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FAIS Cat I and II licences

We are aware that there is fair amount of concern in the industry about where the regulator is heading in this regard. The following are some of the points for discussion at the FSB Insurance Conduct of Business seminar In Cape Town tomorrow:

Informal consultation is underway with the investment industry on:

  • Defining “investment management” as a specific licensed activity
  • The extent to which investment managers (as defined) should be licensed/regulated differently from “model portfolio providers” and other types of discretionary mandate holders
  • Clarifying the contractual and business relationships between all entities in the investment value chain to mitigate risks of conflicted advice and conflicted discretion
  • Third party outsourcing / “white label” models. We no longer propose to completely prohibit white labels being held by entities providing advice, provided conflict risks can be adequately mitigated
  • The implications of the two-tier adviser categorisation in the investments space. In particular: When should an investment adviser be classified as a product supplier agent (i.e. is there a role for “tied” advice in the investments sector?)
  • The extent to which intervention in remuneration arrangements, over and above the prohibition of product supplier commissions, is appropriate to address risks.
  • A public discussion document on these investment related proposals will follow in early 2018.

We will report back on this next week. There will be transitional arrangements, so please do not jump the gun until you are sure which way the wind blows.

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