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Are you FAIS compliant

11 May 2006 Riaan van Wyk, Santam

FAIS, more than anything, is a way of regulating and protecting the consumer by ensuring he/she are provided with trusted advice, allowing them to make informed decisions. But how can you ensure you are adhering to the Act and conducting your business in a FAIS compliant way?

Riaan van Wyk of Santams Corporate Legal Services says as a broker you should always have a copy of your license and allow clients to check, if need be, whether the Financial Services Provider (FSP) license number is displayed along with the name of the FSP or the company for which you work if you are acting as a representative for another provider in which case you should be able to produce a letter from the provider confirming this fact.

Brokers are now compelled to conduct a needs analysis for each client ascertaining whether he/she are already insured, what type of cover they require and whether the insurance product you are offering them will satisfy their needs.

If no such analysis is conducted, it can easily happen that the client may have a policy that already covers certain perils, meaning the client might be insured twice for the same peril without knowing.

When selling a short term insurance product, such as household insurance, a broker must explain the type and nature of cover to the client.

Van Wyk says that if you recommend a certain short-term insurance product underwritten by a particular insurer, you are obliged to advise a client as to why you recommend that particular product allowing he/she them to understand the difference between the products and make an informed decision.

FAIS also allows a client to request everything in writing before accepting the short-term insurance policy.

Brokers need to disclose brokerage fees, the commission received from the insurer, as well as premium obligations.

Van Wyk adds that in terms of FAIS you are required to keep record of advice provided to clients. This provides protection for both broker and client in the event of a claim dispute arising.

If you require any advice regarding FAIS you can contact the FSB (Financial Services Board) toll free on 0800 20 20 87 or 0800 11 04 43.

Issued on behalf of Santam by Lange Strategic Communications

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