The Financial Services Board (FSB) has published the proposed amendments to the General Code of Conduct for Authorised Financial Services Providers and Representatives under the Financial Advisory and Intermediary Services Act, 2002 (FAIS GCoC).
The extensive amendments, published on 01 November 2017 are proposed on the Advertising and Complaints sections of the FAIS GCoC.
Some proposals on the advertising and marketing section include the following:
- The key individual must approve advertisements;
- Where the advertisement is not in line with principles in the FAIS GCoC, it must be withdrawn and a notification must also be sent to persons who the FSP knows to have relied on the advertisement.
- Where all information cannot be included in the advertisement, the FSP must also indicate where the additional information can be accessed
- Information on the advertisement must be prominent so as not to mislead the client. This includes - depending on the nature of the advertisement - the name of the product supplier or FSP or both
- FSP’s have to keep a record of all advertisements
- Negative option marketing is not acceptable
- Where comparative marketing is used, the comparison must take into account comparable features across the financial products and the financial service
- Endorsements and testimonials must be based on actual experience
Proposals on the Complaints section include the following:
- A person who makes decisions regarding complaints must be empowered to make decisions
- Nine minimum complaints categories have been introduced, but FSP’s are encouraged to consider additional categories relevant to their own business
- Where the complaint is upheld, the FSP must honour the commitment timeously
- The complainant has to be engaged during the lifecycle of the complaint
- The FSP must have an honest and transparent relationship with the ombuds
Other proposals include the following:
- The FSP is not permitted to say that it is regulated by the FSB where this is not the case
- Financial interests to representatives should not only be based on quantity but should also result in fair customer outcomes
- The FSB can determine the format and matters that should be address in the record of advice
The amendments also aligns the FAIS GCoC with the Policyholder Protection Rules (PPR’s) released by the Registrar under the Short Term Insurance Act, 1998.
The commencement date of the advertising and complaints sections is 01 July 2018 and 01 January 2019. All the other sections will come into effect on a date of publication of the Notice in the Government Gazette.
The SAIA has invited written comments from its members in order to compile an industry submission which will be shared with the FSB.
The SAIA maintains its support for regulatory interventions for the broader implementation of fair consumer treatment, the protection of insurance consumers and the integrity of the financial system.
For more information, contact:
Mashudu Mabogo, SAIA Legal Manager