The Words Behind FAIS

M O D U L E 1 FAIS L E S S O N LEARNING GUIDE 2 Inter-Bank Compliance Training Project Sponsored by BANKSETA

The words behind FAIS

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1 Key terminology B A N K S E T A S p o n s o r e d P r o j e c t The words behind FAIS Module 1: Lesson 2 INTRODUCTION

Link Now that you have a broad understanding of the intent and structure of FAIS, you need to master the key terms used in FAIS.

Over the next few pages we give you simple explanations of the legal definitions, so that you understand the essence of what each term means.

FAIS gives very specific definitions for the terms it uses. We have inserted these definitions as an appendix to this lesson and encourage you to check these definitions carefully.

Learning 1 Explain the key terminology used in FAIS. outcomes

Learner guide Developed by Gray Training 011 472 3516 Jan 2004 B A N K S E T A S p o n s o r e d P r o j e c t The words behind FAIS Module 1: Lesson 2 L/O #1 KEY TERMINOLOGY

Advice Advice means any financial recommendation, guidance or proposal given to any client or group of clients on any financial product with the intention of getting the client to consider:  Entering into a financial transaction in respect of a financial product  Investing in a financial product  Varying, replacing or terminating any of these.

Client A client is a person or an organisation to whom the FSP renders financial services and/or financial products.

Compliance Officer A Compliance Officer is a person appointed by the FSP and (CO) approved by the Registrar who monitors and assists with compliance with the requirements of FAIS.

Entity An entity may be a business unit, a company, a division, etc depending on the structure of the organisation.

Exclusion An exclusion specifies who or what is NOT included in the obligations and requirements of FAIS.

Exemptions An exemption is permission to be excused from a requirement of FAIS.

Financial Product A financial product is a product defined by FAIS that is offered or serviced by a FSP. These products typically include deposits, investments and insurance, and exclude loans and other credit agreements.

Learner guide Developed by Gray Training 011 472 3516 Jan 2004 B A N K S E T A S p o n s o r e d P r o j e c t The words behind FAIS Module 1: Lesson 2 L/O #1 KEY TERMINOLOGY – cont.

Financial Services A FSP is any entity authorised by the Financial Services Board to: Provider (FSP)  Furnish advice  Render an intermediary service or  Both.

Intermediary An intermediary service occurs when a person performs any act, Service other than giving advice, for or on behalf of a client or product supplier, which facilitates a transaction relating to a financial product.

Key Individual (KI) The KI manages and oversees the conduct of the FSP, and is responsible for the actions of the Representatives.

Representative A Representative is any person working under a contract of employment or acting under any other mandate (ie contracted in a mandatory capacity such as being a temporary, casual employee or a contractor) to render a financial service to clients on behalf of the FSP.

The Ombud The Ombud is appointed by the Financial Services Board to:  Deal with complaints fairly and swiftly  Make binding legal decisions.

Learner guide Developed by Gray Training 011 472 3516 Jan 2004 B A N K S E T A S p o n s o r e d P r o j e c t The words behind FAIS Module 1: Lesson 2 ASSESSMENT

Test your Answer these short questions to test your knowledge and understanding knowledge & of this material. Choose the right answer. understanding

Question 1.2.1 A Financial Services Provider’s functions are to: a Regulate FAIS b Furnish advice and render an intermediary service once it is approved by the Registrar for FSPs (the Financial Services Board) c Provide financial services d Be authorised by the Reserve Bank. 1.2.1.1 All of the choices are true 1.2.1.2 None of the choices are true 1.2.1.3 Choices (b) and (c) are true 1.2.1.4 Choice (b) applies 1.2.1.5 Choice (c) applies.

Question 1.2.2 Advice means any financial recommendation, guidance or proposal given to any client or group of clients on any financial product with the intention of getting the client to consider: a Entering into a financial transaction in respect of a financial product b Investing in a financial product c Granting a loan d Varying, replacing or terminating any of these.

1.2.2.1 All of the choices are true 1.2.2.2 None of the choices are true 1.2.2.3 Choice (b) and (d) are true 1.2.2.4 Choice (a) and (c) are true 1.2.2.5 Choices (a), (b) and (d) are true.

Learner guide Developed by Gray Training 011 472 3516 Jan 2004