Financial Advisory and Intermediary Services Act

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.

 

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