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- FAIS Act
- The Financial Advisory and Intermediary Services Act 37 of 2002, which regulates financial services providers and their representatives and aims to protect clients of financial services.
- Advice under FAIS
- Any recommendation, guidance or proposal of a financial nature furnished to a client regarding the purchase of, investment in or variation of a financial product, excluding factual information.
- Intermediary service
- Any act other than advice performed for or on behalf of a client in relation to a financial product, such as buying, selling, administering or keeping the product in safe custody.
- FAIS Registrar
- The executive officer of the Financial Sector Conduct Authority, who licenses providers, approves key individuals and takes regulatory action under the FAIS Act.
- When a licence is required
- Any person who renders financial services as a regular business must first be licensed by the Registrar; rendering services without a licence is an offence.
- FAIS licence categories
- Licences are categorised as I (advice and intermediary services), II (discretionary), IIA (hedge funds), III (administrative) and IV (assistance business such as multi-agents).
- Key individual
- A natural person approved by the Registrar who is responsible for managing and overseeing the rendering of financial services by the provider or its representatives.
- Representative appointment
- A person may render financial services on behalf of a provider only if appointed in writing by that provider and fit and proper for the functions performed.
- Fit and proper pillars
- Honesty and integrity, competence, operational ability and financial soundness; a provider must satisfy these requirements at licensing and continuously thereafter.
- Honesty and integrity
- A person must have no conviction for dishonesty, no current debarment, no pending dishonesty proceedings and no adverse regulatory findings against them.
- Competence requirements
- The combination of a qualification at the required NQF level, relevant experience, the prescribed regulatory examination and class-of-business training for the products concerned.
- Continuing professional development
- Representatives and key individuals must complete the prescribed annual CPD hours, including ethics-related activities, and must retain verifiable evidence of completion.
- Code of conduct
- Rules issued by the Registrar for a category of financial services, prescribing minimum conduct standards; contravention is an offence and grounds for regulatory action.
- General Code of Conduct
- The code applying to providers not covered by a sector-specific code, requiring honesty, fairness, due skill and care, disclosure of conflicts and suitability of advice.
- Conflict of interest disclosure
- A provider must disclose in writing any financial interest or relationship that may impair its ability to render an unbiased financial service to the client.
- Earliest reasonable opportunity
- The point at which a representative must disclose identity, licence status, services, fees and commission, conflicts, supervision status and the complaints procedure to the client.
- Record of advice
- A written record of the advice given, the client's needs and the product recommended; it is given to the client on request and retained for five years.
- Needs analysis
- Collecting and analysing the client's financial situation, objectives, risk tolerance, knowledge and time horizon before recommending a financial product to that client.
- Commission disclosure
- A representative must disclose to the client, in writing before rendering the service, the commission, fees or other consideration received in respect of the financial product.
- Record retention period
- Providers must keep records of financial services rendered and the related client documents for at least five years from the date the service was rendered.
- Client profile
- The documented information about a client's circumstances, needs, objectives, risk tolerance, experience and time horizon used to assess the suitability of a product.
- Client refuses information
- If a client declines to provide information needed for a needs analysis, the representative must record the refusal and explain the consequences for the advice given.
- Compliance officer
- A person appointed by a provider, approved by the Registrar and independent of its other functions, who monitors compliance with the FAIS Act and applicable codes.
- Compliance report
- An annual report submitted by the provider to the Registrar describing its compliance with the Act and codes of conduct and any material deficiencies identified.
- Supervision policy
- A written provider policy setting out how representatives under supervision are trained, monitored, evaluated and signed off before operating without supervision.
- Key individual accountability
- The approved manager who oversees the rendering of financial services and remains accountable for the conduct of the provider and its representatives.
- FAIS Ombud
- An independent statutory officer appointed by the Minister of Finance to investigate and determine complaints about financial services, free of charge to complainants.
- Internal complaint timeframe
- A provider must resolve a client complaint within six weeks; if it is not resolved in that period, the client may lodge the complaint with the FAIS Ombud.
- Ombud determination
- A decision by the Ombud ordering compensation or other relief; it binds the provider only if the complainant accepts it, failing which the complainant may go to court.
- Debarment procedure
- The provider must notify the representative, give an opportunity to be heard, then debar and notify the Registrar within the prescribed period and update its register.
- Administrative penalty
- A monetary penalty imposed by the Registrar on a provider or representative for contravening the Act, imposed in addition to or instead of other regulatory action.
- Financial Services Tribunal
- The tribunal that hears appeals against, and reviews of, decisions of the Registrar such as licence refusals, suspensions, withdrawals, debarments and administrative penalties.