FAIS and Financial Planners

FAIS stands for Financial Advisory and Intermediary Services Act, which is a piece of legislation that regulates financial services providers in South Africa. The act was introduced in 2002 to ensure that financial advisors and intermediaries provide professional financial advice and services to their clients and to protect consumers from unscrupulous financial practitioners.

The FAIS Act requires all financial services providers to be registered with the Financial Services Conduct Authority (FSCA) and to meet certain minimum educational and ethical standards. The act also requires financial services providers to disclose their fees and commissions to clients, and to provide clients with appropriate advice that takes into account their financial situation, needs, and objectives.

The FAIS Act also sets out the duties and responsibilities of financial advisors and intermediaries, including the duty to act in the best interests of their clients, to disclose any conflicts of interest, and to maintain the confidentiality of their clients’ information.

In terms of financial planning, the FAIS Act requires financial advisors to have a good understanding of their clients’ financial circumstances, goals, and risk tolerance, and to provide advice that is appropriate for their clients’ needs. Financial planners who are registered with the Financial Planning Institute (FPI) are required to comply with the FPI’s Code of Ethics and Professional Responsibility, which is based on the principles of integrity, objectivity, competence, confidentiality, and professionalism.

Overall, the FAIS Act is an important piece of legislation that protects consumers from unethical financial practitioners and ensures that financial services providers provide professional and appropriate advice to their clients.