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(1)
(2)

 Advertising

(3)

 Background

Objectives of the FAIS Act

Ensure consumer protection.

Uphold the integrity of the financial services industry.

(4)

 Prescribed minimum registration

requirements - Fit & Proper

 General Code of Conduct

 Adjudication of disputes between clients

(5)

 Section 8 (8) of the FAIS Act:

– reference to the fact that the provider is authorised.

 Intention :

– give clients comfort that providers are registered

– clients protected when doing business with registered providers.

(6)

• Authorised financial services provider

Compliant

• Authorised FSP • FSP 000

Non-compliant

• Authorised financial services provider , 000

Nice, not

obligatory

(7)

 Face to face – orally

 Writing:

business docs, newspaper, pamphlets, bill boards etc.

 Electronically:

 e-mail, website,

online communication media.

(8)

 Business cards

– What must be stated? – How visible?

(9)

Example: Business Card

Joe Soap

Investment Executive

Soap’s Best Investment Services Tel: 0669 233890

Soap’s office park Soapville

Soap Town 000

(10)

Soap’s Best Investment Services

We offer the

absolutely most amazing

investment services

ever!

Always on your side, unlike others in the market Contact us today if you are a winner in life!

(11)

 Survey conducted to determine whether

FSPs gave effect to the intention of the FAIS Act.

 Looked at TV, Newspapers, Magazines

advertisements.

(12)

1. Print media & TV

– Information not visible.

– No/ little effort by FSPs to give effect

to the intention of the legislation 2. Radio – audible enough

– When to disclose

– promotional ads VS invite of FSP employee

(13)
(14)

 Direct Marketing – rendering of financial

services by means of telephone, internet, media insert, direct mail, or electronic mail excluding advertisements not containing transaction requirements.

 Direct Marketer – a provider who provides

all or predominant part of financial services in the form of direct marketing.

(15)

 Minimal compliance with provisions of

Section 15 of the General Code of Conduct

 Approved telesales scripts do not address all

required disclosure information.

 Lack of call centre facilities e.g voice logging

facilities.

 The identity of the entity rendering financial

services withheld, due to;

- Misinterpretation of principal vs agency capacity.

(16)

- Exclusive right to market or distribute financial products.

- One party claiming ownership of client relationship e.g provides contacts or

database for the 2nd entity to sell. Challenge

is that client has recourse on the FSP (seller) & not the relationship owner.

(17)

 Some FSPs set very high sales targets for call

centre consultants resulting in a focus on

quantity and a compromise on providing the client with the best product (i.e. quality of

service), which is not in line with the Conflict of Interest requirements.

 Value added products are often sold to clients

without establishing whether the client needs the product and can afford it.

 Call centre consultants rush through

disclosures in terms of the General Code of Conduct.

(18)

 Quality assessment of calls is not focused

on whether the call centre consultants made the required disclosures.

 Lack of disclosure of the product supplier

by the FSP, the product is sold as if the FSP is also the product supplier.

 Misleading marketing, i.e. making

“empty promises” about what the FSP can provide for the client.

(19)

 Speaking negatively about other

FSPs/product suppliers when attempting to sell a product.

 Failure to list all the call centre

consultants involved in the rendering of financial services on the representatives register.

 Background checks are not conducted on

(20)

 Failure to implement supervision process for

representatives that should be rendering financial services under supervision.

 Lack of training/awareness of FAIS and FICA

requirements.

 Appointment of key individuals that can

practically not be able to oversee the activities of representatives.

 Lack of monitoring of calls by the

(21)

 “Direct marketing”, means the

rendering of financial services by way of telephone, internet, media insert, direct mail, or electronic mail, excluding any such means which are advertisements

not containing transaction requirements.

(22)

 “Direct marketer” means a provider

who, in the normal course of business, provides all or the predominant part of the financial services concerned in the form of direct marketing.

(23)

 Provide clients with info about:

– Direct marketer – FSP

(24)

Name of FSP Name of FSP Business name Trade name Details Details FSP? Products A/ I.S Contact Info Contact Info Tel # DM Tel # CO of DM PI Cover? PI Cover? If DM a rep If DM a rep Details of FSP

(25)

• Risk profile • Financial needs • Circumstances Financial Product appropriate • Business/ trade name

• Legal status & relationship

Provide info about product supplier • Name, class or type • Nature and extent of benefits • Manner in which such benefits are derived or calculated • material investment or other risks

Info about Product

• Monetary obligations • Payment methods • Whether cooling off rights are offered Client rights

(26)



take reasonable steps to establish whether the financial product identified is wholly or

partially a replacement for an existing

financial product of the client and, if it is such a replacement, inform the client of actual and potential financial implications, costs and consequence set out in clause 8(1)(d) of this Code before any transaction is concluded.

[Para (c) substituted by BN 43/2008 with effect from 14 May 2008]

(27)

• Completely • Partially Replacement product? • Actual / potential financial implications • Costs • Consequences • Refer to section 8(1)(d) for detail Inform client • Before any transaction is concluded Do this

(28)

Compare

Fees & Charges

Different tax implication

Different investment risks

Explain

Terms & conditions exclusions of liability

Waiting periods

loadings, penalties, excesses loadings, penalties, excesses Restrictions where benefits not

(29)

Insurance product Insurance

product

Age & health

Impact on premium Termination Termination Penalties Unrecovered expenses Replacement: extent Replacement: extent Readily realisable Fund accessability What is lost? What is lost? Vested rights Minimum benefits Other guarantees Terminated/ replacement Provider receives/ payable Terminated/ replacement Provider receives/ payable incentives consideration remuneration commission fee brokerage

(30)

DM: Commission, consideration, fees, charges or brokerages Paid by the client, or by the product supplier or by any other person;

Charges and fees: amount and frequency thereof

net investment amount ultimately invested for the benefit of the client; Early termination or withdrawal: restrictions, penalties, other effects

Details of manner in which benefits will be paid;

Extent that product is readily realisable and/or the funds concerned are accessible Telephone contact details: Compliance department of the product supplier

(31)

• past investment performance of the product

On request provide

•Consequences of non-payment by client •escalations, increases or additions;

Explain

•abbreviated disclosures of contractual increases;

Insurance product –

explain:

•special terms and conditions,

•exclusions, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided

Concise details

•Any guaranteed minimum benefits or •other guarantees where appropriate.

(32)

•Provide – where appropriate - a record of advice in writing.

S9(1)(a) to (d)

• Store & retrieve

• Copy provided o client or Registrar in reasonable time

Record telephone calls

• Provide info to client • In writing

• Within 30 days of concluding transaction

(33)

 Is it clear to the client who he/she is

dealing with?

 Can they see whether the product/

service is a regulated/ non-regulated product?

 If a client reacts to an invitation on a

website to inquire about a product or service – the normal disclosures would apply & record keeping requirements

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