FAIS DEFINITIONS
Presented by the Inspired Learning Regulatory Academy
GENERAL DUTY OF PROVIDERSource: Section 2 of the General Code of Conduct
Render financial services
In interests of clients
Honestly and fairly
With due care,
Skill and dilligence
And in the integrity of financial services industry
CLIENT
Or the beneficiary of such person
Or is successor in title of such person
Who may be rendered a financial service intentionally
Excluding general public
Specific person or group of persons
Source: FAIS Introductory Provisions Definitions
WHO IS A REPRESENTATIVE
By virtue of a mandate from a provider
By virtue of an employment contract
On behalf of a provider
To a client
Who renders a financial service
A person
OUTCOME 1
Source: FAIS Introductory Provisions Definitions
A person providing clerical, technical, administrative, legal, accounting or related services IF service requires:
NOT A REPRESENTATIVE
No judgementNo recommendations
No opinionsNo guidance or influence
Not financial service
OUTCOME 1
Source: FAIS Introductory Provisions Definitions
REPRESENTATIVES ROLE
Representative
Rendering financial services
Fit and Proper
Regulatory compliance
Practice Management
OUTCOME 1
WHO IS A KEY INDIVIDUAL
In relation to authorised Financial Service Provider or
Representative
Carrying on business as
Corporate or unincorporated Body, Trust or Partnership
Means any natural person
Responsible for managing or overseeing
The activities or Body, Trust or Partnership
Relating to rendering of
financial service or
Corporate Body or Trust consisting of one natural person
As Member, Director,
Shareholder or Trustee, means any
natural person
Source: FAIS Introductory Provisions Definitions
OUTCOME 2
5. FIT AND PROPERSource: BN 103, 104,105,106 and 60 and INSETA
Fit and Proper requirement FSP’s Sole proprietor (FSP’s) Key individuals Reps
Personal character qualities Yes Yes Yes Yes
Competency No Yes Yes Yes
Experience No Yes Yes Yes
CPD No Yes Yes Yes
Qualifications No Yes Yes Yes
Regulatory Exams No Yes Yes Yes
Operational ability Yes Yes Yes No
Financial Soundness Yes Yes No No
OUTCOME 5
9. NOT FIT AND PROPER
Criminal or Civil proceedings
Statutory / VoluntaryProfessional Body
Denied MembershipDishonesty Negligence
Incompetence
Authorisation withdrawnDishonestyNegligence
Incompetence
Disqualified/Prohibited by Court for
Managementinvolvement
Source :BN 106 of 2008
5 years before
ApplicationApproval
Appointment
OUTCOME 9
REGISTER OF REPRESENTATIVES
FSP must maintain Register of
Representatives
Updated regularly and
ready for inspection
Contain all Representatives
and Key Individuals
names
Is Rep acting as employee or mandatory
Categories Reps competent to
render financial services
Registrar may request
information from FSP
Allows for maintenance and
update central register
Register can be published in appropriate
media
Person complying with FAIS for Rep is
regarded as Rep
Source: Section 13(2) of FAIS Act
OUTCOME 6
ADVICE IS REPRESENTATIVES RESPONSIBILITY
Advice RecommendationGuidance Proposal
Financial Nature
Client
• Buying a • Financial • product
• Investing in Financial product
• Using financial product in another
transaction, cede or pledge benefits or
rights
• Changes in nature of financial product –
replacement, termination of buying
or termination of investing in product
OUTCOME 7
Source: FAIS Introductory Provisions Definitions
NOT ADVICE
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
Source: FAIS Introductory Provisions Definitions
OUTCOME 7
7. NOT ADVICE
Procedures to financial transaction
Describing financial product
Answering admin queriesDisplaying promotional material
Information about financial product
Source: FAIS Introductory Provisions Definitions
Advice is not factual
advice
Any act except giving of advice
Resulting inclient entering or
offering to enter into transaction in respect of financial product
with product provider
For client or on behalf of product supplier
With a view to receiving, submitting or processing claims of client against product supplier
With view to collecting or accounting for premiums or other money which client has to pay
