FAIS 2010 Training Presentation
INDEX THE AIM AND PURPOSE OF FAIS FINANCIAL ADVISORY AND INTERMEDIARY SERVICES 1. Describing words 1.1 Advisory 1.2 Intermediary 2. Definitions 2.1 Advice 2.2 Client 3. Financial Service Provider 3.1 Intermediary Services Fais Fit & Proper Requirements 4. Key Individual 5. Representative and Representatives under supervision 6. Supervision 7. Who are the different role-players in the legislation 7.1 Financial Services Board 8. What are the Functions of the role-players? 8.1 Financial Services Board 8.2 Financial Services Provider 8.3 Key Individuals 8.4 Representatives 8.5 Compliance Officer 8.6 Auditor 8.7 Support Staff 9. Protection That the FAIS Legislation Gives Clients 10. The role of the Ombud in terms of the role in supporting Fais 10.1 Definitions
THE AIM AND PURPOSE OF FAIS WHO IS PROTECTED BY FAIS WHY DID THEY NEED PROTECTION Consumers By financial advisors who will indirectly protect consumers by: • Unscrupulous advisors • Keeping records • Unregulated industry to a • Complaint practices large extent which let do • Keeping within the law as abuse by various parties • Illiterate and gullible clients to who can advise • Industry which is production • Licensed advisors against bad advice driven- with little or no • Have focus on ethics, and value access to the to the client ombud for complaints • Freedom of choice WHO HAS TO ABIDE BY THE HOW WILL CONSUMERS BE RULES OF FAIS PROTECTED • Financial advisors Advisors representatives will • Representatives have to be licensed and comply • Employees with the Act in as much as they of financial service providers • Are fully competent • Compliance officers according to the “FIT AND • Auditors of financial PROPER” and have the services providers right knowledge and skills • They are registered as a representative • Fully trained • Honesty
• Integrity • Access to legal redress in the case of a complaint
FINACIAL ADVISORY AND INTERMEDIARY SERVICES ACT 1. DESCRIBING WORDS 1.1 ADVISORY • Empowered to make recommendations • An advisory body • Consultative • Counseling • Helping • Recommending 1.2 INTERMEDIARY • A person who acts as an agent between parties • Agent • Broker • Entrepreneur • Go-between • Mediator • Middleman FAIS ACT 5 2010
2. DEFINITIONS 2.1 ADVICE Recommendation, guidance or proposal of a financial nature - furnished by any means or medium, to any clients or groups of clients • buying the financial product • or investing in a financial product • on the conclusion of any other transaction including a loan or cession aimed at incurring any liability • on replacement • is given in the course of or incidental to financial planning in connection with the affairs of the client • Results in any such purchase, investment, transaction, variation, replacement or termination, as the case may be 2.2 CLIENT Means a specific person or group of persons, excluding the general public, who is or may become the subject, to whom a financial service is rendered intentionally, or is the successor in title of such person or the beneficiary of such service. 3. FINANCIAL SERVICES PROVIDER Means any person other than a representative who as a regular feature of the business of such person FAIS ACT 6 2010
• FURNISHES ADVICE OR • FURNISHES ADVICE AND RENDERS ANY INTERMEDIARY SERVICE OR • JUST RENDERS AND INTERMEDIARY SERVICE 3.1 INTERMEDIARY SERVICES • Any act other than the furnishing of advice performed by a person for or on behalf of a client of product supplier • The result of which the client may enter into or OFFERS to enter into with a view to a) Buying b) Selling c) Otherwise dealing in a financial product d) Managing e) Administering f) Keeping in safe custody g) Maintaining or servicing h) Collecting or accounting for premiums or other i) Moneys j) Receiving submitting or submitting or processing the k) Claims of a client against a product supplier FAIS FIT AND PROPER REQUIREMENTS See table at end of manual FAIS ACT 7 2010
4. KEY INDIVIDUAL An authorized financial services provider or a representative carrying on business as • A corporate or unincorporated body • Trust • Partnership (any natural person responsible for managing or overseeing, either alone or together with other responsible persons) 5. REPRESENTATIVE and REPRESENTATIVES UNDER SUPERVISION Any person who renders a financial service to a client for or on behalf of a financial services provider, in terms of conditions of employment or any other mandatory agreement Advices do not include: • advice on the procedure for entering into a transaction • in relation to the description • in answer to routine admin queries • in the form of objective information about a particular product • the display or distribution of promotional material • an analysis or report on a financial product without any • express or implied recommendation, guidance or proposal Representatives under supervision The Act demands that an FSP only appoint representatives that are fully compliant from an experience and qualification perspective. This is clearly not practical and an exemption exists that allows representatives to work under supervision of one or more key FAIS ACT 8 2010
individuals or suitably qualified representatives until such time as the incoming representative has; • Completed the minimum experience requirements as per the attached Table A, AND • Completed the required qualification (OR credit levels for representatives appointed for the 1 st time during 2008 or 2009) AND • Completed ALL the required Regulatory exams – levels 1 and 2 This supervision process cannot exceed a period of 6 years from the date first appointed as a representative. What must the supervised representative do? i) Before any financial service is rendered a client must be informed that the representative is working under supervision In a direct marketing situation this would be at the start of a call and in others this detail could be provided verbally or by the presentation of the issued mandate letter. (A degree of practicality is required here and not all interactions need be preceded with a statement to this effect. Generally those likely to result in a sale, cancellation or amendment to a financial product should have the required information supplied) Supervision agreement A supervision agreement will form part of the employer's performance management processes and/or employment contract, and details the procedures regarding the rendering of services under supervision. NB 1: Supervision can apply to key individuals who are also acting as representatives. FAIS ACT 9 2010
NB 2: Qualifications and Regulatory exams need not be done under supervision for any representative appointed during 2008 or 2009 that have completed their minimum experience requirement by 31/12/2009 It must be noted that, we are obliged to: • indicate on the representative register whether the representative is acting under supervision, and • differentiate on the representative register between representatives that are acting under supervision and those that meet all the requirements and are not acting under supervision. • Issue a representative mandate letter that signifies their supervision status. Objective of the supervision period At the end of the supervision period the supervisee will have completed his/her minimum experience requirements and their appropriate qualification (where applicable) and should be thoroughly versed in the manner and form by which financial services, as envisaged in terms of the Financial and Advisory & Intermediary Services Act “FAIS”, are rendered in respect of the product categories of financial products detailed above. Supervisor rules Selection of the supervisor: The financial services provider must ensure that the normal working relationship between the supervisee and supervisor allows the supervisor oversight of the activities performed by the supervisee as per agreement, and that there is regular contact that enables the transfer of skills, which may include face-to-face and/or contact via electronic means, between the supervisee and supervisor in the FAIS ACT 10 2010
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