Transcript Who is a Representative

Who is a Representative ?
Employed or
Mandated
Requires
JUDGEMENT
Representative
For F.S.P.
Renders
Financial
Service
• Oversee / manage
KI
FSP
• Authorised provide
financial services
• Takes responsibility of
Rep
• Debar – update register
Rep
• Employee / mandate
• Act on behalf
• Guarantees
Code of
conduct
Act in
interest
of CLIENT
Keep
records
Fit &
Proper
Rep
Disclose
Product categories
Long Term
Insurance
• Category A (Assistance) (does not exceed R10 000)
• Category B1 (Restricted)
• Category B2 (Guaranteed)
• Category C
Retail Pension
Benefits
• RA’s
• Preservation Pension Funds
• Preservation Provident Funds
Pension Fund
Benefits
• Pension Fund Organisation
Product categories
Securities and
instruments
• Shares
• Debentures
• Money-market
• Securities
Participatory interest
in Collective
Investment Schemes
• Old Unit Trusts
Forex
• Forex investments
Product categories
Deposits
• Long term (more than 12 months)
• Short term (less than 12 months)
Health Service
Benefits
• Medical Schemes
Short Term
Insurance
• Personal Lines
• Commercial Lines
Role of Rep as per C.o.C
Act honestly
and fairly
Comply with
the Law
Treat clients
fairly
Effective
resources
Seek info
from Clients
C.o.C must make provision for…
Disclosures
Recordkeeping
Other matters
Control
incentives
Honest
advertising
Guarantees
Protect funds
and docs
Who is a Key Individual?
Managing
/
Overseeing
Natural
Person
Activities
of FSP
Key
Individual
Role of K.I.
Maintain operational ability
Fulfil responsibilities as per the Act
Oversee financial services
Role of FSP
Reps & KI’s are competent & comply with licensing
Ensure reps comply with Code of Conduct
Maintain register of Reps & KI’s of reps
Employee
or
mandatory?
Rep
Name &
business
address
Rep
Rep & KI
What info is in the Register?
Categories
competent
to render
financial
services
Purpose of the register?
To enable the Registrar to
Maintain and continuously update
Central register of all Reps and KI’s
Acts as a Rep
On the date of licensing:
•Complies with requirements
of Act
•Acts as employee / mandatory
•FSP then becomes authorised
•Is regarded as a Rep
Rep to adhere to at all times
Provide certified confirmation:
• Service contract or Mandate
• FSP accepts responsibility of activities
of the rep (not KI)
Rep cannot act if debarred
Fit and Proper - Reps
Honesty and Integrity
• List of factors
• Constitutes prima
facie evidence
• Within a period of 5
years
Competence
• Minimum experience
• Qualification
• 5 years from FDOA
• Regulatory exams
• 6 years from FDOA
• CPD
Honesty & Integrity:
Prima Facie Evidence
Within a period of 5 years:
• Found GUILTY in any criminal
proceedings or liable in civil
proceedings by a court of law
• Of having acted fraudulently,
dishonestly, unprofessionally,
dishonourably or in breach of a
fiduciary duty
Honesty & Integrity:
Prima Facie Evidence
Within a period of 5 years:
• Found GUILTY by any statutory or
voluntary professional body
• Of an act of dishonesty, negligence,
incompetence or mismanagement,
sufficiently serious to impugn the
honesty and integrity of the
FSP/KI/Rep
Honesty & Integrity:
Prima Facie Evidence
Within a period of 5 years:
• Been denied membership of any
statutory or voluntary professional
body
• Of an act of dishonesty, negligence,
incompetence or mismanagement,
sufficiently serious to impugn the
honesty and integrity of the FSP/KI/Rep
Honesty & Integrity:
Prima Facie Evidence
Within a period of 5 years:
• Been found guilty by any regulatory or
supervisory body recognised by the FSB
• Had its authorisation refused, suspended or
withdrawn
• Of an account of an act of dishonesty,
negligence, incompetence or mismanagement,
sufficiently serious to impugn the honesty and
integrity of the FSP/KI/Rep
Honesty & Integrity:
Prima Facie Evidence
ANY TIME PRIOR to:
•Been disqualified or prohibited
by any court of law
•From taking part in the
management of any company
(irrespective if it had been lifted)
Honesty & Integrity:
Volunteer information
Be candid and accurate:
•FSP & KI when applying to the
Registrar and
•A Rep when appointed by the FSP
•Must of own accord disclose all
facts or information
Competence:
Registrar to publish
criteria
•Against which RE will be
set
•Recognised qualifications
Competence:
Reps & KI’s must:
•Comply with the applicable
minimum experience
•Have relevant qualification (5 yrs)
•Passed the 1st and/or 2nd level RE’s
(6 yrs)
•Comply with CPD requirements
Competence:
Reps at date of appointment must
comply with:
• Applicable minimum experience and all
requirements, and completed the RE’s
(unless under supervision)
• Medical Schemes Act: FSP/Rep renders
health service benefits must be accredited
broker, or if under supervision, an
apprentice broker
Competence:
FSP, who is a sole proprietor,
a KI and a Rep, must:
•After completion of relevant
qualification, experience and RE’s,
meet the requirements relating to
the CPD
Experience: Category I
FSP must meet the minimum
experience. Must be practical
experience gained in rendering F.S.
