Page 92 - Profile's Unit Trusts & Collective Investments - September 2025

Chapter 5 Legislation and guidelines

R They must act in the interests of clients at all times, and must advise clients if they have any
personal interest in the investment product or service.
R An FSP may not misrepresent the extent of any FSCA license held and must disclose when
they advise on unregulated products that are not covered by their licence.
R They must act prudently (ie, be careful not to give reckless advice), and must avoid conflicts
of interests with clients.
R They must make sure that any information provided to clients is accurate and easy to
understand. Statements about past performance must be appropriate and product-relevant.
R FSPs must have systems in place to record written communications relating to financial
services rendered to a client, to store and retrieve such documentation and to keep
documentation safe from destruction.
R Financial advisers need to give clients certain prescribed particulars about the selected
product supplier and the business once a financial service has been rendered.
R They must tell clients about all material terms of any contracts or transactions so that clients
can make informed decisions. This includes information about commissions and incentives.
R Financial advisers must ascertain how well informed clients are, investigate each client’s
financial situation and explore each client’s needs and objectives before giving advice. This
is to ensure that advice is appropriate to each client’s particular circumstances. Where an
adviser is unable to identify a suitable product, the adviser must point this out to the client and
decline to recommend a product.
R If a client chooses not to follow the recommendation, the adviser must point out the risk of
doing so.
R They need to keep records of all advice given to clients.
R Where an FSP receives or holds financial products or funds on behalf of a client, these assets
must be properly and promptly accounted for and must be kept separate from any assets of
the FSP.
R Financial advisers must also try to eliminate, as far as possible, the risks of loss to clients
through theft, fraud or negligence. This means that FSPs must have good internal controls
to ensure that the business is run in an orderly and efficient manner, and that information
provided to all parties is accurate and reliable.
R FSPs must maintain suitable guarantees, professional indemnities and/or fidelity insurance
cover.
R Marketing material, brochures and advertising must comply with certain provisions of the code
designed to ensure that promotional material does not contain any statements, promises or
forecasts that are fraudulent or misleading.
R FSPs must establish complaints resolution
processes, ie, clear procedures for resolving
customer grievances. In the interests of
transparency, clients must be given access to
the complaints procedure itself.
In terms of the FAIS Act, FSPs can be held liable
for the actions of their representatives. This makes it
imperative for FSPs to ensure that staff are properly
trained and meet the Fit and Proper Requirements.
The Act gives the Registrar certain powers
regarding FSPs. For example, if an FSP publishes
a misleading advert, the Registrar may direct the
FSP to change the advert or to stop using it. The
Registrar must of course provide reasons and give
the FSP an opportunity to be heard.

90 Profile’s Unit Trusts & Collective Investments September 2025