FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT FAIS ACT

1. FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT (�FAIS ACT�)

2. Why the FAIS ACT? To regulate the provision of financial advisory; and intermediary services.

3. Key Definitions in the Act Advice; Financial product (c); Intermediary service.

4. The Licensing Process (s7) Step 1 Apply to the Financial Services Board (�FSB�) or through a recognised Representative Body + Statement that applicant complies with of Fit and Proper requirements (see defn later); Step 2 Consideration by FSB Licencing Committee, which will decide whether to grant or refuse the licence. Step 3 If the licence is refused, then the entity will be advised of the reasons for the refusal.

6. FIT & PROPER REQUIREMENTS In respect of FSP, KI and Representatives Honesty and integrity; Competence (qualifications and experience); Operational ability (The operational ability requirements for the KI are limited to his ability to act as a KI for a financial product category).

7. SUSPENSION OF A LICENCE (s9) Suspension Suspension of licence occurs when the Registrar conditionally removes the licence from the FSP Suspended licences can be reinstated Conditions Gets evidence that the FSP no longer meets Fit and Proper requirements Has the evidence and has asked the FSP for further information

8. WITHDRAWAL OF A LICENCE (s 10) Withdrawal Withdrawal of a licence occurs when the Registrar purposefully removes a licence from an FSP A withdrawn licence cannot be reinstated Conditions Non disclosure of all relevant information Offered false or misleading information Contravened or failed to comply with FAIS in a material manner

9. KEY INDIVUALS AND REPRESENTATIVES (s13) WHAT ARE THE DIFFERENCES?

10. Appointment of Representatives Representative - a person who represents an FSP under contract of employment or any other mandate. A �mandatory� could be a temporary member of staff, a casual, a consultant or an outsourced person amongst others. Representatives need not be licensed under FAIS, but need to comply with the Fit and Proper requirements and Be listed in the FSP�s Representatives Register

11. REPRESENTATIVES Is the person who interacts directly with the client, and offers financial services for or on behalf of the FSP in connection with a financial product. Is appointed by the FSP based upon qualification and financial product expertise. Uses product knowledge, skills and codes of conduct to ensure that the client is ethically treated in terms of understanding both client�s needs and financial products The FSP must be satisfied that the Representative meets the Fit and Proper requirements and is competent and qualified to act on their behalf.

12. KEY INDIVIDUALS Is the person responsible for managing or overseeing the activities of the FSP; senior executive appointed by the FSP based upon qualification and experience in a specific financial product category . Is appointed by the FSP based upon management and financial product expertise KIs need to satisfy the Registrar that they comply with the Fit and Proper requirements

13. RELATIONSHIP BETWEEN KI, REPRESENTATIVES AND THE FSP FSP Licenced; Employs Representatives; Appoints Key Individuals. KI�S Responsible for the actions of Representatives; Can be anywhere in the country; Does not change Representatives� reporting structures; Fit and Proper.

14. CONTINUED LINE MANAGER Manages the Representatives REPRESENTATIVES Works for the FSP Is Fit and Proper Reports to Line Manager / Supervisor May be an employee or mandatory

15. RESTRICTIONS IMPOSED ON REPRESENTATIVES A person does not meet minimum Fit and Proper requirements. That person is prohibited from functioning as a Representative A person only meets the minimum Fit and Proper requirements. That person has a specific period of time in which to attain the next level of competence Circumstances change for a person who is a Representative so that the �Fit and Proper� status is in question That Representative must declare the changed circumstances to the FSP

16. DEBARMENT OF REPRESENTATIVES In this context, debarment means that a Representative is prohibited from performing his/her duties. Debarment is a serious step to take. It means that once the Representative�s name is removed from the FSP register s/he may no longer act as a Representative. The FSB must be notified within 30 days and will maintain records of such debarments.

17. WHEN ARE REPRESENTATIVES DEBARRED? A Representative can be debarred if s/he: No longer complies with the Fit and Proper requirements Has contravened or failed to comply with any provision of FAIS.

18. CONSEQUENCES OF DEBARMENT The FSP must: Prohibit the Representative from offering any new financial service, by withdrawing any authority to act on its behalf Take immediate steps to ensure that the debarment does not prejudice the interests of the clients Conclude all of the Representative�s unfinished business with clients Inform the Registrar that the Representative�s name has been removed from the register, within the prescribed time limit.

19. DUTIES OF THE FSP Appoint the Compliance Officer; Compliance Officer must be approved by the Registrar; Establish and maintain procedures to ensure compliance with the FAIS Act. Maintain records for a minimum period of 5 years; Known premature cancellations of transactions or financial products; Record of complaints received; Record of continued compliance with the Act; Cases of non-compliance with the Act; Record of continued compliance by the Representatives Accounting and Audit requirements Maintain accounting records but more importantly, ensure that the AFS are submitted to the FSB within 6 mionthsfrom the financioal year end.

20. HOW DOES THIS IMPACT ON THE BUSINESS OF SAFRICAN Representatives & KI�s: records are to be maintained and updated; Assessment of representative�s compliance with the Fit & Proper to be periodically performed Maintenance of records Required records to be maintained; Submission made on time.

21. QUESTIONS