Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)
Codes of Conduct
Notice on Codes of Conduct for Administrative and Discretionary FSP's, 2003
Chapter II : Code of Conduct for Discretionary FSP’s, 2003
Part II : Operational requirements
|A discretionary FSP must obtain a signed mandate from a client, before rendering any intermediary service to that client: Provided that the parties may agree to complete an electronic mandate in respect of which appropriate controls and personal identification procedures have been put in place that ensures security of information, and that the mandate records the arrangements made between the parties, and must—
|authorise the discretionary FSP to act on behalf of the client, indicating whether the authorisation is given with full or specified limited discretion;
|state the investment objectives of the client and whether there are any investment or jurisdiction restrictions that apply to the rendering of intermediary services in relation to the financial products involved;
|contain a general statement pertaining to the risks associated with investing in local and foreign financial products, with particular reference to any currency risk;
|stipulate in whose name the financial products are to be registered and whether they are, for example, to be registered in the name of—
|the client or a nominee company nominated by the client;
|the nominee company of the discretionary FSP or a nominee company within the group of companies of which the discretionary FSP forms part;
|the nominee company of a product supplier;
|a nominee company of any depositary institution or central securities depository registered or licensed in terms of the Custody and Administration of Securities Act, 1992 (Act No. 85 of 1992), or of any bank registered or licensed in terms of the Banks Act, 1990 (Act No. 94 of 1990); or
|an administrative FSP's independent nominee, in the case of a FSP who deals through an administrative FSP;
|stipulate the bank account details of the trust account opened at a bank or other bank account opened in the name of the client in which the discretionary FSP must deposit and, where applicable, from which the discretionary FSP must withdraw moneys received in connection with the rendering of intermediary services;
|stipulate, where applicable, at which intervals any cash accruals (including dividends and interest) which the discretionary FSP receives on behalf of a client, must be paid to the client;
|stipulate the basis on which, the manner in which and the intervals at which the client will remunerate the discretionary FSP for the rendering of intermediary services on the client’s behalf: Provided that for the purposes of this paragraph it shall be deemed that the basis of the remuneration has not been stipulated if the remuneration must be calculated with reference to a source outside the mandate or if it is placed within the discretion of any person;
|state whether the discretionary FSP receives commission, incentives, fee reductions or rebates from an administrative FSP or product supplier for placing a client‘s funds with them;
|if the discretionary FSP is capable to do so, provide a client with the option to receive reports and statements in electronic or printed format;
|empower either party to the mandate to terminate the mandate after notice in writing of not more than 60 calendar days;
|stipulate whether the discretionary FSP may vote on behalf of its clients in respect of their financial products;
|obtain and transmit to a client any information which a relevant product supplier must disclose in terms of any law, unless the client in writing specifically requested the discretionary FSP not to provide such information;
|where applicable, obtain a statement .to the effect that the discretionary FSP may, in order to render an intermediary service to the client, utilise the services of its own staff or that of another approved FSP.
|The mandate of a discretionary FSP must initially, be approved by the registrar, who may grant approval subject to such conditions as the registrar may determine. The initially approved mandate is hereinafter referred to as the "specimen mandate". The registrar may subsequent to approval require that specific amendments be made to the specimen mandate or that any other information be disclosed that is deemed necessary in the interest of the client.
|A discretionary FSP may not amend the specimen mandate substantially, without the prior written approval of the registrar.
|When the mandate of a discretionary FSP is terminated, such FSP must at once return all cash, financial products and documents of title to the client and must simultaneously provide the client with a detailed final statement of account. If the financial products and documents of title are in possession of a nominee company, the discretionary FSP must at once issue an instruction to such nominee company to return such financial products or documents of title to the client.
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