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

Part IV : Special Provisions applying to Forex Investment Advisors

9. Arrangements between forex investment advisors and clients and cost disclosure

 

 

1) A forex investment advisor must commence its business relationship with a client by way of a written application form signed by the client and, where applicable, the forex investment intermediary involved. The forex investment advisor and the client may agree to complete an electronic application form, provided that appropriate controls and personal identification procedures have been put in place that ensures security of information. This application form or supplementary documentation made available to the client in addition to the application form, must record the arrangements made between the parties, and must, if applicable in a particular case, disclose clearly-
a) if the forex investment advisor deals with one or more forex investment intermediaries;
b) if the client will deal directly with the forex investment intermediary or through the advisor;
c) whether the application is for advice on a managed forex account or a self-directed forex account;
d) the names and postal addresses of the client and the forex investment intermediary concerned, and the telephone, facsimile and other contact detail, if any, of the forex investment intermediary;
e) that the forex investment intermediary concerned is an authorized financial services provider and state the applicable licence number;
f) a list of the available investment options and leverage, drawdown and foreign regulatory environment options, and explain the type and the nature of the applicable risks;
g) whether the investments in the case of managed forex accounts will be made in the name of the client at the foreign forex services provider acting as clearing firm or whether it will be made in the name of an omnibus account holder under direct or indirect control of the forex services provider;
h) information on applicable exchange control measures regarding the forex investment;
i) the amount of the investment and the term of the investment; and
j) separately, in respect of the forex investment advisor and the forex investment intermediary concerned, the total fees and benefits to be received by each in respect of a client’s investment, whether by way of a deduction from the investment or not, including-
i) the initial fees or costs;
ii) the ongoing fees or costs;
iii) any other benefit, fees or costs, whether in cash or kind.

 

2) The registrar must initially approve the application form referred to in subsection (1), and may grant approval subject to the conditions that the registrar may determine. The registrar may subsequent to approval require that specific amendments be made to such application form (hereunder referred to as the specimen application form) or that any other information that is deemed necessary be disclosed in the interest of the client. The forex investment advisor may not amend the specimen application form substantially without the prior written approval of the registrar.

 

3) If a client decides to terminate the relationship with a particular forex investment intermediary but wishes to continue to make use of the services of the originally chosen forex investment advisor through another forex investment intermediary, the last-mentioned forex investment intermediary must ensure that the client sign the applicable application form referred to in subsection (1) and the forex investment advisor must inform the client of all changes pertaining to subsection (1) (a) to (j) of this section.

 

4) If a client decides to terminate the relationship with the forex investment advisor but wishes to continue to make use of the services of the originally chosen forex investment intermediary through another forex investment advisor, then the last-mentioned forex investment advisor must ensure that the client sign the applicable application form referred to in subsection (1) and must inform the client of all changes pertaining to subsection (1)(a) to (j).

 

5) Where a forex investment advisor solicits additional funds for an existing forex investment intermediary involved, the advisor must provide the client with the information referred to in subsection (1)(a) to (j) of this section if any of the terms of the previous/initial investment had changed.

 

6) A forex investment advisor must enter into an appropriate written agreement with each forex investment intermediary to whom it refers clients, which records their particular arrangements and makes provision for termination of the agreement by either party on written notice of not less than 60 days.