Regulation Flashcards
An FSP must have and effectively use the resources, ______and ________ to eliminate risk of financial loss.
procedures
technological systems
Financial loss can be because of ____, ______ acts, poor _______, negligence or ________.
fraud
dishonest
administration
misconduct
The internal control procedures is to ensure that:
- The business is carried out in an ____ and ____manner.
- Financial and other info used is _______.
- all _____ have been complied with.
orderly, efficient
reliable
laws
An FSB must maintain in force suitable _____ and professional _______ insurance.
guarantees
indemnity
Professional indemnity insurance, indemnifies professionals against _____ ______ to _____ parties for claims brought by the client due to their professional ____.
legal liability
3rd
negligence
What would the indemnity insurance cover?
legal fees to defend
any loss due to negligent act/omission
any loss due to false statements/misrepresentation
What are some risk management procedures that can be put in place i.t.o. FAIS/FICA?
- segregate roles and responsibilities
- access security (to stored information)
- physical security
- clearly set out POLICIES AND PROCEDURES
- system testing/disaster recovery
- staff TRAINING on FAIS and FICA
- BCP
- proper admin
What are the Fit and Proper criteria for an FSP/Representative?
Financial Soundness (FSP) Honesty & Integrity (+FSP) Competency ==Experience ==Qualifications + RE Exams ==CPD Operational ability (FSP)
When can a representative be debarred?
- does not meet F&P criteria
* failed to materially comply with provisions of FAIS
How does the FSP debar a representative?
*allow for business with client to be completed
*investigate all info regarding representative
*within 15 days – notify Registrar in writing + reasons
(will no be listed as a debarred person)
What should be provided when applying for debarment?
- evidence supporting the reasons for debarment
- copy of service contract btw FSP and representative
- transcript of disciplinary hearing
- investigation/forensic report
When can a debarred person be re-appointed?
- after 1 year
- all complaints/legalities resolved
- all non-concluded business resolved
- meets at least H&I, competence and operational ability
What must be done PRIOR to advice given?
Suitability analysis
==get as much info as possible from client
==analyse info before advice
==identify appropriate products based on analysis
If the client doesn’t provide enough info, what must you do?
notify client of
==no suitability analysis done
==might received incorrect products
==reconsider
If the client elects not to follow the given advice (as per analysis), what should be done?
==alert client of the risk
==advise client to consider his needs/circumstances
Where a financial product is to replace an existing financial product held by the client, there must be full ___ about the financial _____ as well as ____ and consequences thereof.
disclosure
implication
costs
What is a record of summary?
brief summary of ==financial products considered recommended + explanations of why ==costs/fees
What must a client do if he wants to complain?
lodge in writing to FSP (first internal)
What must the FSP do when a client complains?
==receive in writing ==maintain record (5 yrs) ==handle fair and timely ==investigate and respond quickly ==refer to ombudsman etc if not resolvable
What is a conflict of interest?
any situation where FSP has an actual or potential interest that may:
==influence objective performance of obligations
==prevent unbiased/fair service
How must an FSP deal with a conflict of interest?
disclose to client in writing
==measures taken to mitigate
==details of financial or other interest
==nature of relationship/arrangement with 3rd party
What is the law of delict?
==there was an ACT perpetrated (wrongdoing)
==wrongdoer has duty to compensate victem
==person who suffered wrongdoing has right to claim reperation
To claim delictual demages there had to be an act of _____ or ______.
intention
negligence
What is misrepresentation?
statement made by one party to another
the statement was incorrect or false
What are the types of misrepresentation?
==negligent (what would reasonable person have done/known?)
==intentional (knows fact is false!)
==innocent (not negligent nor fraudulent)
What are the ELEMENTS of delict?
==wrongfulness (intent or negligence)
==duty of care (reasonable man – foresee harm, took steps to avoid?)
==causation (was the loss CAUSED by the omission/act?)
==loss/damage
What is the Protection of Personal Information Act?
aimed at right of PRIVACY
not an absolute right == justifiable limits
What does the Protection of Personal Information Act try to achieve?
==promote protection of personal info
==set minimum requirements for processing info
==establish an Information Regulator
==provide rights against unsolicited electronic comms
(e.g. sms)
==regulates flow of info across borders
