The Financial Sector Conduct Authority (FSCA) recently proposed further amendments to the FAIS General Code of Conduct (GCOC) which is intended to take effect early 2021.
According to the statement supporting the proposed amendments, the amendments are necessary to contribute to the fulfilment of the FSCA’s legislated objectives and is intended to promote the fair treatment and protection of financial customers. The main purpose of the amendments is to update the GCOC in order to offer additional protection to financial customers, to align requirements relating to premium collection across short- and long-term insurance, to give effect to the Retail Distribution Review (RDR) proposal with regards to the charging of advice fees from customers and to limit the need for a further exemption notice.
The proposed amendments include –
- RDR related amendment: The FSCA published its RDR in November 2014, proposing a number of reforms to the regulatory framework for financial advice and distribution on financial products. The FSCA proposes certain amendments to the GCOC to give effect to one of these proposals. In line with aspects of RDR Proposal JJ: Standards for up-front and ongoing product advice fees amendments are being proposed to set requirements which must be adhered to in order to charge such a fee.
- Additional protection to financial customers: The inclusion of an additional disclosure to customers where products other than financial products and services are sold, with the aim to ensure customers understand that they are not afforded protection under the FAIS Act for these other products or services.
- Alignment of requirements relating to premium collection across short- and long-term insurance: An amendment to the custody and financial products and fund requirements, to extend the current exclusion applicable to the collection of short-term insurance premiums to also apply to the collection of long-term insurance premiums. The purpose of the amendment is to align the requirements across short- and long-term insurance as the premium collection frameworks in the Regulations under both the Long- and Short-term Insurance Acts have also been aligned.
- Limiting the need for a further exemption: An amendment to include a current exemption, in place since 2015 for Insurers, as a permanent exclusion for both Insurers and Banks as these entities are prudentially regulated the protection afforded by the requirement does not offer additional protection for the customer compared to the prudential requirements in place.
According to the FSCA, the impact of these amendments on FSPs and their representatives is expected to be minimal.
Interested parties are invited to submit comments on the draft amendments to the GCOC to the FSCA using the Submission Template by 19 February 2021 at FSCA.RFDStandards@fsca.co.za
Read the related documents by clicking on the links below:
- Draft Amendments to the GCOC
- Statement in support of the draft Amendments
- Download the Submission Template