in Category I (& subcategories):
Provided that
• Experience involved the active and ongoing
gaining of knowledge, skills and expertise
Experience: Category I
FSP must meet the minimum experience. Must be
practical experience gained in rendering F.S. in Category I
(& subcategories): Provided that
•Obtained through the active
involvement in rendering
financial services (even if
under supervision)
Experience: Category I
FSP must meet the minimum experience. Must be
practical experience gained in rendering F.S. in
Category I (& subcategories): Provided that
•Gained either within or outside
the R.S.A
Experience: Category I
FSP must meet the minimum experience. Must be practical experience
gained in rendering F.S. in Category I (& subcategories): Provided that
•Could be during intermittent
periods, not more than 5 years
prior to application
•Could have been gained
simultaneously in multiple
subcategories
Experience: Category I
FSP must meet the minimum experience. Must be practical experience gained in rendering F.S. in
Category I (& subcategories): Provided that
•Changes Licence:
•Add service: meet 50% of
experience requirement
•Add subcategory: meet 100%
of experience requirement
Experience: Category I
Rep at date of appointment
•Must comply with same
relevant experience
requirements, unless working
under supervision
Experience: Category I
KI, on date of approval must have at least 1
year’s practical experience in the management
or oversight, provided that
• It could have been gained inside or
outside the R.S.A.
• Gained intermittently, not more than 5
years prior to application
• May have been in services similar or
corresponding to FSP’s
What is advice?
Recommendation, guidance or
proposal
Purchase a Invest in a Conclude Vary terms
Financial
Financial any other
and
Product
Product transaction conditions
What is intermediary service?
Any other act other than advice
For and
behalf of
Client or
Product
Supplier
View to
Client may,
Collecting Receiving,
buying,
offers or
or
submitting
selling,
enters into
accounting
or
managing,
a
for
processing
keeping
transaction
premiums
claims
safe…
What is services under supervision?
Financial Services rendered by Rep
Does not meet experience /
qualification / RE requirements
Services are rendered under
guidance, instruction and supervision
Debarring Representatives?
No longer complies with
qualification requirements
Failed to comply with Act
FSP must withdraw authority to act
on behalf of Provider
Debarring Representatives?
