The FIAS division of the Financial Services Board was established in terms of the FIAS Act to regulate financial services providers. The FIAS division is divided into four separate departments, namely Registration, Supervision, Compliance and Enforcement.
- Registration is responsible for new licence applications, profile changes (change to any of the application detail that must be submitted in terms of licensing conditions of FSPs), updating the central representative register, approval of mandates and application forms for discretionary and Administrative FSPs, lapsing of licences, any queries relating to the status of an FSPs licence and liaison with the FSB’s Finance Department relating to collection of levies.
- Supervision is responsible for the implementation of a risk based approach to supervision of financial services providers, the analysis of financial statements and compliance reports, conducting onsite visits to FSPs and compliance officers and liaison with industry relating to changes in subordinate legislation.
- Compliance is responsible for dealing with complaints against FSPs that cannot be referred to the FAIS Ombud, investigations into the affairs of FSPs and regulatory action (suspension and withdrawal of licences) and updating debarments on the central representative register as well as reinstatement of representatives on the central register.
- Enforcement is responsible for the interaction between the FAIS Division and the FSB Enforcement Committee. This interaction includes the preparation of matters that the registrar of financial services providers deems necessary to refer for possible administrative sanction.
Advice does not only apply to the selling of financial products. It includes any recommendation, guidance or proposal of a financial nature that is given to a person or group of People, with a view to purchasing, investing or variation, replacement or termination of any financial product.
Advice does not include factual advice about procedures, the description of financial products, answering routine questions, objective information about financial products or the display or distribution of promotional material.
Advertising and Direct Marketing
Advertising may not contain any statements; promises or forecasts which are fraudulent; untrue or misleading. All advertising must have references, dates, basic assumptions for forecasts (including returns; costs and charges); make clear there are no guarantees and include a risk warning; clear indication of investment return dependence. Records of all telephonic or electronic advertising must be kept and a copy provided to the registrar on request.
Direct marketers and representatives must provide the Consumer with business or trade name of the marketing company; FSP licence details; contact details unless contact was initiated by the Consumer; professional and indemnity insurance details; legal status and relationship with product supplier; product details and enquire whether the financial product or products are appropriate to the Consumers risk profile, needs and circumstances analysis; cooling off rights; actual and potential financial implications, costs and consequences of a new financial product replacing and existing one. Electronic and telephonic records must be kept and provided to the registrar within a reasonable time.
Where information is provided telephonically, the direct marketer must confirm the information in writing within 30 days. This information should also include details about benefits; charges and fees; commission, consideration, charges and brokerages; details of investment performance; consequences of non-compliance with monetary obligations; concise details of any special terms and conditions; and exclusions, waiting periods, loadings, restrictions, penalties, excesses, restrictions or circumstances in which benefits will not be provided.
The compliance officer is a key individual with the responsibility to assist management of an FSP to establish and maintain a compliance function within the risk management framework. The role of a compliance officer can be defined into three main functions namely support, monitoring and training. The FAIS Act explicitly mentions these roles as part of the compliance officer’s duty:
- Monitor compliance with the FAIS Act
- Submit compliance reports and other compliance related reports to the Registrar
- Take responsibility for liaison with the Registrar
- Supervise the compliance function which is established by the FSP
- Act with diligence, care and degree of competency required from a compliance officer
- Provide the FSP with written reports at least quarterly indicating the course of, and progress achieved with, compliance monitoring duties and make recommendations to the FSP.
Compliance and Penalties All authorised FSPs have an obligation to ensure compliance with the FAIS Act and its subordinate legislation which amongst other requirements includes:
- Submission of compliance report
- Submission financial statements
- Payment of annual Levie
FAIS Act non-compliance penalties include fines up to R1 million and/or imprisonment for up to 10 years, as well as the withdrawal of the FSP’s licence or debarment of a representative.