| (1) | A provider must prior to providing a client with advice— |
[Part VII section 8(1) words preceding paragraph (a) by section 8(a) of Notice No. 706, GG43474, dated 26 June 2020]
| (a) | obtain from the client such information regarding the client's needs and objectives, financial situation, risk profile and financial product knowledge and experience as is necessary for the provider to provide the client with appropriate advice, which advice takes into account— |
| (i) | the client's ability to financially bear any costs or risks associated with the financial product; |
| (ii) | the extent to which the client has the necessary experience and knowledge in order to understand the risks involved in the transaction; and |
| (iii) | where the client is a pension fund, medical scheme, friendly society, employer or other entity that is being advised on entering into a financial product or transaction aimed at providing benefits for its members, employees or other underlying natural persons, the reasonably identified collective needs and circumstances of such members, employees or other natural persons; |
[Part VII section 8(1)(a) substituted by section 8(b) of Notice No. 706, GG43474, dated 26 June 2020]
| (b) | conduct an analysis, for purposes of the advice, based on the information obtained; |
| (c) | identify the financial product or products that will be appropriate to the client's risk profile and financial needs, subject to the limitations imposed on the provider under the Act or any contractual arrangement; and |
| (cA) | where as a result of limitations referred to in paragraph (c) the provider is not able to identify a financial product or products that will be appropriate to the client's needs and objectives, financial situation, risk profile and product knowledge and experience, the provider must make this clear to the client, decline to recommend a product or transaction and suggest to the client that they should seek advice from another appropriately authorised provider; |
[Part VII section 8(1)(cA) inserted by section 8(c) of Notice No. 706, GG43474, dated 26 June 2020]
| (d) | where the financial product ("the replacement product") is to replace another financial product ("the terminated product"), fully disclose to the client the actual and potential financial implications, costs and consequences of such a replacement, including, where applicable, full details of— |
| (i) | fees and charges in respect of the replacement product compared to those in respect of the terminated product; |
| (ii) | special terms and conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided, which may be applicable to the replacement product compared to those applicable to the terminated product; |
| (iii) | in the case of an insurance product, the impact of age and health changes on the premium payable; |
| (iv) | differences between the tax implications of the replacement product and the terminated product; |
| (v) | material differences between the investment risk of the replacement product and the terminated product; |
| (vi) | penalties or unrecovered expenses deductible or payable due to termination of the terminated product; |
| (vii) | to what extent the replacement product is readily realisable or the relevant funds accessible, compared to the terminated product; |
| (viii) | vested rights, minimum guaranteed benefits or other guarantees or benefits which will be lost as a result of the replacement; and |
| (ix) | any incentive, remuneration, consideration, commission, fee or brokerages received, directly or indirectly, by the provider on the terminated product and any incentive, remuneration, consideration, commission, fee or brokerages payable, directly or indirectly, to the provider on the replacement product where the provider rendered financial services on both the terminated and replacement product. |
[Part VII, section 8(1)(d)(ix) inserted by section 3(b) of Board Notice 43 of 2008]
[Part VII section 8(1)(d) substituted by section 8(d) of Notice No. 706, GG43474, dated 26 June 2020]
| (e) | 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, the provider must comply with subparagraph (d). |
[Part VII, section 8(1)(e) inserted by section 3(c) of Board Notice 43 of 2008]
| (2) | The provider must take reasonable steps to ensure that the client understands the advice and that the client is in a position to make an informed decision. |
| (3) | A provider providing advice to a client to replace an existing long-term insurance contract or policy with any other financial product must at the earliest practicable opportunity after providing such advice, but in any event no later than the date on which any transaction requirement is submitted to a product supplier in respect of any replacement product, notify the issuer of the existing and the replacement long-term insurance contract or policy of such advice. |
[Part VII, section 8(3) substituted by section 3(d) of Board Notice 43 of 2008]
(4)
| (a) | In performing the analysis referred to in subsection (1)(b) a provider may, in determining the extent of the client information necessary to provide appropriate advice, take into account— |
| (i) | any specific objectives or needs of the client that the client has explicitly requested the provider to focus on, or not to focus on, in performing the analysis; |
| (ii) | any specific objectives or needs of the client that the client and the provider have explicitly agreed to focus on or not to focus on in performing the analysis; |
| (iii) | applicable surrounding circumstances that make it clear that the analysis can reasonably be expected by the client to focus only on specific objectives or specific needs of the client; |
| (iv) | the fact that the client has explicitly declined to provide any information requested by the provider. |
| (b) | Where an analysis referred to in subsection (1)(b) is performed in any of the circumstances referred to in subsection (4)(a), the provider must alert the client as soon as reasonably possible that— |
| (i) | there may be limitation on the appropriateness of the advice provided in light of such circumstances; and |
| (ii) | the client should take particular care to consider on its own whether the advice is appropriate considering the client's objectives, financial situation and particular needs, particularly any aspects of such objectives, situation or needs that were not considered in light of the aforementioned circumstances. |
| (c) | Where a client elects to conclude a transaction that differs from that recommended by the provider, or otherwise elects not to follow the advice furnished, or elects to receive more limited information or advice than the provider is able to provide, the provider must alert the client as soon as reasonably possible of the clear existence of any risk to the client, and must advise the client to take particular care to consider whether any product selected is appropriate to the client's needs, objectives and circumstances. |
[Part VII section 8(4) substituted by section 8(e) of Notice No. 706, GG43474, dated 26 June 2020]
| (1) | A provider must, subject to and in addition to the duties imposed by section 18 of the Act and section 3(2) of this Code, maintain a record of the advice furnished to a client as contemplated in section 8, which record must reflect the basis on which the advice was given, and in particular— |
| (a) | a brief summary of the information and material on which the advice was based; |
| (b) | the financial products which were considered; |
[Part VII, section 9(1)(b) substituted by section 3(e) of Board Notice 43 of 2008]
| (c) | the financial product or products recommended with an explanation of why the product or products selected, is or are likely to satisfy the client's identified needs and objectives; and |
[Part VII, section 9(1)(c) substituted by section 3(e) of Board Notice 43 of 2008]
| (d) | where the financial product or products recommended is a replacement product as contemplated in section 8(1)(d)— |
| (aa) | the comparison of fees, charges, special terms and conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided, between the terminated product and the replacement product; and |
| (bb) | the reasons why the replacement product was considered to be more suitable to the client's needs than retaining or modifying the terminated product: |
[Part VII, section 9(1)(d) inserted by section 3(f) of Board Notice 43 of 2008]
Provided that such record of advice is only required to be maintained where, to the knowledge of the provider, a transaction or contract in respect of a financial product is concluded by or on behalf of the client as a result of the advice furnished to the client in accordance with section 8.
| (1A) | The Registrar may determine the format of and the matters to be addressed in the record of advice referred to in section (9)(1). |
[Part VII section 9(1A) inserted by section 9(a) of Notice No. 706, GG43474, dated 26 June 2020]
| (2) | A provider must provide a client with a copy of the record contemplated in 9(1) in writing. |
[Part VII section 9(2) substituted by section 9(b) of Notice No. 706, GG43474, dated 26 June 2020]
