A newly published “ASISA Standard on Replacement” is currently being rolled out to the industry.
The aim of the revised guidelines is to bring it in line with Treating Customers Fairly outcomes.
The introduction to the new Standard reads:
The Financial Advisory and Intermediary Services Act and section 8 of the General Code of Conduct for Authorised FSPs and Representatives, place specific responsibilities on financial services providers where one financial product is replaced with another. The member life offices of ASISA have agreed to this Standard with the aim of facilitating the provision of adequate, accurate information regarding the product that is replaced as well as the product with which it is replaced to enable the client to make an informed decision about the merits of the replacement advice as stipulated in the Financial Advisory and Intermediary Services Act.
Member life offices therefore undertake to ensure that:
- All representatives are properly trained to understand the implications of inappropriate replacements and, in accordance with the FAIS Code, are required to provide comprehensive disclosure and appropriate advice where a replacement is recommended;
- Adherence with this Standard is a term of their contractual relationship with all representatives;
- Non-adherence with this Standard will be deemed a potential breach of contract or potential misconduct as the case may be; and
- Internal replacements are managed in accordance with this Standard through an internal Review Board.
This Standard comes into effect on 1 October 2015.
Please click here to download the ASISA Standard on Replacement.