May not render new services
Debarment may not prejudice interest of
Clients
FSP must have information regarding conduct
to provide to Registrar or other person
Process of Debarment
Stop new
service
Remove
name & KI
from
register
Process of
debarment
Clients not
prejudiced
Conclude
unconcluded
Update the Register (Debarment)
Remove
name & KI
from
register
Registrar
may
publish in
media
Updating
of
Register
In writing,
with
reasons
15 days
inform
Registrar
Record-keeping
Premature
cancellations
• known
• Keep for 5
years min
Complaints
received
• Indicate
resolved
• Keep for 5
years min
Continued
compliance
• Licence
requirements
• Keep for 5
years min
Noncompliance
• Reasons for
noncompliance
• Min 5 years
Continued
compliance
• Qualification
requirements
• Min 5 years
Record-keeping
Code of conduct must contain
• Disclosures, record-keeping, advertising, safe keeping
of docs and funds, guarantees, incentives, any other
matter
Internal control structures are in place
• Segregation of duties, access security, access rights,
physical security, system testing, disaster recovery,
training for KI’s & Reps regarding Act and providing
services and a business continuity plan
Record-keeping: FICA
Accountable institution
Acting on behalf of other
Id on behalf of
Person’s /
Client’s authority
ID of Client
Manner
Identified
Record-keeping: FICA
Accountable institution
Amount and parties to transaction
All accounts involved
Name of person obtained
info
Nature of
transaction/relationship
Can be kept electronically
Record-keeping: FICA
Reportable institution
Dealing in
motor vehicles
Dealing in
Kruger Rands
Record-keeping: FICA
5 years from
termination of business
relationship
5 years from date of
transaction (concluded)
Record-keeping: FICA: 3rd parties
Access
Failure
• Free &
• Easy access
• A.I
accountable
• For failure
of 3rd party
Inform
Centre
• Provide
details
Record-keeping: FICA: Evidence
Evidence
Access
Warrant
• Admissible
• Centre rep
• Ordinary
working hours
• Issued in
chambers
• Reasonable
grounds
• Give assistance
GCoC: Receives funds or products
from Client:
Documents of title
• Provide written confirmation immediately
Receives funds into safe custody
• Issue written receipt
Safeguard funds
GCoC: Receives funds or products
from Client:
Open and maintain separate bank account
•
•
•
•
•
Pay over funds in 1 business day
Separate account only contains funds of clients
Pay all bank charges
Interest paid to client or owner of the funds
Product or funds dealt with in accordance with given mandate
Discernible from private assets / funds of provider
Client has ready access, less deductions, charges and fees
Transaction in writing: original agreement delivered to Client
Exemption: Depositing money
Separate bank account
•Not applicable to ST
reinsurance policy &
•STI company
Disclosures – Duties of Provider
Info provided – factually correct
In plain language
Adequate & appropriate
Provided timeously (make informed decision)
Disclosures – Duties of Provider
Provided orally – confirmed in writing
Clear and readable print size
All amounts reflected in monetary terms
Don’t have to duplicate, unless it changes
Disclosures – Duties of Provider
Existence of personal interest / any conflict of interest
Non-cash incentives offered payable
In accordance with contract and executed ASAP
All Client transactions accurately accounted for
Disclosures – Duties of Provider
Provider not deal in any product
for OWN benefit, account or
interest
Have procedures and systems to
record communication, store and
retrieve records and keep docs safe
from destruction
Disclosures – Requirements for FSP’s,
P.S. & P.S. acting as FSP’s
Furnish Client with:
• Name, physical location, postal and telephone contact
details of P.S.
• Contractual relationships
• Names & Contact details of relevant compliance and
complaints departments of P.S.
• Any restrictions or conditions imposed by P.S.
Within 30 days in writing
Disclosures – Requirements for FSP’s,
P.S. & P.S. acting as FSP’s
Furnish Client with:
• Provider holds (directly or indirectly) more than
10% of P.S.’s shares
• In the previous 12 months received more than 30%
of total remuneration from P.S.
• Convey changes thereafter to Client at earliest
opportunity
Within 30 days in writing
Disclosures – Requirements for FSP’s,
P.S. & P.S. acting as FSP’s
P.S. who is a FSP:
• And enters into another contract with an intermediary
• Must supply disclosure requirements to enable FSP to
comply
When applicable, FSP must provide Client with
a choice and exercise judgment objectively
Disclosures – Requirements for FSP’s,
P.S. & P.S. acting as FSP’s
FSP may not, when dealing with
a Client:
• Compare different products, providers
or reps, unless differences are made
clear
• May not be inaccurate, unfair or
unsubstantiated criticisms
Disclosures – Requirements for FSP’s,
P.S. & P.S. acting as FSP’s
Provider must furnish Client
• Names, registration number, addresses, telephone,
internet and e-mail
• Legal and contractual status of provider
• Names & contact details of Compliance
• Details of authorised services
• Guarantees, PI or Fidelity insurance
• Rep is under supervision
• Existence of exemptions
Disclosures – Requirements for FSP’s,
P.S. & P.S. acting as FSP’s
Provider must
• In all communications and dealings act
honourably, professionally and with
due regard to the convenience of the
Client
• At commencement of contract, visit or
call, provide the relevant information
Transparency: Drafting of C.o.C
Act honestly
and fairly
Comply with
the Law
Treat clients
fairly
Effective
resources
Seek info
from Clients
C.o.C must make provision for…
Disclosures
Recordkeeping
Other matters
Control
incentives
Honest
advertising
Guarantees
Protect funds
and docs
Transparency & Managing Conflict of
Interest
What is conflict of interest?
