Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)

Codes of Conduct

Notice on Codes of Conduct for Administrative and Discretionary FSP's, 2003

Chapter I : Code of Conduct for Administrative FSP’s, 2003

Part II : Operational requirements

5. Dealing with clients
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5.1An administrative FSP must obtain a signed mandate from a client, before rendering any intermediary service to that client: Provided that the parties may agree to complete an electronic mandate in respect of which appropriate controls and personal identification procedures have been put in place that ensures security of information.

 

5.2The mandate must comply with the following minimum requirements:
(a)State whether the client will deal with the administrative FSP through another person or in a personal capacity;
(b)if the client will deal with the administrative FSP through another person—
(i)state the name of the person;
(ii)state whether that person is an authorised FSP;
(iii)state whether that FSP is appointed with full or limited discretion and where the discretion is limited, indicate those limits;
(iv)authorise the administrative FSP to accept from that FSP instructions given on behalf of the client;
(c)record the names, telephone and fax numbers, and postal and e-mail addresses of the client and the other FSP;
(d)indicate that the financial products will be registered in the name of the independent nominee of the administrative FSP;
(e)provide in bold font an indication of the time period involved with regard to the following administrative processes:
(i)The cut-off times within which an instruction must be received by the administrative FSP to enable it to render an intermediary service on that particular day;
(ii)once an instruction has been received, the maximum number of working days it will take to render that intermediary service and an indication of the day that will determine the price that the client eventually receives;
(iii)maximum number of working days that it will take to process a switch or withdrawal instruction and an indication of the day that will determine the price that the client eventually receives;
(f)stipulate separately in respect of the administrative FSP and the other FSP (if any), the total fees and benefits to be received by each in respect of a client's financial products, whether by way of a deduction from the financial product or not, including—
(i)the initial fees or costs;
(ii)ongoing fees or costs;
(iii)any other benefit, fees or costs, whether in cash or kind;
(iv)costs (if any) to have the financial products registered in the name of the client or in the name of the nominee company of another administrative FSP at the request of the client or at termination;
(v)any fees or costs that will be levied on additional investment in or purchase of the same financial product; 2nd
(g)The signatures of the client, as well as the other FSP, where applicable.

 

5.3Further to paragraph 5.2 above, an administrative FSP may, subject to the approval of the registrar, provide the said information either in the mandate or in a combination of the mandate and the administrative FSP's written terms or guides of business.

 

5.4The registrar must initially approve a specimen of the mandate and where relevant, the administrative FSP's terms of business, and may grant approval subject to the conditions that the registrar may determine. The registrar may subsequent to approval require that any other information that is deemed necessary, be disclosed in the interest of the client. An administrative FSP may not substantially amend' the documents approved by the registrar, without the prior written approval of the registrar.

 

5.5The administrative FSP must ensure that it has, in relation to the financial products offered by it, appropriate forms available to enable the client or the other FSP to conduct business with it. These forms include application, instruction, transfer, switch, withdrawal or additional investment forms.

 

5.6An administrative FSP must—
(a)within 14 days of receipt of a notice from a product supplier of an increase in costs, notify the client or the other FSP (if any) in writing of such increase, who in turn must inform the client in writing within 14 days;
(b)if it wishes to increase costs unrelated to the costs referred to above, give the client or such other FSP three months prior written notice thereof, who in turn must notify the clients of the other FSP in writing within 14 days, provided that the cost of the increase may not become effective during the notice period.

 

5.7If a client notifies an administrative FSP in writing that the client has terminated the client's relationship with a particular FSP and wishes to continue with the relationship with an administrative FSP through another FSP, such notification must be sent by the administrative FSP to the terminating FSP.

 

5.8An administrative FSP may accept telephonic or electronic instructions without written confirmation, provided that appropriate controls and personal identification procedures have been put -in place to ensure security of information and transactions, and that records of such telephonic or electronic instructions must be made and stored for a period of five years from the date when the instruction was received.

 

5.9Where another FSP intends to provide, through an administrative FSP, a client with its own personalised range of financial products, such other FSP and the administrative FSP must first enter into a written agreement, which must provide for termination of the agreement by either party on written notice of not less than 30 days.

 

5.10An administrative FSP must enter into an appropriate written agreement with each product supplier from or to whom it buys or sells financial products on behalf of clients, which agreement records their particular arrangements and makes provision for termination of the agreement by either party on written notice of not less than 30 days.

 

5.11In relation to new investments placed with an administrative FSP, no interest shall be payable to a client until the expiry of the first completed day after receipt of the funds. After the expiry of the first completed day, interest earned shall be payable to the client.

 

5.12No interest shall be payable to clients in relation to funds held in bulk during the execution of a switching instruction, provided that the administrative FSP adheres to the time standards, which are stipulated as part of the service levels to clients. In the event of non-adherence, the client shall be entitled to interest for the period in excess of the stipulated time period.

 

5.13If an administrative FSP has made a mistake in executing an instruction or allocating client funds in such a manner that a client is entitled, in law, to be placed in the position that the client would have been in had the administrative FSP not made the mistake, the client shall only be entitled to compensation to the extent that the client is placed in said position. The administrative FSP shall not be required to pay interest to the client in addition to restoration.

 

5.14Where an administrative FSP effects payment of an investment to a client, whether in whole or in part, no interest shall be payable to that client on funds that are paid within the first complete day after the receipt of the funds from the liquidation of the underlying investment by the administrative FSP: Provided that should the administrative FSP issue a cheque for the amount received within the abovementioned time period, the issuing of the cheque shall be deemed to be payment and no interest liability shall accrue to the administrative FSP in respect of the time period between the issuing of the cheque and the actual payment of the cheque by the drawee bank.