Client Confidentiality when transferring business
A recent Moneyweb article highlighted the importance of treating client information with great circumspection.
A product house included personal client information in court documentation in an urgent application. The article pointed out that these documents are available to the public, and could have been used for the wrong purposes.
Fortunately, this did not happen, and the product provider could arrange for the documents to be sealed. We pointed out that, apart from the General Code of Conduct requirement that client information may only be shared with prior written consent of the client, there are also POPI Act provisions.
FSCA FAIS Notice 75 of 2018, published on 30 October, sheds more light on this matter.
In September 2017, PSG Konsult acquired a part of the Absa Insurance and Financial Advisers’ (Aifa) unit, the commercial and industrial Short-term insurance brokerage. In February 2018, it purchased the remaining stake.
This was not just a mere transfer of business. The two parties applied successfully to the FSCA for an exemption to ensure compliance with a number of legal requirements, including section 3(3) of the General Code of Conduct as well as the POPI Act.
Extent of exemption and conditions
Both parties are subject to a number of conditions, many relating to replacement conditions, which this in fact is.
This exemption is an excellent guide for those contemplating taking over someone else’s book, or selling theirs.
Click here to download a copy.