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BLUECHIPPRACTICE

BLUECHIPPRACTICE MANAGEMENT | ComplianceWhen a provider renders a financial service, representations madeand information provided to a client by the provider need not beduplicated or repeated to the same client unless material or significantchanges affecting that client occur, or the relevant financial servicerenders it necessary, in which case a disclosure of the changes to theclient must be made without delay. [1]According to my research pertaining to FAIS Ombud determinations,the safest way for any FSP to construct a record of advice would beto maintain the following documents:1. A client service request or agreement, which confirms thefinancial service that you agree to render to the client as impliedin sections 3(1)(d) and 8(4) of the FAIS General Code of Conduct.2. A client proposal which contains the following:2.1 Confirmation of the client’s circumstances, needs, objectivesand risk profile, as required in terms of section 8(1)(1)(a) ofthe General Code of Conduct.2.2 Financial planning recommendations.2.3 Product recommendations.3. Signed quotation which contains product disclosures asrequired in terms of section 7 of the General Code of Conduct.4. Advice agreement which contains the following, as required interms of section 3(1)(d) and 3(1)(e) of the General Code of Conduct:4.1 A summary of the information on which the advice was based.4.2 Products considered.4.3 Product(s) recommended and the reason(s) why.In the event of a client compliant,the FAIS Ombud will alwaysrequest a Record of Advice.That is why it is so importantto know exactly what it is.Who is accountable for maintaining the record of advice?It is commonly accepted that the FSP is accountable. However,according to the definition in the FAIS Act, “provider” means anauthorised financial services provider, and in terms of the GeneralCode of Conduct, “provider” also includes a representative. Wherethe General Code of Conduct refers to a provider must, …, maintaina record of the advice, the obligation is not just that of the FSP, itincludes an obligation on the representative as well.Yes, the FSP must ensure that there are resources and proceduresin place to manage and oversee the rendering of financial servicesand compliance with the Act and its subordinate measures, buttechnically, both the FSP and the representative can be held equallyaccountable for non-compliance. As more and more responsibilitieswill be added to FSPs under CoFI, I will not be surprised if more andmore FSPs will demand more accountability in this regard fromrepresentatives in future. [1] See section 3(1)(a)(viii) of the FAIS General Code of Conduct Anton Swanepoel, Founder, Trusted Advisors68 www.bluechipdigital.co.za

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