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Advice and Intermediary Service

Advice and Intermediary Service. Presented by the Inspired Learning Regulatory Academy. Advice is Representatives responsibility. Source: FAIS Introductory Provisions Definitions. Outcome 30. Not advice. Source: FAIS Introductory Provisions Definitions.

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Advice and Intermediary Service

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  1. Advice and Intermediary Service Presented by the Inspired Learning Regulatory Academy

  2. Advice is Representatives responsibility Source: FAIS Introductory Provisions Definitions Outcome 30

  3. Not advice Source: FAIS Introductory Provisions Definitions • Procedures to financial transaction • Information about financial product Advice is not factual advice • Describing financial product • Displaying promotional material • Answering admin queries Outcome 30

  4. Not advice Source: FAIS Introductory Provisions Definitions 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 Outcome 30

  5. Intermediary service OR Outcome 30

  6. Intermediary service is not Source: FAIS Introductory Provisions Definitions 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 Outcome 30

  7. Suitability Source: Section 2 General Code of Conduct • Get information, financial situation, experience and objectives • Analysis on information obtained • ID financial products, appropriateness or risk and financial needs • Disclosure on replacements • No information provided or no time for analysis – limitations on appropriateness of advice • Risk to client if no or another product taken Outcome 34

  8. Client engagement Let client go? Operational Ability Source: JW Maree Referral Appointment Introductory letter Screen client Discovery meeting FICA Value Proposition Monitor and Review Engagement letter Letter of Authority Client Communication Workflow and admin Agree and receive implement instructions Financial plan recommendations Needs Analysis Audit Trail, record keeping, backups, electronic storage, security Record of Advice , Quotations, KYC form, Source Funds, Verification: ID Book, Utility Bill, Risk appetite Outcome 34

  9. Client engagement – Six Steps Source: FAIS Act as per sections indicated • Step 1: Advisor client introduction • Section 3,4,5 • Step 2: Discovery • Section 8(1)(a) & FICA • Step 3: Analysis • Section 8(1)(b) & 8(1)(c) • Step 4: Recommendation • Section 2, 7 and 8(2) • Step 5: Implement • Section 3(1)(d), 7 and 8,3 (1)(d) & 9 , Step 6: Monitoring and review Section 3(1)(d) Outcome 34

  10. 44. Record keeping Source: Section 18 of the FAIS Act • Known premature cancellations • Continued compliance by Representatives • Complaints received All documents to be kept for minimum of 5 years • Cases of non-compliance • Compliance with Section 8 Outcome 44

  11. 45. Record keeping Source: Section 3(2) of the General Code of Conduct A provider must: Record verbal and written communication Outsource record keeping Store and retrieve records Provided within 7 days for inspection by Registrar Keep safe from destruction Appropriate electronic format Keep for 5 years after termination of product Procedures and systems

  12. Record keeping and other Legislation Source: Section 22 Financial Intelligence Act Outcome 46

  13. Records and outsourcing ito Section 22 of FICA Accountable Institutions can outsource record keeping to 3rd parties Accountable Institution always liable for Compliance Accountable Institution must provide particulars of 3rd party to FIC SLA between Accountable Institution and 3rd party suggested Outcome 47

  14. Format for st0ring and retrieving Outcome 48

  15. Security / confidentiality of records Source: Section 22 and 24 of FICA Outcome 49

  16. Record keeping Source: Section 3(2) of the General Code of Conduct (a) A provider must have appropriate procedures and systems in place to- • (i) recordsuch verbal and written communicationsrelating to a financial service rendered to a client as are contemplated in the Act, this Code or any other Code drafted in terms of section 15 of the Act; • (ii) store and retrieve such recordsand any other material documentation relating to the client or financial service rendered to the client; and • (iii) keep such client records and documentation safe from destruction. (b) All such records must be kept for a period of five years after termination, to the knowledge of the provider, of the product concerned or, in any other case, after the rendering of the financial service concerned. (c) Providers are not required to keep the records themselves but must ensure that they are available for inspectionwithin seven days of the registrar’s request. (d) Records may be kept in an appropriate electronic or recorded format, which are accessible and readily reducible to written or printed form.

  17. Financial products Source: FAIS Introductory Provisions Definitions Outcome 36

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