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Unit Standard No.12164Page 35

THE AIM OF THE FAIS LEGISLATION

It is important to bear in mind, when seeing FAIS in context with other pieces of legislation that what it really creates or aims to create is a formal system of regulating financial advisors and intermediaries.  As a result of this, aggrieved consumers will be able to seek redress when they have been misled or misrepresented to by a representative or financial services provider.

It appears that in recent times, compliance and consumer protection have become buzzwords in the financial services industry and certainly FAIS is not the first piece of legislation in this industry to concern itself with the rights of consumers.  Other pieces of legislation include the Long and Short Term Insurance Act – more specifically, the Policyholder Protection Rules, The Financial Markets Control Act and the Stock Exchanges Control Act.

So in a nutshell, different pieces of legislation are enacted with different aims in mind.  

The FAIS legislation has been enacted with a strong emphasis on consumer protection and aims to achieve effective regulation of the different role-players through a number of mechanisms:

Financial Services Providers (FSP’s) will have to be licenced in terms of the Act and they will have to comply with certain prescribed fit and proper criteria, which is discussed in more detail under the module on the authorisation process.

The FSP’s are responsible for their representatives who also have to comply with fit and proper requirements.

Further, the Act lays down standards for the market conduct of both FSP’s and representatives.  Again, the focus here is on the consumer to receive fair treatment and to have full disclosure made to the consumer.

INSMAT final materials31/10/03

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