The Financial Advisory and Intermediary Services Act, or the FAIS Act for short, exists to protect you, the consumer, from receiving inadequate financial advice. The FAIS Act states that anyone who provides financial advice must be registered with the Financial Sector Conduct Authority (FSCA). This means only registered financial practitioners can give you advice about which insurance products (or any product that takes your money and does something with it, like an investment product) are right for your specific situation.
Purpose of the Act
“To regulate the rendering of certain financial advisory and intermediary services to clients; to repeal or amend certain laws, and to provide for matters incidental thereto.”
FAIS is legislation that impacts the financial services industry and aims to regulate the provision of advice and rendering of intermediary services to clients, as well as certain other issues. FAIS affects most financial institutions, financial service providers, their representatives (such as practitioners, direct sellers), and other staff.
– Protect the clients who use financial services and products.
– Protect the financial services industry.
– Protect intermediaries.
– Determine the financial needs of the clients.
– Provide appropriate advice to clients after having established the relevant facts.
– Assist clients in making informed decisions.
– Establish an effective complaints resolution procedure.
– Ensure that intermediaries are competent.
– Ensure that product providers and financial planners act with due care and diligence, and in the interests of the client.
– Provide clients with trusted and appropriate advice and solutions.
– Act with integrity, transparency, and a culture of discipline when dealing with clients.
– Receive protection through appropriate and trusted advice, integrity, and transparency.
– Maintain high standards by product providers.
– Establish an effective complaints resolution mechanism.
– Protect through the continued existence of the FSP.
– Ensure proper monitoring of practitioners’ and consultants’ actions.
– Maintain records of advice and communication.
– Ensure that practitioners are competent.
Who must register with FAIS?
FAIS became effective on 30 September 2004. It is important to note that this date is the same for all financial institutions impacted by FAIS, and that from this date onwards, no FSP may operate without an FSP licence.