RE5 key terms

South African statute (Act 37 of 2002) that regulates the giving of financial advice and intermediary services, sets fit and proper standards, and requires providers to be licensed and to treat clients fairly.

Any of the investments, insurance policies, deposits, securities, derivatives or similar instruments listed in the Act on which a provider may advise or which it may sell to a client.

Advice or an intermediary service rendered to a client in respect of a financial product; the activity the Act regulates, whether it is performed for a fee, commission or free of charge.

A recommendation, guidance or proposal given to a client about buying, selling or holding a financial product, or about financial products in general.

Any act performed to bring about a transaction in a financial product for a client, such as selling, buying, administering the product or assisting with a claim.

A person, or that person's representative, to whom a financial service is rendered or is to be rendered by a provider or by a representative of the provider.

The official appointed under the Act, working within the market conduct regulator, who licenses providers, records representatives and takes regulatory action against them.

The market conduct regulator that supervises how financial institutions behave towards clients, administers the FAIS Act and enforces its requirements.

The way financial institutions behave towards their clients, including the fairness of product design, advice, sales and complaints handling; this is what the conduct regulator supervises.

A person or entity that carries on the business of providing financial services to clients and must hold a licence from the Registrar to do so lawfully.

The authorisation issued by the Registrar permitting a provider to render specified categories of financial services, usually subject to stated conditions.

A person who renders financial services on behalf of a licensed provider, having been authorised and approved by that provider and recorded with the Registrar.

A natural person within a provider who manages or supervises the financial services activities of the business, and who must meet the fit and proper requirements.

The standards of honesty and integrity, competence, operational ability and financial soundness that providers, key individuals and representatives must meet and continue to meet.

A fit and proper requirement about a person's truthfulness, good faith and past conduct, judged from criminal, civil, disciplinary and regulatory records.

The fit and proper requirement covering qualifications, relevant experience, regulatory examinations and ongoing training needed to render the financial services concerned.

The fit and proper requirement that a provider has the people, systems, processes and resources needed to deliver the financial services for which it is licensed.

The fit and proper requirement that a provider holds sufficient assets and capital to meet its obligations to clients and to keep operating as a going concern.

The ongoing training and learning hours a representative must complete in each cycle to keep product and regulatory knowledge current and retain competence.

Published standards that prescribe how providers and representatives must behave when rendering services, covering matters such as disclosure, suitability, conflicts of interest and record keeping.

The principal code under the Act setting conduct standards for all providers, including disclosures to clients, suitability of advice, management of conflicts and complaints handling.

A situation in which a provider's or representative's own financial or other interest could improperly influence the advice or service given to a client.

The clear, timely information a provider must give a client, such as licence details, fees, commission, conflicts of interest and the nature of the service offered.

The recorded information about a client's financial situation, needs, objectives, risk tolerance and other relevant circumstances that must be gathered before advice is given.

A written record kept by the provider showing the advice given to a client, the information on which it was based and the product or transaction recommended.

The requirement that a recommended financial product or service must be appropriate to the client's profile, identified needs and personal circumstances.

The duty to keep complete, accurate and easily retrievable records of client transactions, advice and disclosures for the periods required by the Act.

A person appointed by a provider to monitor whether the business and its representatives comply with the Act and applicable codes, and to report on that compliance.

The oversight of representatives by a key individual or appointed supervisor to ensure that services are rendered competently, honestly and in line with the Act.

The continuing checking, testing and review of a provider's business and its representatives in order to detect and correct compliance failures promptly.

An expression of dissatisfaction by a client about a financial service or product, or about the provider's conduct, which the client asks the provider to resolve.

The independent statutory ombud who investigates and decides complaints against providers quickly, informally and free of charge, within set monetary limits.

The written decision the Ombud issues on a complaint after investigation, which may order the provider to pay compensation or to take other specified steps.

The action by which a provider withdraws a representative's authorisation because of misconduct or a failure to meet fit and proper requirements, and reports this to the Registrar.

A monetary fine that the regulator may impose on a provider for contravening the Act, after giving notice and an opportunity to be heard.

Regulatory action in which the Registrar temporarily suspends or permanently cancels a provider's licence for non-compliance or for failing to remain fit and proper.

The independent tribunal that hears applications for reconsideration of certain regulatory decisions, such as debarments, licence withdrawals and administrative penalties.