FSP or Rep
Which could
influence
Has actual or
objective
potential
performance
interest
of
obligations
Or prevent
FSP or Rep
from
rendering
unbiased
and fair
service
Transparency & Managing Conflict of
Interest
Conflict of interest incluldes
Any
An
A financial
relation
ownership
interest
with a 3rd
interest
party
Transparency & Managing Conflict of
Interest
FSP & Rep may only receive or offer
Commission or/and Fees
The
following
financial
interest
from or to
a 3rd party
As per the
STI, LTI or
Medical
Schemes
Act
Fees for rendering of services
Agreed to by Client
in writing
May be stopped by
Client
Transparency & Managing Conflict of
Interest
An immaterial financial interest
Fees/remuneration for rendering
services
Receive/offer
from/to a 3rd party
A financial interest
Transparency & Managing Conflict of
Interest
A provider may not offer any financial
interest to a REP for:
Giving
Giving
Giving
preference to
preference to
quantity to preference to
a specific
the exclusion a specific P.S. product of
of quality
P.S.
Transparency & Managing Conflict of
Interest
Every provider must
adopt, maintain and
implement
A Conflict of Interest
Management Policy
Management to ID
conflicts of interest
Financial Interest
and Conflict of
Interest Policy
Measures for
avoidance of
conflicts
Policy must provide
for
Measures for
disclosure
Processes to
facilitate compliance
with policy
Consequences of
non-compliance
Transparency & Managing Conflict of
Interest
Specify type and basis
that Rep will qualify for
interest
Management to ID
conflicts of interest
Financial Interest and
Conflict of Interest Policy
Include all 3rd parties FSP
holds ownership in
Include nature
and extent of
ownership
Include names of 3rd
parties that hold
ownership in FSP
Include nature
and extent of
ownership
Drafted in an easily
comprehensible form
Transparency & Managing Conflict of
Interest
May not avoid, limit or
circumvent this section
through an associate
Are aware of contents
Ensure employees,
representatives and
associates
Provide for appropriate
training
Financial Interest and
Conflict of Interest
Policy
Monitor compliance
with policy & conduct
annual review
Publish policy
Compliance officer
must include report on
policy to Registrar
Make
relevant
disclosures
Code of Conduct
Manage
conflict
Code of Conduct
Comply
with Fit &
Proper
Code of Conduct
Ethical conduct
Allow
clients to
make
informed
decisions
Handling Complaints
A provider must
Request
Maintain
Handle
Investigate
Client to records of complaints
and
lodge
complaints in a timely
respond
complaint (minimum
and fair
promptly
in writing
5 years)
manner
Not
resolved:
advise
Client of
further
steps
available
Steps to take when providing advice
Perform FNA (past &
current situation and
future expectation)
Conduct an analysis
based on info
obtained
Take steps to ensure
Client understands
and can make
informed decision
Identify products
appropriate to
Client’s risk profile
Disclose actual and
potential implications
regarding
replacements
When replacing a product
Client has not provided all of the information, or
provider has been unable to conduct an analysis:
• Inform client that full analysis could not be undertaken
• Inform client that there may be limitations on advice
• Client must consider whether advice is appropriate
Where a Client elects to conclude a transaction
that differs from that recommended by provider:
• Must alert Client as soon as possible of clear existence of
any risk
Record of advice
Provider must maintain a record of advice which must reflect
the basis on which the advice was given, and:
• A brief summary of the information on which advice was based
• The financial products considered
• The products recommended with an explanation of the reasons
Only needs to maintain record if a transaction or contract is
concluded
• By or on behalf of the client as a result of the advice furnished
A provider (other than a direct marketer) must provide the
Client with a copy in writing
Risk Management
Control
measures
provider to
comply with
Control
objectives a
provider must
comply with
• Have and effectively employ the resources,
procedures and technological systems
• To eliminate as far as possible the risk that
could be suffered through theft, fraud, other
dishonest acts, negligence, professional
misconduct or culpable omissions
• Assurance that the business can be carried
on in an orderly and efficient manner
• Information provided will be reliable
• All applicable laws are complied with
