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Financial Services
Sunday, February 1, 2004
Sound practice

The sands are running out for brokers and financial advisers to make sure that their businesses comply with the proposed FAIS regulations. Although the date is still to be finalised, Emil Scheepers, head of Sanlam’s i-compli service for independent brokers, believes that the cut-off date for them to comply with the legal requirements is likely to be July 2004.

“In terms of the Financial Advisory and Intermediary Services Act (FAIS), financial intermediaries must apply to the Financial Services Board (FSB) for a licence. By the cut-off date all financial intermediaries will have to be registered in order to be able to offer certain levels of advice and products to consumers. The new legislation applies to all intermediaries that give financial advice, but will have an impact particularly on the smaller independent brokers,” says Mr Scheepers.
The focus is precisely on fostering greater professionalism among financial intermediaries. Aspects that will be taken into account in the granting of such a licence are:
• the honesty and integrity of the intermediary;
• his level of expertise and experience;
• his operational capacity, and
• his financial well-being.

According to Mr Scheepers complying with the legal requirements on an ongoing basis will demand a great deal of attention from intermediaries. He recommends that they use support services, such as Sanlam’s i-compli, to facilitate the compliance process. This service offers, amongst others, assistance to intermediaries to register as a Financial Service Provider (FSP) with the Financial Services Board. This is done in conjunction with the Financial Planning Institute.
“i-compli offers assistance with complying with the law. Compliance is a process to ensure that an FSP meets the legal requirements on an ongoing basis, and is therefore not a once-off occurrence. For this reason i-compli has appointed compliance consultants to assist intermediaries in their own offices. This will entail inter alia the training of staff, and the documenting and monitoring of work processes. This service was available in brokers’ offices from January 2004.
“In terms of the law intermediaries only have to apply for an FSP licence once. However, in order to retain that licence they must submit a compliance report to the Financial Services Board every year. If intermediaries use a compliance consultant, it gives them the opportunity to focus on their primary business, namely interaction with their clients.
“The legislation is not aimed at driving brokers out of the industry - even though many believe that this will happen. The benefit of the process is that sound business practice is now law. The focus should rather be on providing clients with quality service instead of merely meeting the legal requirements,” he says.
 

Copyright © Insurance Times and Investments® Vol:17.1 1st February, 2004
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