Glossary of Terms

Insurance Broker - a person or company that is not employed by an insurance company, that finds the best policy for someone who wants insurance

Conflict of Interest - A conflict of interest is a situation in which financial or other personal considerations have the potential to compromise or bias professional judgment and objectivity.

Complaint - means, a specific complaint relating to a financial service rendered by a financial services provider or representative to the complainant on or after the date of commencement of the FAIS Act, and in which complaint it is alleged that the provider or representative -

a)has contravened or failed to comply with a provision of the FAIS Act and that as a result thereof the complainant has suffered or is likely to suffer financial prejudice or damage;

b)has wilfully or negligently rendered a financial service to the complainant which has caused prejudice or damage to the complainant or which is likely to result in such prejudice or damage; or

c)has treated the complainant unfairly;

FAIS - Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)

Financial Advice - means, any recommendation, guidance or proposal of a financial nature furnished, by any means or medium, to any client or group of clients -

a)in respect of the purchase of any financial product; or

b)in respect of the investment in any financial product; or

c)on the conclusion of any other transaction, including a loan or cession ,aimed at the incurring of any liability or the acquisition of any right or benefit in respect of any financial product; or

d)on the variation of any term or condition applying to a financial product , on the replacement of any such product, or on the termination of any purchase of or investment in any such product, and irrespective of whether or not such advice – furnished in the course of or incidental to financial planning in connection with the affairs of the client; or

ii.results in any such purchase, investment, transaction, variation, replacement or termination, as the case may be, being effected;

FSP (Financial Service Provider) - FAIS imposes definite requirements upon the work roles and functions within the financial services industry. Financial service providers must be licensed with the Registrar before they may legally operate in this role. Entities and individuals must moreover, meet certain licensing requirements and are obliged, in addition, to comply with a code of conduct before obtaining, and thereafter retaining, their licenses. FAIS also imposes definite requirements pertaining to education and experience before financial service providers may give advice on the various categories of financial products and obligations.

Insurer - a person or company offering insurance policies in return for premiums.

Intermediary Service - means, any act other than the furnishing of advice, performed by a person for or on behalf of a client or product supplier –

a)the result of which is that a client may enter into, offers to enter into or enters into any transaction in respect of a financial product with a product supplier; or

b)with a view to -

i)buying, selling or otherwise dealing in (whether on a discretionary or non-discretionary basis), managing, administering, keeping in safe custody, maintaining or servicing a financial product purchased by a client from a product supplier or in which the client has invested;

ii)collecting or accounting for premiums or other moneys payable by the client to a product supplier in respect of a financial product; or

iii)receiving, submitting or processing the claims of a client against a product supplier;

Key Individual - Financial services providers are required to appoint at least one natural person to act as a ‘key individual. A financial service provider may be a brokerage or financial product supplier acting as a sole proprietor, a partnership, a close corporation, a business trust or a private or public company while the key individual is responsible for overseeing the process of providing advice or intermediary services to clients in respect of financial products. The key individual, who may be a director, the head of a business unit or a manager who oversees or manages any activity relating to the rendering of any financial service, must be named and registered with the Financial Services Board in such capacity.

Premium - the amount paid or payable, usually in regular instalments, for an insurance policy.

Representative - any person:
  • Who renders a financial service to a client;
  • For or on behalf of a financial services provider;
  • Acting in terms of conditions of employment or any other mandatory agreement; but
  • Excluding a person who renders clerical, technical, administrative, legal, accounting or other services in a subsidiary or subordinate capacity; and which clerical, technical, administrative, legal, accounting or other service does not require judgment on the part of that person or does not lead a client to conclude any specific transaction in respect of a financial product in response to general enquiries.

    A person may not act as a representative of an authorised financial services provider unless that person is able to provide confirmation to clients, as certified by the Financial Services Board, that a service contract or other mandatory agreement to represent the financial services provider has been concluded; and the financial services provider accepts responsibility for the activities of the representative falling within the service contract or other mandatory agreement, as the case may be.