product supplier for financial product
With a view to buying, selling or dealing in managing, administering, keeping in safe custody,
maintaining, servicing a financial product purchased by client from product supplier
INTERMEDIARY SERVICE
OR
OUTCOME 7
INTERMEDIARY SERVICE IS NOT
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
Source: FAIS Introductory Provisions Definitions
OUTCOME 7
1. Render services for authorised
FSP only
4. Written mandate must be
available to Reps to
provide to clients
REPS OBLIGATION TO BE REGISTERED
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
Source: Section 13 of FAIS
Reps information on register of
representatives
OUTCOME
RESPONSIBILITIES REGARDING LICENSING
FSP must ensure KI and Reps at all
times
Are competent and fit and
proper
Take reasonable steps to ensure
compliance with code
And other applicable laws of
conduct of business
Reps must ensure
They remain fit and proper
Undergo required training
And training in product and
process
Understand and comply with FSP ethics and codes of conduct and
FAIS code of conduct
Source: Board Notice103
OUTCOME 3
RESPONSIBILITIES OF REPS
Comply with all applicable statutory and common law requirements applicable to conduct of business
Act with circumspection and treat clients fairly in situation of conflicting interests
Seek from clients appropriate and available information regarding financial situations, financial product experience and objectives in connection with financial services
required
Have and employ effectively resources, procedures and appropriate technological systems for proper performance of professional activities
Act honestly and fairly, with due skill, care and diligence, in interests of clients and integrity of financial services industry
Source: Section 16 (1) of Code of Conduct
OUTCOME 1
PURPOSE OF DEBARMENT
To stop any Representative not
competent to act or not fit and proper or who failed to comply with
FAIS
From rendering new financial service
Authority to act as representative is
withdrawn
Name of Representative or Key Individual
removed from register
Provided debarment does not prejudice
clients ability to get advice
Source: Section 14 (1) and 13 (2) and 8 of FAIS
OUTCOME 38
WHY CONSIDER DEBARMENT
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.
Source: Section 14 (2) FAIS Act
OUTCOME 39
DEBARMENT PROCESS
• 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
Source: Section 14(1) of FAIS Act
A provider cannot debar a person no longer in their employ
OUTCOME 40
REPRESENTATIVE DEBARMENT RECOURSE
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.
Source: Section 14 (2) of FAIS
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
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
PROCESS TO BE FOLLOWED BY REGISTRARSection 14 A of FAIS
OUTCOME 42
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
PROCESS TO BE FOLLOWED BY REGISTRARSection 14 A of FAIS
OUTCOME 42
DEBARMENT / FSP NOTIFIES REGISTRAR Source: Section 14 (2) , (3) and (4) of FAIS Act
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
Section 14A of FAIS empowers
Registrar to debar any person
OUTCOME 42
DEBARMENT BY REGISTRARSource: 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
PARTICULAR RESPONSIBILITIES OF REPSSource: Section 16 (1) of Code of Conduct
OUTCOME 1
ACTING UNDER SUPERVISION
Supervision includes one or more of the following
Sign off by supervisor on advice given to client
Attending client meetings with
supervisee
Post transaction sampling and follow up calls
Pre-transaction sign off
Scrutinize activities of supervisee
OUTCOME 8
WHEN CAN REPS ACT UNDER SUPERVISION
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
Source: Board Notice 105 and 106
OUTCOME 8
WHEN CAN REPS ACT UNDER SUPERVISION
Source: Board Notice 105
• Gained in rendering of financial service
Category 1 practical
experience
• Knowledge, skills and expertise• Through rendering of financial
servicesActive and
ongoing
• Qualified and meets fit and proper requirements
• Guides superviseeSupervisor
OUTCOME 8
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