Page 89 - Profile's Unit Trusts & Collective Investments - March 2026

Legislation and guidelines Chapter 5

R Financial advisers must also try to eliminate,
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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 R
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.
When the COFI Bill is enacted, the conduct of financial advisers which is currently governed by
several separate pieces of legislation and overlapping regulations (such as the FAIS Act, the General
Code of Conduct, Fit and Proper, policyholder protection rules, and so on will be consolidated in one
Act).
Complaints procedures
As noted above, Section 17 of the General Code of Conduct requires the establishment of a
complaints management framework.
Under Section 17, FSPs are required to appoint responsible persons to handle complaints and
there has to be a clearly defined internal escalation and review process. This has to be documented.
Each FSP must keep a record of complaints and monitor complaints received in order to identify
possible ongoing and recurring issues, to improve risk management and improve outcomes for
clients. Complaints must be categorised into defined categories. These include:
R complaints relating to the design of a product or financial service, including around fees,
premiums or other charges
R complaints relating to information provided to (or not provided to) clients
R complaints relating to advice given
FSPs are also required to maintain summary data about complaints, including:
R number of complaints received
R number of complaints upheld
R number of rejected complaints and reasons for the rejection
R number of complaints referred to an Ombud and their outcome
Retail Distribution Review (RDR)
The FSB (now the FSCA) first published its Retail Distribution Review (RDR) in November 2014.

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