The Financial Advisory and Intermediaries Services Act (Act no. 37 of 2002) stipulates in Section 7 that a person may not act or offer to act as a financial service provider (FSP) unless such a person has been issued with a licence under Section 8 of the FAIS Act.
The Financial Advisory and Intermediaries Services Act (Act no. 37 of 2002) stipulates in Section 7 that a person may not act or offer to act as a financial service provider (FSP) unless such a person has been issued with a licence under Section 8 of the FAIS Act.
A financial service provider in terms of the FAIS Act refers to a person, other than a representative, who as a regular feature of the business of such a person:
Intermediary Service means any act, other than the furnishing of advice, performed by a person for or on behalf of a client or product supplier:
Financial product means inter alia a health service benefit provided by a medical scheme as defined in Section 1(i) of the Medical Scheme Act.
It is therefore essential that to act as an FSP and specialising in medical scheme products, the broker needs to display for the client to ascertain that the broker is indeed a registered FSP:
The FAIS Act in Section 8(8) also stipulates the following with regards to the display of the license issues under this act to do the business of an FSP:
“A LICENSEE MUST –
Section 8(1) (a) and (b) of the FAIS General Code of Conduct stipulates that an FSP other than a direct marketer must, prior to providing a client with advice, take reasonable steps to seek from the client appropriate and available information regarding the client’s financial situation, financial product experience and objectives to enable the provider to provide the client with appropriate advice. This means that the broker needs to conduct an analysis, for purposes of advice, based on the information obtained from the client.
The FAIS General Code of Conduct prescribes the manner in which fees are disclosed.
In terms of the FSP, and obviously applying the principles in health care, the following fees and charges must be disclosed separately to enable the client to make an informed decision:
The Medical Schemes Act also determines that the broker must disclose to the client with which medical scheme he/she has entered into an agreement.
It is important for the client to understand that the statutory fee that the broker receives for introducing a client as member to a medical scheme:
Section 9 of the FAIS General Code of Conduct stipulates that an FSP must maintain a record of advice that must reflect the basis on which the advice was given.
“A provider must, subject to and in addition to the duties imposed by section 18 of the Act and section 3(2) of this Code, maintain a record of the advice furnished to a client as contemplated in section 8, which record must reflect the basis on which the advice was given, and in particular-
It is also provided for that such record of advice is only required to be maintained where, to the knowledge of the provider, a transaction or contact in respect of a financial product is concluded by or on behalf of the client as a result of the advice furnished to the client.
In order to demonstrate compliance with the above, an FSP is required in terms of Section 3(2)(a)(i) of the FAIS General Code of Conduct to have appropriate procedures and systems in place to record such verbal and written communication relating to a financial service rendered to a client.
Section 18 requires the FSP to maintain records for a minimum period of five (5) years, save to the extent exempted by the Registrar.
What has to be recorded are the following:
Therefore, the FSP must have processes and systems in place to:
TRIARC is an authorised financial services provider FSP45009. TRIARC insurance products underwritten by Guardrisk Life FSP76. Council of Medical Scheme
Number ORG 4040.