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

General code of conduct for authorised financial services providers and representatives, 2003

Part VIII : Custody of financial products and funds

 

 

10)
1) Subject to the provisions of any other applicable Act, a provider who receives or holds financial products or funds of or on behalf of a client must account for such products or funds properly and promptly and-
a) when documents of title are lodged with the provider on behalf of the client, the provider must immediately provide written confirmation of receipt thereof which contains a description of the documents that is sufficient to identify them;
b) when a provider receives funds into safe custody without the mediation of a bank, the provider must on receipt of the money, issue a written confirmation of receipt thereof;
c) where the provider, or a third party on behalf of either of them, is in control of such financial products or funds, take reasonable steps to ensure that they are adequately safeguarded;
d) open and maintain a separate account, designated for client funds, at a bank and-
i) must within one business day of receipt pay into the account all funds held on behalf of clients;
ii) ensure that the separate account only contains funds of clients and not those of the provider;
iii) pay all bank charges in respect of the separate account except that bank charges specifically relating to a deposit or withdrawal of the funds of the client are for the client's own account; and
iv) ensure that any interest accruing to the funds in the separate account is payable to the client or the owner of the funds;
e) take reasonable steps to ensure-
i) that at all times such financial products or funds are dealt with strictly in accordance with the mandate given to the provider;
ii) that client financial products or funds are readily discernible from private assets or funds of the provider; and
iii) that, subject to any applicable contractual or statutory provisions, a client has ready access to any amount paid into the separate account, less any deductions which are authorised, and charges and fees required or authorised to be paid by law.

 

2) Where a transaction or agreement has been recorded in writing, the provider who dealt with the client, must ensure that the original agreement is delivered to the client for safe custody.

 

3) Section 10(1)(d) is not applicable to a provider-
a) who receives, holds or in any other matter deals with premiums payable under a short-term reinsurance policy; or
b) who is subject to section 45 of the Short-term Insurance Act, 1998 (Act No. 53 of 1998), if the provider complies with the requirements contemplated in that section.