Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)Codes of ConductAmendment of the General Code of Conduct for Authorised FSPs and Representatives, 2020Part I : Introductory provisions |
1.
| (1) | In this Code "the Act" means the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002), a word or expression to which a meaning has been assigned in the Act shall have that meaning, and, unless the context indicates otherwise- |
means any communication published through any medium and in any form, by itself or together with an other communication, which is intended to create public interest In the business, financial services, financial products or related services of a provider, or to persuade the public (or a part thereof) to transact in respect of a financial product, financial service or related service of the provider in any manner, but which does not purport to provide detailed information to or for a specific client regarding a specific financial product, financial service or related service;
[Definition substituted by section 2(a) of Notice No. 706, GG43474, dated 26 June 2020]
"associate"
| (a) | in relation to a natural person, means— |
| (i) | a person who is recognised in law or the tenets of religion as the spouse, life partner or civil union partner of that person; |
| (ii) | a child of that person, including a stepchild, adopted child and a child born out of wedlock; |
| (iii) | a parent or step-parent of that person; |
| (iv) | a person in respect of which that person is recognised in law or appointed by a Court as the person legally responsible for managing the affairs of or meeting the daily care needs of the first mentioned person; |
| (v) | a person who is the spouse, life partner or civil union partner of a person referred to n subparagraphs (ii) to (iv); |
| (vi) | a person who is in a commercial partnership with that person; |
| (b) | in relation to a juristic person- |
| (i) | which is a company, means any subsidiary or holding company of that company, any other subsidiary of that holding company and any other company of which that holding company is a subsidiary; |
| (ii) | which is a close corporation registered under the Close Corporations Act, 1984 (Act No. 69 of 1984), means any member thereof as defined in section 1 of that Act; |
| (iii) | which is not a company or a close corporation as referred to in subparagraphs (i) or (ii), means another juristic person which would have been a subsidiary or holding company of the first-mentioned juristic person— |
| (aa) | had such first-mentioned juristic person been a company; or |
| (bb) | in the case where that other juristic person, too, is not a company, had both the first-mentioned juristic person and that other juristic person been a company; |
| (iv) | means any person in accordance with whose directions or instructions the board of directors of or, in the case where such juristic person is not a company, the governing body of such juristic person is accustomed to act; |
| (c) | in relation to any person— |
| (i) | means any juristic person of which the board of directors or, in the case where such juristic person is not a company, of which the governing body is accustomed to act in accordance with the directions or instructions of the person first-mentioned in this paragraph; |
| (ii) | includes any trust controlled or administered by that person. |
[Definition inserted by section 2(a) of Board Notice 58 of 2010]
"company"
has the meaning assigned to it in the Companies Act 2008 Act No. 71 of 2008);
[Definition substituted by section 2(b) of Notice No. 706, GG43474, dated 26 June 2020]
refers to a direct or indirect comparison between providers or between financial products, financial services or related services of one or more provider or product supplier;
[Definition inserted by section 2(c) of Notice No. 706, GG43474, dated 26 June 2020]
"conflict of interest"
means any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client,—
| (a) | influence the objective performance of his, her or its obligations to that client; or |
| (b) | prevent a provider or representative from rendering an unbiased and fair financial service to that client, or from acting in the interests of that client, |
including but not limited to—
| (i) | a financial interest; |
| (ii) | an ownership interest; |
| (iii) | any relationship with a third party; |
[Definition inserted by section 2(a) of Board Notice 58 of 2010]
means the rendering of financial services by way of telephone, internet, digital application platform, media insert, direct or electronic mail, but excludes the publication of an advertisement;
[Definition substituted by section 2(d) of Notice No. 706, GG43474, dated 26 June 2020]
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;
means—
| (a) | any arrangement between a product supplier or any of its associates and one or more providers or any of its associates in terms of which arrangement any support or service is provided to the provider or providers in rendering a financial service to a client; |
| (b) | any arrangement between two or more providers or any of their associates, which arrangement facilitates, supports or enhances a relationship between the provider or providers and a product supplier; |
| (c) | any arrangement between two or more product suppliers or any of their associates, which arrangement facilitates, supports or enhances a relationship between a provider or providers and a product supplier; |
[Definition inserted by section 2(b) of Board Notice 58 of 2010]
"endorsements"
