an answer is right or wrong
Attempts	No limit on the number of attempts
Fee	A legislated fee published by the FSCA

Questions are drawn at random from a question bank, so two candidates in the same room get different papers with the same layout by level of complexity:

Level	Share of the RE1	Questions
Level 1	27%	21
Level 2	39%	32
Level 3	22%	18
Level 4	12%	9

Question styles include direct questions, incomplete sentences, negative questions, most/best/least questions, Roman numeral questions where more than one statement is correct, and sequencing questions where events must be put in order. You do not have to memorise legislation word for word: where a question relies on a specific section, the FSCA says that section is quoted in the question.

What the RE1 covers: the 16 tasks

The RE5 tests eight tasks; the RE1 tests twice as many, and the preparation guide states that every task is covered at least once in an examination. The tasks come from Table 1 of Annexure Five to Board Notice 194 of 2017:

1. Demonstrate understanding of the FAIS Act as a regulatory framework.
2. Define financial products and financial services.
3. Maintain the licence of the FSP: licence conditions, changes to licence details, display of licences, suspension, withdrawal and lapsing, undesirable practices, levies, on-site inspections and offences.
4. Operate as a key individual: approval, management and oversight duties, honesty, integrity and good standing, competence and ongoing training.
5. Manage and oversee the operational ability of the FSP: record storage, bank accounts, professional indemnity and fidelity cover, business continuity, financial soundness and outsourcing.
6. Adhere to the specific codes of conduct: conflicts of interest, disclosures, client funds, advertising, complaints handling and termination of agreements.
7. Manage and oversee the compliance function.
8. Comply with regulated record-keeping requirements.
9. Manage and oversee the accounting and auditing requirements.
10. Manage and oversee the requirements of the FIC Act and the money laundering and terrorist financing control regulations.
11. Deal with complaints submitted to the Ombud for FSPs.
12. Define the role of the representative.
13. Manage and oversee the appointment of representatives.
14. Manage the rendering of services under supervision.
15. Manage and oversee the representatives appointed by an FSP.
16. Debar representatives that have failed to comply with the FAIS Act in a material manner.

The difference with the RE5 is the point of view. The RE5 asks what a representative must do; the RE1 asks what the business must have in place and what the key individual must check. Many qualifying criteria are skills phrased as "verify that…", "confirm that…" or "ensure that…": a process exists, a register is maintained, a complaints procedure is followed. Our guide to the FAIS Act covers the legal frame these tasks rest on.

A study plan built on the FSCA's own advice

The FSCA preparation material page for the RE1 lists what to read: the FAIS Act, the Financial Intelligence Centre Act, the General Code of Conduct, the Ombud rules, the requirements for reappointment of debarred representatives, the procedure for approval of key individuals, the FAIS Regulations, the professional indemnity notice, the compliance officer notice, the audit exemption, the fit and proper determination, the fees notice and form of licence, plus four FAIS notices including the new licence application form and the supervision exemption. Build the plan around that list:

1. Start early. The preparation guide recommends starting at least three months before the examination date.
2. Download the current versions from the FSCA legislation page rather than a summary from a previous year; questions are amended when the law changes.
3. Work task by task with Appendix A of the guide, which maps each criterion to the sections to read. The guide suggests grouping criteria in threes or fours and studying at least two hours a day.
4. Read the legislation first, then the plain-language material, then the legislation again. The guide is blunt that candidates who relied only on study notes and mock questions fail.
5. Do not skip tasks that feel foreign to a broking firm. Accounting and auditing, FICA and debarment are tested even if your firm outsources them.
6. Treat mock papers and short workshops with caution. The FSCA FAQ notes that it does not accredit training providers and that a workshop of less than a week cannot cover the content.
7. Pace yourself on the day. The guide suggests half a minute to a minute for knowledge questions and up to two minutes for application and analysis questions, and moving on from a hard question to return to it later.

Turning the RE1 syllabus into daily practice

Once approved, the key individual has to do what the RE1 tested: oversee representatives, keep records, handle complaints. If advice and service run on WhatsApp, that oversight has to reach the conversations too. Two situations come up often in a brokerage.

A client complains in a thread run by a representative still under supervision. The key individual takes over in the same conversation so the record stays in one place:

Hi {first name}, I'm {name}, responsible for short-term business at {brokerage}. I have read your messages with {adviser} about the declined geyser claim. I'm treating this as a formal complaint under our complaints procedure and will send you our written response and the reasons by {date}. If you are not satisfied with it, I will also tell you how to refer it to the FAIS Ombud.

A client asks a supervised representative for advice on a product they are not yet appointed for:

Hi {first name}, thanks for asking about life cover. That falls outside the products I can advise on at the moment, so I have passed your question to {supervisor}, who will contact you today. Your car and household policy stay with me as usual.

When these threads sit in a shared inbox on the firm's WhatsApp Business number rather than on personal phones, the key individual can read a representative's conversations and the firm keeps them for the record. In ORIS, conversations are attached to the customer record, an AI-suggested reply lands as a draft for a person to check, auto-reply runs only under rules the firm sets and hands over to a person when the message needs it, and data can be exported as CSV for the compliance file. None of that replaces the RE1 knowledge: it gives the key individual something to supervise. When a representative crosses the line, the debarment process under section 14 is where task 16 meets real life.

Frequently asked questions

How many questions are in the RE1 exam?

The RE1 has 80 multiple-choice questions with four options each, written in 2 hours 30 minutes. Each question is worth 1.25%, and the pass mark of 65% means you need at least 52 correct answers.

Can I be approved as a key individual and write the RE1 later?

No. Section 26(6) of Board Notice 194 of 2017 requires the applicable regulatory examination to be passed before authorisation, approval or appointment. The two-year supervision window under FAIS Notice 86 of 2018 concerns representatives.

What is the difference between the RE1 and the RE5?

The RE1 is for FSPs, key individuals and compliance officers and covers 16 tasks on running and overseeing the business. The RE5 is for representatives, has 50 questions and covers eight tasks on rendering financial services correctly.

Does a funeral-only FSP need the RE1?

Not if the FSP and its key individuals are authorised or approved only for Long-term Insurance subcategory A and/or Friendly Society Benefits, under section 25 of Board Notice 194 of 2017. Adding other products brings the requirement back.

Where do I register for the RE1?

Through the Moonstone examination body, by telephone or online, as the FSCA indicates. You need your ID or passport number, an FSP number, personal and contact details and professional details.