It is evident that the existence of a service contract and/or mandate is not sufficient to safeguard an employer in instances where a representative acts outside of its stipulations and parameters.
Despite this, it is necessary to remind ourselves from time to time of the obligations resting on FSPs, key individuals and representatives in this regard.
Section 13 of the FAIS Act determines, amongst others, that a person may not act as a representative of an authorised financial services provider, unless such a person, and prior to rendering a financial service, provides confirmation, certified by the provider, to clients
- that a service contract or other mandate, to represent the provider exists and
- that the provider accepts responsibility for those activities of the representative performed within the scope of, or in the course of implementing, any such contract or mandate
Section 13(1)(c), which came into effect on 30 May 2014, stipulates further that-
“A person may not render financial services or contract in respect of financial services other than in the name of the financial services provider of which such a person is a representative.”
The Regulator found it necessary to publish Guidance Note Section 13(1)(c) to ensure clarity on how it would interpret this, as well as a Response Document on Section 13(1)(c) which covers a wide range of questions from the industry, including matters such as premium collection, binder functions and insurer responsibilities.
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Can a representative work for two different FSP’s or are you allowed to only be a representative on one license?
There is no regulation that prevents a rep from working for different FSPs. But the FSCA is not particularly happy with reps doing so, because it is unclear which FSP is accountable for the advice/intermediary service being provided by the rep. Having multiple licences can be suitable if a rep wants to gain experience by working for an FSP that has a licence for a product category for which another FSP is not licensed. Please note: Reps who want to work for another FSP need to pay careful attention to their contract with their current FSP. The contract may contain terms and conditions that prevent them from doing so, particularly if this will result in conflicts of interest with competitors.
can a representative conduct a waiver of rights on a previous sales call by another representative ?