Client advice

05 August 2004 Angelo Coppola

(5.8.04) Contrary to popular perception, the FAIS Act, which will come into full operation in September, will not be providing blanket protection to users of financial services.

Dr Philip van der Walt, head of compliance at Sanlam Life, warns that although the FAIS Act provides much in terms of regulating the financial services industry and offers some protection to the users of financial services and financial services products, it also places responsibility for certain actions and decisions squarely on the shoulders of clients.

The Act doesn’t absolve the client from taking full responsibility for his or her decisions, he says.

“The Act stipulates certain conditions that are to be met and sets certain standards for financial service providers and financial advisers. The rest is still up to the client who ultimately has the final say in his or her own financial matters.

“The success or not of the FAIS Act will ultimately depend to a large extent on how clients accept their own responsibilities,” says Van der Walt. 

He offers a few tips for clients:

  • Manage your own personal finances. Financial advisers act on your instructions and you cannot blame them or the product provider for your indiscretions.
  • Ensure that your financial adviser is licensed by the Financial Services Board (FSB).
  • Enter into a contract with your financial adviser in which it is clearly stipulated what should be delivered and by when.
  • Provide your financial adviser with correct information, otherwise he / she cannot be held responsible for any shortcomings.
  • It is your responsibility to ensure that your money is entrusted to a reputable financial institution, so choose your product and product provider with care.
  • Your financial adviser should disclose certain information, but it is up to you to ensure that you understand what you are going to sign. Do not sign blank forms and do not sign anything that you do not understand. Ask him or her to explain and, if necessary, get another opinion.
  • Do not expect your financial adviser to realise your dreams. He or she can only assist in doing the possible.

Van der Walt says you should also guard against being bullied into something that you do not understand or do not need. “You are ultimately responsible for your decisions and you will not be able to blame anyone else afterwards. If in doubt, stay out.”

He also says that although the Act stipulates that financial advisers should keep records, it will not be wise to rely on the financial adviser to maintain records on your behalf.

“It is imperative to keep proper records of all dealings to revert back to in times of trouble.”

Van der Walt also points out that you should familiarise yourself with the mechanisms provided for in FAIS for handling complaints, should you be dissatisfied. When complaining:

  • Ensure that your complaint is formulated properly, and ask for assistance if necessary.
  • Submit your complaint in writing to the financial adviser first. The financial adviser must keep records of all complaints for at least five years.
  • If you are not satisfied with the financial adviser’s solution, you may approach the office of the FAIS Ombudsman for his consideration.
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