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FAIS Definitions

FAIS Definitions. Presented by the Inspired Learning Regulatory Academy. General duty of provider. Source: Section 2 of the General Code of Conduct. Skill and dilligence. With due care, . Honestly and fairly . And in the integrity of financial services industry.

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FAIS Definitions

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  1. FAIS Definitions • Presented by the Inspired Learning Regulatory Academy

  2. General duty of provider Source: Section 2 of the General Code of Conduct Skill and dilligence With due care, Honestly and fairly And in the integrity of financial services industry In interests of clients Render financial services

  3. Client Source: FAIS Introductory Provisions Definitions • Specific person or group of persons • Excluding general public • Who may be rendered a financial service intentionally • Or is successor in title of such person • Or the beneficiary of such person

  4. Who is a representative Source: FAIS Introductory Provisions Definitions • A person • Who renders a financial service • To a client • On behalf of a provider • By virtue of an employment contract • By virtue of a mandate from a provider Outcome 1

  5. Not a representative Source: FAIS Introductory Provisions Definitions A person providing clerical, technical, administrative, legal, accounting or related services IF service requires: No judgement No recommendations No opinions No guidance or influence Not financial service Outcome 1

  6. Representatives role • Rendering financial services • Representative • Practice Management • Fit and Proper • Regulatory • compliance Outcome 1

  7. Who is a key individual Source: FAIS Introductory Provisions Definitions • In relation to authorised Financial Service Provider or Representative • The activities or Body, Trust or Partnership • Relating to rendering of financial service or • Responsible for managing or overseeing • Carrying on business as • Corporate Body or Trust consisting of one natural person • Corporate or unincorporated Body, Trust or Partnership • Means any natural person • As Member, Director, Shareholder or Trustee, means any natural person Outcome 2 Source: FAIS Introductory Provisions Definitions

  8. 5. Fit and Proper Source: BN 103, 104,105,106 and 60 and INSETA Fit and Proper requirement FSP’s Sole proprietor (FSP’s) Key individuals Reps CPD Experience Financial Soundness Personal character qualities Competency Regulatory Exams Qualifications Operational ability No Yes No Yes No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes No Yes No Yes Outcome 5

  9. 9. Not fit and proper Source :BN 106 of 2008 • Criminal or Civil proceedings • Disqualified/ • Prohibited by Court for • Management • involvement • Statutory / Voluntary • Professional Body 5 years before Application Approval Appointment • Authorisation withdrawn • Dishonesty • Negligence • Incompetence • Denied Membership • Dishonesty Negligence • Incompetence Outcome 9

  10. Register of representatives Source: Section 13(2) of FAIS Act Outcome 6

  11. Advice is Representatives responsibility Source: FAIS Introductory Provisions Definitions Outcome 7

  12. Not advice Source: FAIS Introductory Provisions Definitions Analysis or report on a financial product without express or implied recommendation, guidance or proposal that transaction iro product meets clients needs, investment objectives or financial situation Advice by pension fund board member, organisation and friendly society to members on benefits enjoyed by members. Advice by board members to members of medical scheme on health care benefits Outcome 7

  13. 7. Not advice Source: FAIS Introductory Provisions Definitions • Procedures to financial transaction • Information about financial product • Describing financial product Advice is not factual advice • Displaying promotional material • Answering admin queries

  14. Intermediary service OR Outcome 7

  15. Intermediary service is not Source: FAIS Introductory Provisions Definitions A Bank acting as a conduit between client and product supplier in collecting premiums or money An intermediary service by product supplier which is also a financial institution and regulated as such Outcome 7

  16. Reps obligation to be registered Source: Section 13 of FAIS Reps information on register of representatives No one can act as rep unless If Rep debarred can only operate again if procedures for re-appointment of rehabilitated Rep have been followed Outcome