refer to public statements declaring the virtues of a financial product, financial service or related service of a provider or recommending the entering into of a financial product, financial service or related service;
[Definition inserted by section 2(e) of Notice No. 706, GG43474, dated 26 June 2020]
"fair value"
has the meaning assigned to it in the financial reporting standards adopted or issued under the Companies Act, 1973 (Act No. 61 of 1973);
[Definition inserted by section 2(b) of Board Notice 58 of 2010]
"financial interest"
means any cash, cash equivalent—
| (a) | an ownership interest; |
| (b) | training, that is not exclusively available to a selected group of providers or representatives, on— |
| (i) | products and legal matters relating to those products; |
| (ii) | general financial and industry information; |
| (iii) | specialised technological systems of a third party necessary for the rendering of a financial service; but excluding travel and accommodation associated with that training; |
| (c) | a qualifying enterprise development contribution to a qualifying beneficiary entity by a provider that is a measured entity; |
[Paragraph (c) inserted by section 2(f) of Notice No. 706, GG43474, dated 26 June 2020]
means the Financial Sector Code published in terms of section 9(1) of the Broad-Based Black Economic Empowerment Act, (Act 53 of 2003), as amended from time to time;
[Definition inserted by section 2(g) of Notice No. 706, GG43474, dated 26 June 2020]
"holding company"
has the meaning assigned to it in the Companies Act, 2008 (Act No. 71 of 2008);
[Definition substituted by section 2(h) of Notice No. 706, GG43474, dated 26 June 2020]
"immaterial financial interest"
means any financial interest with a determinable monetary value, the aggregate of which does not exceed R1 000 in any calendar year from the same third party in that calendar year received by—
| (a) | a provider who is a sole proprietor; or |
| (b) | a representative for that representative’s direct benefit; |
| (c) | a provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives; |
[Definition inserted by section 2(b) of Board Notice 58 of 2010]
means any benefit (including a so-called cash- or premium-back bonus) that is directly or indirectly provided or made available to a client by a provider or a product supplier or an associate of the provider or product supplier, which benefit is wholly or partially contingent upon—
| (a) | the financial product with that provider or product supplier remaining in place; |
| (b) | the client continuing to utilise a financial service of that provider or product supplier; |
| (c) | the client increasing any benefit to be provided under a financial product; or |
| (d) | the client entering into any other financial product or benefit or utilising any related services offered by that provider, product supplier or their associates; |
[Definition inserted by section 2(i) of Notice No. 706, GG43474, dated 26 June 2020]
has the meaning assigned to it in the FSC insofar it relates to a qualifying enterprise development contribution;
[Definition inserted by section 2(j) of Notice No. 706, GG43474, dated 26 June 2020]
mean any benefit that is directly or indirectly provided or made available to a client by a product supplier in the event that the client does not claim or does not make a certain claim under a financial product within a specified period of time;
[Definition inserted by section 2(j) of Notice No. 706, GG43474, dated 26 June 2020]
"new entrant"
means a person who has never been authorised as a financial services provider or appointed as a representative by any financial services provider"
[Definition inserted by section 2(a) of Board Notice 146 of 2014]
means communication that—
| (a) | is clear and easy to understand; |
| (b) | avoids uncertainty or confusion; and |
| (c) | is adequate and appropriate in the circumstances. |
taking into account the factually established or reasonably assumed level of knowledge of the person or average persons at whom the communication is targeted;
[Definition inserted by section 2(k) of Notice No. 706, GG43474, dated 26 June 2020]
means an authorised financial services provider, and includes a representative;
means—
| (a) | to make generally known; |
| (b) | to make a public announcement of; |
| (c) | to disseminate to the public; or |
| (d) | to produce or release for distribution; and |
"publication" has a corresponding meaning;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
means any value judgments or subjective assessments of quality based solely on the opinion of the evaluator and where there is no pre-established measure or standard;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
has the meaning contemplated in the FSC insofar as it relates to a qualifying enterprise development contribution;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
has the meaning assigned to it in the FSC;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
means any service or benefit provided or made available by a product supplier or a provider or any associate of that product supplier or provider, together with, or in connection with, any financial product, financial service or benefit in respect of that financial product or financial service, and includes a loyalty benefit and a no-claim bonus;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
means the action or process of—
| (a) | substituting a financial product, wholly or in part, with another financial product; or |
