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Unit Standard No.12164Page 97


In terms of FAIS, a person will not be able to act as a representative of an authorised FSP, unless such person is able to provide confirmation, certified by the FSP, to clients that:

A service contract or other mandatory agreement, to represent the FSP exists

The FSP accepts responsibility for the activities of the representatives falling within the contract or mandate.

The Act makes the FSP’s liable for the conduct of their representatives.  In terms of the Act, a representative engages in the same activities as its principal but does so for and on behalf of the FSP.  As outlined above, this relationship is either based on the fact that the representative is an employee of the FSP or holds a mandate from the FSP.  The FSP is expected to provide an updated register of its representatives to the Financial Services Board.  

It therefore stands to reason that before an insurer mandates an organisation to perform certain functions on its behalf, it must ensure that such organisation is a registered FSP.  This will mean that each FSP takes responsibility for its own employees or representatives, and the insurer is not held accountable for the behaviour of other organisations that perform certain functions on its behalf.

Further,the Act is quite clear on the duties of the FSP regarding its representatives:

An authorised financial services provider must-

(a) at all times be satisfied that the provider's representatives, and key individuals of such representatives, are, when rendering a financial service on behalf of the provider, competent to act, taking into consideration requirements similar to those contemplated in paragraphs (a) and (b) of section 8(1) and subsection (1)(b)(ii) of this section, where applicable; and

(b) take such steps as may be reasonable in the circumstances to ensure that representatives comply with any applicable code of conduct as well as with other applicable laws on conduct of business .

(3) The authorised financial services provider must maintain a register of representatives, and key individuals of such representatives, which must be regularly updated and be available to the registrar for reference or inspection purposes .

(4) Such register must-

(a) contain every representative's or key individual's name and business address, and state whether the representative acts for the provider as employee or as mandatory; and

(b) specify the categories in which such representatives are competent to render financial services.

INSMAT final materials31/10/03

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