Task4 General code of conduct

• Financial Service Provider (FSP)


  The key individuals, representatives, and compliance officer that make up an FSP
• An FSP with one or more representatives or more than one key individual is obligated or must appoint a compliance officer
• General duties of an FSP

  • Be honest
  • Be fair
  • Be skilled
  • Act with care and diligence
  • Act in the interest of the client
  • Act in a manner that maintains the integrity of the financial service industry
• Specific duties of an FSP when rendering financial services

  • Consider what they say to clients
  • Consider how they contract and deal with clients
  • Consider any possible conflicts of interest
• Representations


  What is said to the client and the information provided by the FSP
• Requirements for representations and information provided by the FSP


  • Be factual
  • Be easy to understand
  • Be at an appropriate level
  • Be timely
  • Be in writing if requested
  • Be in readable print
  • Amounts to be in rand values
  • Information must be repeated if significant changes happen
• Conflicts of interest


  Any conflict of interest between the FSP and the client, or the representative and the client, must be avoided or reduced
• Minimum requirements if a conflict of interest has arisen

  • Disclose what measures will be taken to avoid or reduce the conflict
  • Disclose what ownership interest or financial interest the FSP or representative may be or has become eligible for
  • Disclose the nature of any relationship or arrangement with a third party that gives rise to the conflict
• Contracting


  The FSP must render financial service in terms of a contractual relationship, making sure everything is done properly and on time
• FSP's duties when contracting


  • Render services as per the contract and reasonable requests from the client
  • Execute actions of the contract or requests from the client as soon as reasonably possible
  • Reasonably consider the client's interest over the interest of the FSP
  • Accurately account for the client's transactions
• Record keeping


  The FSP must have systems in place to record, retrieve and safeguard the documents of its clients
• The FSP must keep client records for at least 5 years after termination of products or rendering of the financial services
• Disclosing client information


  The FSP must not disclose confidential client information without the client's written permission or consent
• The FSP has a duty to provide the client with information about the product supplier
• Information the FSP must provide about the product supplier


  • Its name, address and contact details
  • Contact details of its compliance officer and complaints department
  • The FSP's contractual relationships with the product supplier
  • Any conditions or restrictions imposed by the product supplier
  • Whether the FSP holds an interest in the product supplier
• Information the FSP must provide when giving advice to a client

  • General explanations of the nature and material terms of the contract and transaction
  • Material contractual information, facts, illustrations, projections or forecasts
  • Specific disclosures required by section 7 of the code of conduct
• The client is responsible for ensuring all facts disclosed to the FSP are accurate and complete
• The FSP must inform the client of possible consequences of misrepresentation or non-disclosure
• The FSP must provide the client with a statement at least annually identifying and listing financial products still in existence
• Information that must be included in the annual statement

  • Ongoing monetary obligations of the client
  • Main benefits provided by the product
  • Net value of any investment component
  • Ongoing incentives, commissions, fees and brokerage payable to the provider
• Section 8 subsection 1 of the code of conduct states that certain information must be obtained by the FSP before giving the client financial advice
• Obligations


  The ongoing monetary obligations of the client
• Benefits


  The main benefits provided by the product
• Value of the investment


  The net value of the investment to the client must be disclosed if the product has an investment component
• Commissions and fees


  Any ongoing incentives, commissions, fees and brokerage fees payable to the provider must be disclosed
• This statement need not be provided where the client is aware or should be aware that the FSP does not render or has stopped rendering ongoing financial services in respect of the products concerned
• Before giving advice to a client, an FSP must take steps to get from the client all available information about the client's situation, financial product experience and objectives to enable the FSP to provide the client with appropriate advice
• Financial needs analysis (FNA)


  Based on the information provided by the client, the FSP must conduct a financial needs analysis
• From the FNA, the FSP will identify the financial products that will be appropriate and suitable based on the client's risk profile and their financial needs
• When existing financial products are to be replaced by new financial products, the FSP should fully disclose the actual and potential financial implications relating to cost and consequences of such a replacement
• Disclosure when replacing existing financial products

  • Difference in fees and charges between the products
  • Special terms and conditions which may be applicable to the replacement product as compared to the terminated product
  • Impact of age and health changes on the premium to be paid
  • Difference in tax implication
  • Material differences between the investment risk of the replacement product and the terminated product
  • Penalties or unrecovered expenses deductible or payable due to termination of products
  • To what extent the replacement products is readily realizable or relevant funds are accessible compared to the terminated products
  • Vesting rights, minimum guaranteed benefits or other guarantees or benefits that will be lost as a result or consequence of the replacement product
  • Any incentives, remuneration, consideration, fees received directly or indirectly by the FSP in relation to the financial services offered for either or both the terminated and/or replacement products
• The FSP must acknowledge and confirm receipts of client documents and funds in writing
• The FSP must keep the client's funds in a separate bank account within one working day of receipt
• The client's funds and the FSP's funds must be kept separate
• The general bank charges on the client's account is to be paid out of the FSP's funds account
• Any interest on the client's funds and specific bank charges relating to deposits and withdrawals of the client funds would be charged directly to the client's accounts
• FSPs that receive, hold or in any other matter deals with premiums and a short-term insurance policy do not require to follow the mentioned steps for keeping client funds separate
• The client must have access to his or her funds less any required deductions, charges or fees
• The FSP must take into account the contractual requirements when dealing with the client's funds
• The client must receive the original agreement and documents between the FSP and the client