Conflict of Interest means any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client:
Financial Interest means any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration, other than:
Immaterial Financial Interest means any financial interest with a determinable monetary value, the aggregate of which does not exceed R1 000 in any calendar year from the same third party in that calendar year received by:
Ownership Interest means
Third Party means
Associate means
Distribution Channel means
The primary responsibility for the identification of a conflict of interest rests with the representatives, employees and individual members of the governing body of the FSP.
Throughout the process of rendering a financial service to a client, a representative must apply his or her mind to answering the following questions:
If the answer to all three questions is “no”, then there is no conflict of interest associated with the financial service and the representative may proceed.
If the answer to any one of the three questions is “yes”, the representative must proceed to answer the following additional questions:
If the answer to any one of these questions is “yes”, an actual or potential conflict of interest will have been identified.
The definition of a Conflict of Interest incorporates the following terminology:
It is generally understood that the word “objective” refers to a situation where an individual’s personal feelings or opinions are completely removed from the equation. The “objective performance” of an FSP or representative’s obligations therefore implies a situation where financial services are rendered without any untoward influences.
The word “bias” or “biased” is understood to mean a form of prejudice towards a particular person or viewpoint, whereas the word “fair” or “fairness” indicates a situation of just circumstances or being treated on an equal footing. An unbiased financial service therefore implies a financial service that does not lend itself to a particular persuasion, where no reasonable justification for such persuasion can be found. Similarly, a fair financial service implies a situation where the same conclusion or outcome will consistently present itself given the exact same set of circumstances.
Subject to section 3A(1)(c) of the General Code of Conduct, the FSP and its representatives may only receive or offer the following “financial interest” from or to a “third party”.
The FSP will not offer any financial interest to its representatives for:
The FSP has implemented the following internal controls to identify actual or potential conflicts of interest that may arise:
Once an actual or potential conflict of interest has been identified, the following procedures will be followed in order to determine whether the conflict of interest is avoidable:
The governing body of the FSP will convene and evaluate the actual or potential conflict of interest in an open and honest manner
All information that’s led up to and resulting in, or causing the actual or potential conflict of interest will be disclosed to the FSP’s governing body and the FSP’s compliance officer
The governing body of the FSP will apply its mind and determine by way of majority vote whether the FSP is in a position to avoid the actual or potential conflict of interest
During the evaluation process, the governing body of the FSP will consider the following possible outcomes prior to a finding in favour of unavoidability:
Where the governing body of the FSP has determined that the actual or potential conflict of interest is in fact avoidable, the following processes will be followed:
Where the governing body of the FSP has determined that the actual or potential conflict of interest is unavoidable, the following processes will be followed:
Any measures implemented towards mitigating the actual or potential conflicts of interest will include the following arrangements:
It is acknowledged that while disclosure alone will often not be enough, disclosure must be treated as an integral part of managing conflicts of interest. The FSP is therefore committed to ensure that clients are fully informed about actual or potential conflicts of interest in relation to the provision of financial services.
The FSP has adopted the following disclosure measures:
The FSP shall disclose to a client any conflict of interest in respect of that client
The disclosure shall be made in writing at the earliest reasonable opportunity. The disclosure may be communicated by way of appropriate electronic media
The disclosure shall include the nature of any relationship or arrangement with a third party that gives rise to a conflict of interest
The disclosure shall be made in sufficient detail to enable the client to understand the exact nature of the relationship or arrangement and the conflict of interest
The disclosure shall include the measures taken to avoid or mitigate the conflict
The disclosure shall include any ownership interest or financial interest, other than an immaterial financial interest, that the FSP or representative may be or become eligible for
The disclosure shall include a reference to the FSP’s Conflict of Interest Management Policy and how it may be accessed
The measures implemented towards ensuring the FSP’s continued compliance with the Conflict of Interest Management Policy rests with the governing body of the FSP. The FSP’s appointed Compliance Officer will monitor the FSP’s continued compliance with the policy on an ongoing basis.
