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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 X : Advertising and direct marketing

 

 

14)
1) An advertisement by any provider must-
a) not contain any statement, promise or forecast which is fraudulent, untrue or misleading;
b) if it contains-
i) performance data (including awards and rankings), include references to their source and date;
ii) illustrations, forecasts or hypothetical data-
aa) contain support in the form of clearly stated basic assumptions (including but not limited to any relevant assumptions in respect of performance, returns, costs and charges) with a reasonable prospect of being met under current circumstances;
bb) make it clear that they are not guaranteed and are provided for illustrative purposes only; and
cc) also contain, where returns or benefits are dependent on the performance of underlying assets or other variable market factors, clear indications of such dependence;
iii) a warning statement about risks involved in buying or selling a financial product, prominently render or display such statement; and
iv) information about past performances, also contain a warning that past performances are not necessarily indicative of future performances; and
c) if the investment value of a financial product mentioned in the advertisement is not guaranteed, contain a warning that no guarantees are provided.

 

2) Where a provider advertises a financial service by telephone-
a) an electronic, voicelogged record of all communications must be maintained. Where no financial service is rendered as a result of the advertisement, such record need not be maintained for a period exceeding 45 days;
b) a copy of all such records must be provided on request by the client or the registrar within seven days of the request;
c) all the information required by sections 4(1)(a) and (c) and 5(a) and (c) shall not be required: Provided that the client is provided with basic details (such as business name and telephone number or address) of the provider or relevant product supplier, and of their relevant compliance departments: Provided further that, if the promotion results in the rendering of a financial service, the full details required by those sections are provided to the client in writing within 30 days of the relevant interaction with the client.

 

3) Where a provider advertises a financial service by means of a public radio service, the advertisement must include the business name of the provider.

 

15)
1) A direct marketer must, when rendering a financial service to or on behalf of a client, at the earliest reasonable opportunity furnish the client with the following particulars:
a) the business or trade name of the direct marketer;
b) confirmation whether the direct marketer is a licensed financial service provider and details of the financial services which the direct marketer is authorised to provide in terms of the relevant license and any conditions or restrictions applicable thereto;
c) telephone contact details of direct marketer (unless the contact was initiated by the client);
d) telephone contact details of the compliance department of the direct marketer;
e) whether the direct marketer holds professional and indemnity insurance;
Provided that where the direct marketer is a representative, the information contemplated in sub-paragraphs (a) to (c) above must be provided in respect of the provider to which the representative is contracted.

 

2) When providing a client with advice in respect of a product, a direct marketer must at the earliest reasonable opportunity:
a) make enquiries to establish whether the financial product or products concerned will be appropriate, regard being had to the client's risk profile and financial needs, and circumstances;
b) furnish the client with the following particulars where appropriate:
i) business or trade name of the product supplier;
ii) legal status and relationship with product supplier;
iii) the following details in respect of the product:
aa) Name, class or type of financial product concerned;
bb) Nature and extent of benefits to be provided;
cc) Manner in which such benefits are derived or calculated, with specific reference to the underlying assets of any investment component and the manner in which the value of such investment component is determined;
dd) Monetary obligations assumed by the client as well as manner of payment;
ee) Whether cooling off rights are offered and, if so, procedures for the exercise of such rights;
ff) Any material investment or other risks associated with the product;
c) take reasonable steps to establish whether the financial product identified is wholly or partially a replacement for an existing financial product of the client and, if it is such a replacement, inform the client of actual and potential financial implications, costs and consequence set out in clause 8(1)(d) of this Code before any transaction is concluded.

[Paragraph (c) substituted by section 4(a) of Board Notice 43 of 2008]

 

3) A direct marketer must prior to the conclusion of any transaction and where a contract is concluded provide the client with the following information, provided where such information is provided orally, it must be confirmed in writing within 30 days:
a) Telephone contact details of the compliance department of the product supplier;
b) To what extent the product is readily realisable or the funds concerned are accessible where appropriate;
c) Details of manner in which benefits will be paid;
d) Any restrictions on or penalties for early termination or withdrawal from the product, or other effects, if any, of such termination or withdrawal;
e) Charges and fees to be levied against the product including the amount and frequency thereof and where the product has an investment component, the net investment amount ultimately invested for the benefit of the client;
f) Commission, consideration, fees, charges or brokerages payable to the direct marketer by the client, or by the product supplier or by any other person;
g) On request, the past investment performance of the product, where applicable, over periods and at intervals which are reasonable with regard to the type of product involved;
h) Consequences of non-compliance with monetary obligations assumed by the client and any anticipated or contractual escalations, increases or additions;
i) In the case of an insurance product in respect of which provision is made for increase of premiums, abbreviated disclosures of such contractual increases;'
j) Concise details of any special terms and conditions, exclusions, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided;
k) Any guaranteed minimum benefits or other guarantees where appropriate;
l) That recordings of telephone discussions (where applicable) will be made available to the client on request.

 

4) A direct marketer must provide a client (where appropriate) with a record of advice as contemplated in section 9(1)(a) to (d) in writing.

[Subsection 4 amended by section 4(b) of Board Notice 43 of 2008]

 

5) A direct marketer shall be obliged to record all telephone conversations with clients in the course of direct marketing and must have appropriate procedures and systems in place to store and retrieve such recordings. Records of advice furnished to a client telephonically need not be reduced to writing but a copy of the relevant voicelogged records must be provided, on request, to the client or Registrar within a reasonable time.

 

6) Notwithstanding the above or contrary provision in the code, such of the information required to be provided to the client in terms of clauses 4, 5 and 7 of this Code as has not yet been recorded or provided to the client in writing before the conclusion of any transaction, must be provided to the client in writing within 30 days thereafter.