Protecting your rights

Background to The Financial Advisory and Intermediary Services (FAIS) Act

Your money is precious to you, and deciding who should advise you on your investments is not a decision to be taken lightly. To protect your rights, the Ministry of Finance, as far back as 1993, investigated mechanisms for regulating conduct within the financial services industry.
The main purpose was to:

• Provide consumer protection in terms of financial products; and
• enhance the integrity of the South African financial services industry.

This resulted in the Financial Advisory and Intermediary Services (FAIS) Act which was enacted in November 2002. We are committed to serving you, our customers, within and beyond the specifications of the law.

Aim of the Act

• The primary aim of the Act is to protect you against improper conduct by financial service providers (FSPs).
• The Act makes provision for FSPs to be licensed and authorised through a government-appointed regulatory body, the Financial Services Board (FSB). The FSB will provide you with the right of recourse should the FSP not comply with the Act.
• The FSB regulates members of the industry in the way they provide advice, as well as related intermediary services such as processing your insurance claims, in terms of certain financial products as defined by the Act.
• The FSB regulates members of the industry in the way they provide advice, as well as related intermediary services such as processing your insurance claims, in terms of certain financial products as defined by the Act.
• The FSP's licence must be prominently displayed.
• The Act allows for an FSP to employ a representative under contract, to render services or give advice relating to a financial product. Representatives are not required to be licensed individually, but because they are employed by a licensed FSP, they are required to comply with certain "fit and proper" requirements.

FSPs are managed by key individuals who bring both technical competence in a particular financial product category, as well as managerial skills to their organisations.

• FSPs with multiple key individuals or representatives are required to appoint a compliance officer who has a set of responsibilities in terms of the Act to ensure that their organisations adhere to certain basic principles when rendering services in respect of financial products. These principles contain provisions relating to the following basic categories of information:
• Adequate disclosure of relevant material information to you
• Disclosure of actual and potential own interests to you
• Adequate and appropriate record keeping
• Avoidance of fraudulent and misleading advertising, canvassing and marketing
• Proper safekeeping, separation and protection of your funds and transaction documents
• Suitable and adequate guarantees, professional indemnity or fidelity insurance cover.

Fit and proper requirements

The Act requires that competent and qualified persons render services and give advice (fit and proper requirements). Fit and Proper requirements of a representative include:

• Honesty and integrity
• Competence and operational ability
• Sound financial base.

The Act entitles you to sound financial advice, services and products that best suit your needs. Your financial adviser, therefore, needs to be trustworthy and knowledgeable and understand your needs.

The Act entitles you to complain about any inappropriate advice given, or service rendered, in relation to a particular financial product. While we would request the opportunity to resolve any issues raised internally, the FAIS Ombud has been created by the FSB to handle all FAIS-related complaints in a way that is fast, procedurally fair, informal and economical.

Financial services defined

"Advice" is defined in the Act as "guidance or recommendations of a financial nature to a customer on a financial product, irrespective of when it is furnished or the result of the advice."

Anything other than advice is referred to as an "intermediary service".

Financial products covered by the Act include:

• Investments
• Insurance
• Deposits

Loans and credit agreements are excluded from the Act

Our responsibilities as a financial services provider

We have always done business according to the Codes of Conduct which the FAIS Act now demands of FSPs. We pride ourselves in exceeding the requirements set down, in many aspects.

Our management team comprises personnel who display honesty and integrity and who have demonstrated competence in their fields.

The representatives we employ in our FSPs are selected along the same criteria and are well placed to provide products and services in compliance with the Act.

Our processes are designed to ensure that we comply, not only with this Act, but with the many other legally or voluntarily imposed regulations affecting the way in which we conduct business.

We have appointed a dedicated team to ensure, not only that we comply with the regulations set down by the FSB, but who will ensure you receive the best deal possible.

Our Customer Relations Centre has been effective for many years in dealing with customer complaints, and has been recognised for its team's ability to deal effectively with issues brought to its attention. Those issues that are not satisfactorily resolved internally may now be elevated to the FAIS Ombud under the auspices of the FSB.

Any service provider who does not comply with any aspect of the Act is open to prosecution, public declaration of their undesirable practices and administrative penalties.

Our declaration

We will continue to try to act honestly and fairly, and with due skill, care and diligence, in your best interest.

More information

More information on the Financial Advisory and Intermediary Services (FAIS) Act may be obtained from the Financial Services Board (FSB) on their toll free numbers 0800 110 443/0800 202 087, or visit their website at www.fsb.co.za.