The Financial Advisory and Intermediary Services (FAIS) Act 37 of 2002 is a South African law that regulates the financial advisory and intermediary services industry. Its main purpose is to protect consumers of financial products and services, professionalise the industry, and ensure that financial service providers act in a competent and ethical manner. 

Key aspects of the FAIS Act include:

• Regulation of Financial Service Providers (FSPs) - requires all FSPs to be registered and to comply with specific codes of conduct;
• Consumer Protection - aims to ensure that consumers receive adequate information about financial products and services, making informed decisions, and are protected from inappropriate advice or practices;
• Professionalisation of the Industry - promotes a professional and ethical financial services industry by establishing standards for competence, conduct, and compliance;
• Licensing and Registration - FSPs must obtain licenses and their representatives must be registered;
• Codes of Conduct: The Act requires the development and implementation of codes of conduct to govern the behaviour of FSPs and their representatives;
• Compliance Officers - FSPs with multiple key individuals or representatives must appoint a compliance officer to oversee compliance with the Act;
• Financial Statements - FSPs are required to submit financial statements to the Registrar;
• Complaints and Enforcement - provides mechanisms for consumers to lodge complaints and for the authorities to enforce compliance; and 
• Financial Advisory and Intermediary Services Ombud - This body handles complaints and provides alternative dispute resolution. 

What products are covered under the FAIS Act?

• Investment products: These include products such as unit trusts, exchange-traded funds (ETFs), and stocks. Financial advisers may provide advice on which investment products to buy and sell, as well as on asset allocation and risk management strategies.
• Insurance products: Financial advisers may provide advice on a range of insurance products, including life insurance, disability insurance, and medical insurance. They may help clients choose the right coverage and policy limits based on their needs and financial situation.
• Retirement planning: Financial advisers may provide advice on retirement planning, including helping clients choose the right retirement savings vehicle, such as a pension fund or a retirement annuity, and developing a retirement income plan.
• Estate planning: Financial advisers may provide advice on estate planning, including helping clients create a will, setting up trusts, and selecting beneficiaries for assets such as life insurance policies.
• Credit products: Financial advisers may provide advice on credit products, such as home loans, personal loans, and credit cards. They may help clients choose the right product, negotiate terms, and manage debt.

Insurance Brokers

Insurance brokers, as intermediaries, are specifically required to comply with FAIS regulations when advising clients and placing insurance policies. The FAIS Act mandates that brokers demonstrate competence and act with integrity when providing advice and services to clients and must adhere to the FAIS Code of Conduct, which outlines obligations related to disclosures, record-keeping, and other areas. 

Mortgage brokers

Bond brokers, who are considered financial service providers, must be licensed by the Financial Sector Conduct Authority (FSCA) and adhere to a Code of Conduct. 

The FAIS Ombud determinations frequently refer to section 8(1)(c), which requires the provider to identify the financial products, including mortgage bonds, that are appropriate to the client's risk profile and financial needs. It is advantageous for consumers to work with a mortgage broker that can advise on all relevant lenders

Use a reputable mortgage broker

Using a reputable broker will ensure you get more value out of the bank’s offer. By using a broker, you can access multiple offers simultaneously and negotiate on fees and interest rates so you can have the confidence knowing you received the best deal in the market at the time.

Phoenix Bonds is a premium mortgage broker in South Africa, with a proven track record (check out the reviews on Google).  For expert advice and personalised service, fill in your details HERE and one of our experienced Consultants will be in touch.