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

Financial Advisory And Intermediary Services Regulations, 2003

Chapter V : Matters relating to Administrative and Discretionary FSPs (Section 35(1)(d) and (e) of Act)

10. Duties of independent nominee

 

 

1) The investments of clients, as recorded by a product supplier (excluding cash held in a separate bank account as contemplated in the General Code of Conduct for Authorised Financial Services Providers and Representatives, 2003, as published in the Gazette) must be held in the name of the independent nominee on behalf of such clients, except in instances where because of the nature of a specific client, such registration is prohibited by other legislation.

 

2) The independent nominee must satisfy itself and submit a written statement to the registrar, within three months after the financial year end of the administrative FSP for which it acts, that -
a) the FSP has adequate procedures in place for ensuring that proper reconciliation, of the number of investments held in its name and reflected in the client records of the FSP, and the number of investments reflected in the records of the collective investment scheme or company, takes place on an ongoing basis;
b) such procedures are followed by the FSP;
c) procedures are implemented by the independent nominee in order to ensure that the duties stipulated in this regulation are carried out on a continuous basis;
d) summarises the nature of the errors and or difficulties that impacted on the ability of the FSP to conduct its business in accordance with these Regulations during the year under review; and
e) highlights the co-operation or lack thereof extended by the FSP to the independent nominee during the year under review.

 

3) The independent nominee must maintain fidelity guarantee and professional indemnity insurance sufficient to cover the risk of losses due to fraud, dishonesty and negligence that can reasonably be expected in an organisation of the size and complexity of the nominee and with due regard to the relationship with the administrative FSP concerned.

 

4)
a) Where an administrative FSP ceases to conduct business or its authorisation as a financial services provider lapses or is withdrawn, or its business is wound up or liquidated, the independent nominee of the FSP must with regard to investments, transfer the investments out of the bulk account of the independent nominee held with the relevant product supplier, into an account held in the name of a client concerned with that product supplier or the independent nominee of another administrative FSP: Provided that where the client is a- long-term insurer as defined in section l(1) of the Long-term Insurance Act, 1998 (Act No. 52 of 1998), or a pension fund organization as defined in section 1(1) of the Pension Funds Act, 1956 (Act No. 24 of 1956), the transfer of the investments will be subject to the contract with the relevant insurer and the Long-term Insurance Act, 1998, or the rules of the relevant pension fund organisation and the Pension Funds Act, 1956, as the case may be.
b) The provisions of paragraph (a) apply with the necessary changes where the mandate of an administrative FSP is terminated, in which case the FSP must ensure that instructions by clients concerned for the transfers are carried out.