  17. Responsibilities regarding licensing Source: Board Notice103 Outcome 3

  18. Responsibilities of Reps Source: Section 16 (1) of Code of Conduct • Act honestly and fairly, with due skill, care and diligence, in interests of clients and integrity of financial services industry • Have and employ effectively resources, procedures and appropriate technological systems for proper performance of professional activities • Seek from clients appropriate and available information regarding financial situations, financial product experience and objectives in connection with financial services required • Act with circumspection and treat clients fairly in situation of conflicting interests • Comply with all applicable statutory and common law requirements applicable to conduct of business Outcome 1

  19. Purpose of debarment Source: Section 14 (1) and 13 (2) and 8 of FAIS Outcome 38

  20. Why consider debarment Source: Section 14 (2) FAIS Act Reasons for debarment are non-compliance with relevant fit and proper requirements or contravention of any provision of FAIS. The FSP may also take into consideration information from the Registrar, Ombud or anyone else. Outcome 39

  21. Debarment process Source: Section 14(1) of FAIS Act • A FSP must debar a Representative in the following manner: • Withdraw authority to act for the FSP • Remove the Representative from the Representative register • Ensure the debarment does not prejudice interests of Representatives clients • Ensure unconcluded business of Representative is concluded A provider cannot debar a person no longer in their employ Outcome 40

  22. Representative debarment recourse Source: Section 14 (2) of FAIS A debarred Representative may respond to the notice of debarment. The registrar must consider the response from the Representative and then decide to proceed with the debarment or not. The Representative must be notified of the decision. BN 82 of 2003 states on reappointment of debarred Rep must provide substantiating documents, 12 months have elapsed, unconcluded business properly concluded, complaints and legal proceedings resolved and fit and proper status complied with Outcome 41

  23. Process to be followed by Registrar Section 14 A of FAIS • On receipt of response registrar considers response and makes final order • If no response forthcoming, Registrar will only make decision if proof of delivery of service exists • Registrar issues notice of debarment- 14 days after date of notice of intention to debar • Notice must state grounds of debarment and terms attached thereto • Person is allowed an appeal • Notice dispatched by registered post • Name of person is placed on central register of debarred persons • Period of debarment is between 2 to 5 years Outcome 42

  24. Process to be followed by Registrar Section 14 A of FAIS • If debarred person linked to other FSP’s, registrar will inform provider to remove name of person from register within 15 days of notice • If debarred person is a FSP regulatory action will ensue ito Section 9 of Act • An individual is debarred in individual capacity, no obligation by registrar to inform any other person • Most instances respondents do not respond and notices are returned as uncollected • Person cannot be traced is entered in FSB central database Outcome 42

  25. Debarment / FSP notifies registrar Source: Section 14 (2) , (3) and (4) of FAIS Act Section 14A of FAIS empowers Registrar to debar any person FSP must have regard to information from Registrar, Ombud and other interested parties Within 15 days of removal of names from Representatives register FSP must inform registrar in writing Registrar may publish names in Gazette or appropriate public media Outcome 42

  26. Debarment by registrar Source: Section 14 (2) , (3) and (4) of FAIS Act Registrar may debar a person, including Representative for specified time from rendering financial service Registrar must be satisfied person no longer meets requirements or has failed to comply with FAIS FSP must within 5 days of being informed by registrar of debarment remove Representative from register Outcome 42

  27. Particular responsibilities of Reps Source: Section 16 (1) of Code of Conduct Outcome 1

  28. Acting under supervision Outcome 8

  29. When can Reps act under Supervision Source: Board Notice 105 and 106 Services under supervision means financial services rendered by a Rep who does not have prescribed experience, qualification and RE exam requirements. Services then rendered under guidance, instruction or supervision of Supervisor • Sign-off by Supervisor on advice given by Rep • Pre-transaction sign-off • Attending meetings with Supervisee • Post transaction sampling • Follow up calls to clients Supervisor can be a Representative or Key Individual Outcome 8

  30. When can Reps act under Supervision Source: Board Notice 105 Outcome 8

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