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

2. FSP must

accept responsibili

ty for Reps activities in

agreement

3. R

eps

mus

t

ensu

re

nece

ssar

y

docu

men

ts

are

avai

labl

e

for c

lient

s

4. Written mandate must be

available to Reps to

provide to clients

6. H

e has

empl

oym

e

nt o

r

man

date

agre

emen

t

with FS

P

5. No one can act as

Rep unless

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

services

Active and ongoing

• Qualified and meets fit and proper requirements

• Guides superviseeSupervisor

OUTCOME 8