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Unit Standard No.12164Page 116

DISCLOSURE RULES FOR A SUB SECTOR OF THE FINANCIAL SERVICES INDUSTRY

In order to establish professionalism within the FSP’s in South Africa, the Act lays down strict standards for the market conduct of both FSP’s as well as representatives.

From the FAIS General Code of Conduct, certain disclosures have to be made by the Financial Services Provider to the client.  It is imperative for the representative to understand the principles behind the code in order for the objectives of this legislation to be achieved.

The purpose of the code is to ensure that the clients receiving financial advice will be able to make informed decisions, that their reasonable financial needs with regards to financial products be appropriately and suitably satisfied. It is for this reason that authorised financial services providers are required to comply with the provisions of the General and other codes and make the disclosures detailed therein.  

In so doing the authorised financial services provider is required to at all time;

Act honestly and fairly, with due skill, diligence and care in the interests of the client and the integrity of the financial services industry

have and employ effectively the resources, procedures and appropriate technological systems for the proper performance of professional activities;

seek from clients appropriate and available information regarding their financial situations, financial product experience and objectives in connection with the financial service required;

act with circumspection and treat clients fairly in a situation of conflicting interests; and

comply with all applicable statutory or common law requirements applicable to the conduct of business.

In addition to the General Code of Conduct, there are also specific Codes of Conduct such as the Short Term Deposit Taking Code of Conduct and the Code of Conduct for Administrative and Discretionary Financial Services Providers.

INSMAT final materials31/10/03

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