The Financial Advisory and Intermediary Services (FAIS) Act is a statement of law that affects the way a Financial Services Provider (FSP) conducts business, interacts with consumers, and guides the consumer in their daily dealings.

The Purpose of the FAIS Act is to:

  • protect consumers of financial products and services
  • regulate the selling and advice-giving activities of FSPs
  • ensure that consumers are provided with adequate information about the financial product they use and about the people and institutions who sell these financial products.

It does this by:

  • making sure all FSPs are registered
  • ensuring all service providers are adequately qualified
  • creating a code of conduct
  • defining duties in terms of compliance
  • establishing guidelines for record maintenance, accounting and audit requirements
  • providing mechanisms for enforcement and complaint procedures

Who does the FAIS affect?

The FAIS Act affects those that furnish financial advice, and/or render an intermediary service

As mentioned in a previous post, an intermediary service includes:

  • the storing of a financial product
  • the collection of premiums from clients on behalf of product suppliers
  • the receiving, submitting or processing of a client’s claim against a product supplier
  • buying, selling or dealing in (discretionary or non-discretionary basis) financial products
  • the administration, maintenance and servicing of any financial product

What rights are given to the consumer?

The consumer is provided a number of rights in terms of the FAIS Act, that include:

  • asking for a copy of the “Disclosure and Appointment Letter”
  • receiving trusted and appropriate advice and solutions based on affordability and suitability tests
  • being treated with honesty and integrity
  • expecting discipline and transparency from their FSP
  • being given the details about costs and how the amount will be paid
  • being told the commission charge
  • receiving a yearly report to keep you updated about your financial product
  • receiving a copy of the agreement within 30 days of signing the agreement, and
  • the ability to recourse

Knowing what the FAIS Act is and how it relates to you as an FSP or a consumer allows you to know your rights and what is expected of you.

If you need any further explanations or any financial advice, contact us or follow us on Facebook!

Source: http://www.banking.org.za/consumer-information/legislation/financial-advisory-and-intermediary-services-act

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