Insurance
Provider
must
maintain
in force
• Suitable
guarantees,
• Professional
indemnity or
• Fidelity insurance
cover
Advertising
May not contain any statement, promise or forecast which is fraudulent,
untrue or misleading
If it contains performance data, include references to their source and
date and illustrations, forecasts or hypothetical data must
• Contain support in the form of clearly stated assumptions
• Make it clear that it is not guaranteed
• Clearly indicate dependence on the performance of underlying assets or other variable
market factors
• Prominently render or display any warning statements about risks
• Contain a warning that past performances are not necessarily of future performances
Investment value is not guaranteed, ad must contain a warning that no
guarantees are provided
Advertising
When advertising by telephone:
• Maintain an electronic, voicelogged record of all communication
• If no service is rendered as a result, record need not be maintained for a period exceeding 45
days
• Provide a copy to the Registrar within 7 days from request
All info regarding physical details, compliance departments, conditions
and restrictions are not required provided that
• Client is provided with basic details
• The full details are provided to the Client in writing within 30 days
Advertises by means of a public service:
• The advertisement must include the business name of the provider
Termination
In terms of Procedures, Systems and Conflict of Interest:
• A provider must give immediate effect to Client’s request who wants to terminate any
agreement, subject to contractual obligations
• If the provider advised the Client to cancel, all reasonable steps must have been taken to
ensure that the Client fully understands all of the implications of termination
When a provider ceases to operate:
• Immediately notify all Clients
• Take all reasonable steps, in consultation with Clients and Product Suppliers, to ensure that
any outstanding business is completed promptly, or transferred to another provider
Where a Rep ceases to operate:
• Provider must immediately take appropriate reasonable steps, in consultation with the
Clients and Product Suppliers concerned, to notify all affected Clients
• Ensure that outstanding business is completed or transferred to provider or another rep
Record Keeping - GCoC
Provider must have procedures and systems in place to:
• Record verbal and written communications
• Store and retrieve such records and other material documentation
• Keep Client records and docs safe from destruction
Records to be kept for a period of 5 years after
termination or rendering of the service concerned
Can use a 3rd party to store records, but must be
available within 7 days of the Registrar’s request
Record Keeping – GCoC
Processes to provide management information to complete
reporting:
FSP must have and maintain operational ability to fulfil the responsibilities as per
the Act, including:
• A fixed business address
• Adequate access to communication (telephone/cell phone) and typing and document duplication
facilities
• Adequate storage and filing systems to keep documents and records safe
• An account with a registered bank
• Accountable Institutions (FICA) must have all policies, procedures and systems in place to comply
fully with that Act
FSP using a 3rd party to render admin services must have and SLA in place,
specifying services, time standards, roles and responsibilities and any penalties
FSP must ensure internal control structures, procedures and controls are in place
(already covered)
Record Keeping – GCoC
Processes to provide management information to complete
reporting:
FSP must ensure that the necessary system controls and compliance
measures are in place
FSP must record all financial and system procedures to ensure that the FSP is
able to report in terms of accounting requirements
FSP must have general admin processing, accounting transactions and risk
control measurements in place to ensure accurate, complete and timeous
processing of data, information reporting and the assurance of data integrity
Record Keeping – GCoC
Processes to provide management information to complete
reporting:
FSP must maintain in force suitable guarantees
or professional indemnity insurance or fidelity
insurance cover to cover risks of losses due to
fraud, dishonesty or negligence
K.I. must have and maintain operational ability
to fulfil the responsibilities imposed by the Act
on FSP’s