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The importance of reviewing your FSP’s policies and procedures

Posted on 8 Jul 2021

We are at the halfway mark of the year and if you still need to conduct a review of your FSP’s policies and procedures, now is the ideal time to familiarise yourself with recent regulatory amendments and revise your policies and procedures to align with the latest regulation.

An FSP should review and update their policies and procedures, at least, on an annual basis. Not only does this help protect the FSP, its employees and its clients, it ensures that the FSP is consistent with industry best practice by being up to date with the latest regulation.

One of the more recent and notable regulatory changes was the amendments to the General Code of Conduct (GCOC) that came into effect in December 2020 and June 2021. It is critical to bring your FSP’s policies and procedures in line with these amendments as outdated policies that fail to comply with the regulations can result in inconsistent practices and leave your FSP at risk.

Conducting a review of your policies and procedures may cover activities relating to Client Interaction and may also require you to update your Operations Manual and other documented business procedures.

Below are some of the areas of business that your FSP would need to consider revising in relation to the GCOC amendments.

  • Suitability of the advice process

Some of the amendments specify what you need to do before providing advice to clients and the type of information to consider. The amendments also set out what is expected when giving advice. For example, several aspects determine the extent of information needed to perform an analysis to provide appropriate advice to clients. Considering further amendments to the GCOC, if not already done, FSPs that provide advice should review their advice process and reflect on the following:

How you agree with your clients on the financial services to be provided in the context of what you can provide.
The type of information you request from clients and how this varies depending on the extent of services to be provided.
Are you keeping a record of the information requested from clients that they cannot or are unwilling to provide, whether partially or in full?
How do you record that a client specifically declined to supply information?

  • Service Level Agreements

Although a Client Service Level Agreement (SLA) is not prescribed in FAIS legislation, it should form the foundation of your business relationship with clients and take the six TCF Outcomes into consideration. An SLA can help you manage both your risk and clients’ expectations and achieve minimum service standards reducing the likelihood of complaints if things go wrong later.

  • Conflict of interest management policy, remuneration policy and fee agreements

The conflict of interest requirements in the GCOC have been enhanced and came into effect on 26 December 2020. These amendments require that clients fully understand and agree to the fees payable and the services they can expect for those fees. If not already done, FSPs will be required to relook at their Conflict of Interest Management Policy. To ensure alignment with the GCOC amendments, you will also need to review how you remunerate representatives and document this in your Remuneration Policy, as well as any Fee Agreements with clients.

  • Advertising policy

The amendments to the GCOC also introduce changes which you should have incorporated in your Advertising Policy by 26 December 2020. If you are not operating as a sole proprietor, you will be required to document a process to approve your advertisements before they are published. This seeks to ensure the content of your advertisements complies with the requirements. Your process should also include keeping a record of your advertisements.

  • Complaints management framework

Some of the amendments relating to complaints commenced on 26 December 2020 and the others on 26 June 2021 therefore it is important to relook at your complaints process and compare your Complaints Management Framework against the new requirements to identify any gaps. You will need to categorise complaints, linking them to the various TCF Outcomes and other relevant categories to maintain and analyse very specific data relating to the complaints. Be sure to check your Complaints Register to ensure the data is being captured in a format which is easy to monitor, report and analyse.

(For more information on the GCOC amendments, please refer to our previous newsletter articles, where we summarised and highlighted the GCOC amendments that came into effect immediately and those amendments set to take effect in December 2020 and June 2021.)

The GCOC amendments is one example of how regulation affects your business processes.

Other policies and procedures to review regularly are those in your Governance Framework, which include:

  • Competence Policy
  • Debarment and Disciplinary Procedure
  • Disaster Recovery and Business Continuity Plan
  • FICA Risk Management and Compliance Programme
  • FAIS Risk Management Policy and Plan

Keeping your policies and procedures updated takes time but with some planning and by doing so regularly, you are safeguarding your FSP against risks in the future and in the long-term you will secure relationships with clients and be building a sustainable business.

If you need guidance on implementing changes to your policies and procedures, read more below.

Do you need guidance on implementing changes to your operations processes and aligning these with treating customers fairly in your FSP?

Attend our How to create an effective Operations Manual for your FSP webinar

This webinar will help you identify all the policies and processes that your FSP needs to document and include in the Operations Manual – there are more than 60. We will provide you with a detailed breakdown of the regulatory information that must be included in each policy and process and explain the steps that you need to follow and show you how to compile each document.

Ultimately, we will demonstrate how you can set up your policies and processes to deliver value to clients, ensure clients feel they are being treated fairly as well as improve your operational efficiency.

How will you benefit from attending this webinar?

  • You will be able to create a customised Operations Manual using the tools, templates and guidelines provided to you.
  • You will have a thorough understanding of the policies and processes that must be included in your Operations Manual.
  • You will have a good grasp of the regulatory requirements applicable to the Operations Manual.
  • By creating an Operations Manual, you will improve efficiencies, reduce risk in your business, improve staff morale and increase customer satisfaction.

We also offer the following webinar topics that are geared at getting you up to date with regulatory requirements and will assist you when reviewing your FSP’s processes and procedures:

For more information, contact your Compliance Officer or the regional office closest to you.


A national supplier of risk management services to independent financial advisors and other licensed financial service providers (FSPs). Established in 2004, we help our clients overcome their risk management challenges so they can grow and thrive in an increasingly regulated industry. Providing professional guidance and practical support, our team of specialists is passionately committed to delivering tangible solutions.

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