The FSP has adopted the following internal controls and processes:
The governing body of the FSP shall ensure that the Conflict of Interest Management Policy is kept in the FSP’s Compliance Manual
The governing body of the FSP shall ensure that all relevant personnel read the Conflict of Interest Management Policy and understand their duties in respect thereof
The governing body of the FSP shall ensure that all personnel, and where appropriate, associates are made aware of the contents of the Conflict of Interest Management Policy and shall provide personnel with training and educational material where deemed appropriate
The governing body of the FSP shall ensure that all Conflict of Interest declarations are signed by relevant personnel on a quarterly (3 monthly) basis
Where an employee or representative have any concerns whether or not an actual or potential conflict of interest might arise in a particular situation, the employee or representative will be required to refer his or her concern to the FSP’s Compliance Officer
The governing body of the FSP shall ensure that a list of all the FSP’s associates is annexed to the Conflict of Interest Management Policy and that a review of the list shall be conducted annually
The governing body of the FSP shall ensure that a list of all the parties in which the FSP holds an ownership interest is annexed to the Conflict of Interest Management Policy and that a review of the list shall be conducted annually
The governing body of the FSP shall ensure that a list of all third parties that holds an ownership interest in the FSP is annexed to the Conflict of Interest Management Policy and that a review of the list shall be conducted annually
The governing body of the FSP shall continue to maintain a Gift Register and shall ensure that all gifts received from a third party with an estimated value of R500 or more are recorded in the FSP’s Gift Register
The governing body of the FSP shall ensure that the proper disclosures are made to the client regarding actual or potential conflicts of interest
The Conflict of Interest Policy shall be regularly reviewed by the appointed Compliance Officer, and where necessary, updated to ensure that the measures contained herein remains effective
The governing body of the FSP shall publish its Conflict of Interest Management Policy in appropriate media and ensure that it is easily accessible for public inspection at all reasonable times
The governing body of the FSP shall ensure that the Conflict of Interest Management Policy is reviewed on at least an annual basis
Where there is reason to believe that an employee or representative has failed to disclose an actual or potential conflict of interest via the proper communication channels, the FSP will proceed to investigate and take any appropriate steps it deems necessary to limit any financial prejudice that may be suffered by the FSP, its clients or any other third party.
Where an investigation concludes that an employee or representative of the FSP has indeed failed to disclose an actual or potential conflict of interest, the FSP shall immediately take appropriate disciplinary steps and corrective actions against such employee or representative. Any failure by an employee to comply with the Conflict of Interest Management Policy will be considered serious form of misconduct and a dismissible offence.
In terms of Section 3A(2)(b)(iii) of the General Code of Conduct, a Conflict of Interest Management Policy must include a list of all the FSP’s associates.
Please refer back to the definition of an “associate” and list all the FSP’s associates, as well as the nature of the associate relationship:
In terms of Section 3A(2)(b)(v) of the General Code of Conduct, a Conflict of Interest Management Policy must include the names of any third parties in which the provider holds an ownership interest.
Please refer back to the definition of a “third party” and “ownership interest” and list all third parties in which the FSP holds an ownership interest. Also specify the nature and extent of the ownership interest.
In terms of Section 3A(2)(b)(vii) of the General Code of Conduct, a Conflict of Interest Management Policy must include the names of any third parties that holds an ownership interest in the provider.
Please refer back to the definition of a “third party” and “ownership interest” and list all third parties that hold an ownership interest in the FSP. Also specify the nature and extent of the ownership interest.
In terms of Section 3A(2)(b)(ii), a Conflict of Interest Management Policy must specify the type of financial interest that the provider will offer a Representative and the basis on which a Representative will be entitled to such a financial interest. The Conflict of Interest Management Policy must also include a motivation regarding how the financial interest complies with sections 3A(1)(b) and 3A(1)(bA).
Please refer back to the definition of “Financial Interest”, and specify in the table below which types of financial interest is offered by the provider to its Representatives. Also specify the basis on which these Representatives are entitled to such a financial interest. Lastly, specify how the financial interest afforded to the Representatives comply with sections 3A(1)(b) and 3A(1)(bA).
Form of Financial Interest |
Basis for entitlement to Financial Interest |
Compliance with Sections 3A(1)(b) and 3A(1)(bA) |
Commission authorised under the Long-term Insurance Act, 1998 (Act No. 52 of 1998) or the Short-term Insurance Act, 1998 (Act No. 53 of 1998). | ||
Commission authorised under the Medical Schemes Act, 1998 (Act No. 131 of 1998). | ||
Fees authorised under the Long-term Insurance Act, 1998 (Act No. 52 of 1998) or the Medical Schemes Act, 1998 (Act No. 131 of 1998). | ||
Fees for the rendering of a financial service in respect of which commission or fees referred to above is not paid, if
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Fees or remuneration for the rendering of a service to a third party. | ||
Subject to any other law, an immaterial financial interest. | ||
A financial interest, not referred to in the column above, for which a consideration, fair value or remuneration that is reasonably commensurate to the value of the financial interest, is paid by that provider or representative at the time of receipt thereof. | ||
to the value of the financial interest, is paid by that provider or representative at the time of receipt thereof. |
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