| (b) | the termination or variation of a financial product and the purchase, entering into, investment in or variation of another financial product— |
with the purpose of meeting the same or similar needs or objectives of the client or in anticipation of, or as a consequence of effecting the substitution, termination or variation, irrespective of the sequence of the occurrence of the transactions;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
means any person (whether or not that person is the agent of the provider), other than a representative, with whom a provider has an arrangement relating to the marketing distribution administration or provision of financial products, financial services or related services;
[Definition inserted by section 2(l) of Notice No. 706, GG43474, dated 26 June 2020]
means—
| (a) | any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition, other than equity or a proprietary interest held as an approved nominee on behalf of another person; and |
| (b) | includes any dividend, profit share or similar benefit derived from that equity or ownership interest; |
[Definition inserted by section 2(c) of Board Notice 58 of 2010]
means—
| (a) | any financial interest offered or received directly or indirectly, upfront or deferred, and with or without conditions, as an incentive to become a provider; and |
| (b) | a financial interest referred to in paragraph (a) includes but is not limited to— |
| (i) | compensation for the— |
| (aa) | potential or actual loss of any benefit including any form of income, or part thereof; or |
| (bb) | cost associated with the establishment of a provider's business or operations, including the sourcing of business, relating to the rendering of financial services; or |
| (ii) | a loan, advance, credit facility or any other similar arrangement. |
[Definition inserted by section 2(b) of Board Notice 146 of 2014]
means a significant owner as described in section 157(1) and (2) of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017);
[Definition inserted by section 2(m) of Notice No. 706, GG43474, dated 26 June 2020]
means a subsidiary as defined in section 1(3) of the Companies Act, 1973 (Act No. 61 of 1973);
[Definition inserted by section 2(c) of Board Notice 58 of 2010]
means—
| (a) | a product supplier; |
| (b) | another provider; |
| (c) | an associate of a product supplier or a provider; |
| (d) | a distribution channel; |
| (e) | any person who in terms of an agreement or arrangement with a person referred to in paragraphs (a) to (d) above provides a financial interest to a provider or its representatives; |
[Definition inserted by section 2(c) of Board Notice 58 of 2010]
means any application, proposal, order, instruction or other contractual information required to be completed for, or submitted to, a product supplier by or on behalf of a client relating to the purchase of or investment in any financial product, including any amendment thereof or variation thereto;
includes:
| (a) | an acceleration of the contractual retirement date or other date on which benefits become available; |
| (b) | any change to the premium or other periodic investment amount payable in respect of a financial product; |
| (c) | making the financial product or investment paid-up; |
| (d) | the cessation of premiums or other periodic investment amount; |
| (e) | the application of the policy or investment value as premiums or other periodic investment amount payable in respect of a financial product; |
| (f) | the reduction or removal of any guarantee or benefit in respect of a financial product; |
| (g) | any act that results in a change to a material term or condition, or the contract term; |
| (h) | the financial product becoming static because an option to update cover benefits, premiums or other periodic investment amounts ha not been exercised; |
| (i) | any transfer from or of one financial product to another financial product; |
| (j) | a non-renewal of a short-term insurance policy; |
[Definition inserted by section 2(n) of Notice No. 706, GG43474, dated 26 June 2020]
refers to the marketing of, or offering of, a specific financial product of a product supplier wholly or partially under the brand of another person who is not the product supplier in terms of an arrangement between the product supplier and that other person;
[Definition inserted by section 2(n) of Notice No. 706, GG43474, dated 26 June 2020]
includes communication by telefax or any appropriate electronic medium that is accurately and readily reducible to written or printed form; and "written" has a corresponding meaning.
(2)
| (a) | This Code must be construed— |
| (i) | in conjunction with the provisions of the Act and in manner conducive to the promotion and achievement of the objectives of codes of conduct as stated in section 16 of the Act; and |
| (ii) | as being in addition to any other law not inconsistent with its provisions and not as replacing any such law. |
| (b) | In the case of any inconsistency or conflict between— |
| (i) | a provision of this Code and a provision of any other specific Code drafted under section 15 of the Act, the last mentioned provision shall prevail; and |
| (ii) | a provision of this Code and a provision of any other law specifically regulating market conduct in the rendering of financial services in respect of one or more specific financial products, the last mentioned provision, unless inconsistent or in conflict with the Act, shall prevail. |
| (3) | The provisions of this Code apply, unless stated otherwise in this Code or otherwise by law, to all financial services providers and representatives. |