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Unit Standard No.12164Page 133

THE EFFECT OF DISCLOSURE REQUIREMENTS ON COMMISSION

In terms of the FAIS General Code of Conduct, the following excerpt covers the issue of disclosure of commission.  It is apparent from both excepts below that the interest of the client are being considered and that the Provider has an obligation to disclose ALL costs and fees the client will be liable for, as a result entering into a particular transaction.

Specific duties of provider

3. (1) When a provider renders a financial service–

(a) representations made and information provided to a client by  the rovider–

(vii) must, as regards all amounts, sums, values, charges, fees, remuneration or monetary obligations mentioned or referred to therein and payable to the product supplier or the provider, be reflected in specific monetary terms: Provided that where any such amount, sum, value, charge, fee, remuneration or monetary obligation is not reasonably predeterminable, its basis of calculation must be adequately described.

PART VI

INFORMATION ABOUT FINANCIAL SERVICE

7. (1) Subject to the provisions of this Code, a provider other than a direct marketer, must–

the nature, extent and frequency of any incentive, remuneration, consideration, commission, fee or brokerages (“valuable consideration”), which will or may become payable to the provider, directly or indirectly, by any product supplier or any person other than the client, or for which the provider may become eligible, as a result of rendering of the financial service, as well as the identity of the product supplier or other person providing or offering the valuable consideration: Provided that where the maximum amount or rate of such valuable consideration is prescribed by any law, the provider may (subject to clause 3(1)(a)(vii)) elect to disclose either the actual amount applicable or such prescribed maximum amount or rate.

INSMAT final materials31/10/03

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