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.