The FAIS Act 37 of 2002 for brokers: FSP licence, representatives, fit and proper, compliance officer, five-year records and the FAIS Ombud.
The Financial Advisory and Intermediary Services Act 37 of 2002, the FAIS Act, decides who may give advice on a financial product in South Africa or act as an intermediary between a client and an insurer. In short: a brokerage needs a licence as a financial services provider (FSP), every person who serves clients on its behalf must be appointed as a representative, all of them must stay fit and proper, the FSP must keep records for at least five years, and clients can take a complaint to the FAIS Ombud. The Act is supervised by the Financial Sector Conduct Authority (FSCA), which took over the functions the Act still calls the "registrar".
This guide is the map. It walks through the Act in the order a brokerage meets it, from licensing to complaints, and links to our detailed guides on each obligation. It is written for brokerage principals, key individuals and compliance officers, not as legal advice.
Section 7(1) is the gateway. A person may not act or offer to act as a financial services provider unless it holds a licence issued under section 8, and may not act as a representative unless an authorised FSP has appointed it under section 13. Two activities trigger the Act:
Short-term and long-term insurance are both financial products under the Act. An insurance broker that recommends cover, places it with an insurer or services the policy afterwards is therefore an FSP, whatever its size.
An FSP applies to the FSCA under section 8 and must show that it meets the fit and proper requirements for its category. The Determination of Fit and Proper Requirements (Board Notice 194 of 2017) lists the categories:
| Category | Who it is for |
|---|---|
| Category I | Advice and intermediary services without discretion: the usual licence for an insurance brokerage |
| Category II and IIA | Discretionary FSPs and hedge fund FSPs |
| Category III | Administrative FSPs |
| Category IV | Assistance business FSPs |
The licence is granted per class and subclass of business (for example short-term personal lines, short-term commercial lines, long-term risk). Selling outside the classes on the licence, or letting a representative do so, is a compliance failure even if the advice itself was sound.
A representative renders financial services for and on behalf of the FSP, as an employee or under a mandate. A key individual manages or oversees the financial services the FSP renders. Section 13 then makes the FSP responsible for its people: it must be satisfied at all times that its representatives are competent and fit and proper, and it must keep a register of representatives and their key individuals for the FSCA. Our guide to the FAIS representative definition and the register covers who counts as a representative and what the register must contain.
When a representative no longer meets the requirements, section 14 requires the FSP to debar that person, following a fair process. The steps are set out in our guide to FAIS debarment under section 14.
Board Notice 194 of 2017 came into operation on 1 April 2018. Section 4 lists six fit and proper requirements that apply, to the relevant extent, to the FSP, its key individuals and its representatives:
Two parts of competence drive most onboarding plans. The regulatory examinations come from Table A of section 26: for a Category I FSP, the FSP and its key individuals pass RE1 and representatives pass RE5. Class of business and product specific training must be completed before a person renders services on that class or product. The supervision route for new entrants, and the access a brokerage gives them while it runs, is covered in our guide to onboarding a representative under supervision.
CPD runs in cycles from 1 June to 31 May. Section 33 sets the minimum per cycle: 6 hours for a single subclass of business, 12 hours for more than one subclass within one class, and 18 hours for more than one class. Key individuals and representatives must give the FSP evidence of their CPD within 15 days after the cycle ends, and the FSP keeps it in its competence register. Planning the cycle is the subject of our guide to FAIS CPD hours.
Section 16 provides for codes of conduct, and the General Code of Conduct (Board Notice 80 of 2003) is the one every FSP lives with day to day. Its section 2 sets the general duty: a provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry. Information given to clients must be in plain language, avoid uncertainty or confusion and not be misleading. The Code also covers disclosures about the provider and the product, the needs analysis and record of advice, conflicts of interest and complaints handling.
For a brokerage that talks to clients on WhatsApp, the Code applies to every message in the same way as to a meeting or an email. The practical consequence is that advice given in a chat must be recorded like any other advice; see our guide to the record of advice on WhatsApp.
Under section 17, an FSP with more than one key individual, or with one or more representatives, must appoint a compliance officer approved by the FSCA to monitor compliance with the Act. Every FSP, including a one-person practice, must establish and maintain procedures to ensure compliance and submit compliance reports in the form the FSCA determines. In practice the compliance officer will ask for the same evidence every year: the representative register, the competence register, records of advice, the complaints log and proof that disclosures were made.
Section 18 requires an authorised FSP, unless exempted, to keep records for at least five years on known premature cancellations by clients, complaints received and whether each was resolved, continued compliance with the licence requirements, cases of non-compliance and the reasons for them, and continued compliance by representatives with section 13. The General Code adds the records of advice and disclosures. When client conversations happen on WhatsApp, those messages are part of that record. Retention and archiving are covered in our guide to FAIS record-keeping for WhatsApp.
A client who is unhappy first complains to the FSP, which must handle the complaint under its internal process. If that fails, the client can go to the Ombud for Financial Services Providers. Section 27(3) sets a time bar: the Ombud must decline a complaint about an act or omission that occurred more than three years before the Office received it, the three years running from when the client became aware, or ought reasonably to have become aware, of it. The Ombud also declines a matter already before a court. Where a dispute is about a declined claim rather than the advice, the right forum may be the National Financial Ombud Scheme instead; see NFO or FAIS Ombud.
| Obligation | Where it comes from | Evidence to keep |
|---|---|---|
| Licence for the classes you sell | Sections 7 and 8 | FSP licence and its classes and subclasses |
| Appointed and registered representatives | Section 13 | Representative register, mandates or employment contracts |
| Fit and proper, including RE1 / RE5 | BN 194 of 2017 | Competence register, exam results, qualifications, training records |
| CPD each cycle (1 June to 31 May) | BN 194, section 33 | CPD evidence received within 15 days of cycle end |
| Honest, fair, plain-language service | General Code of Conduct, section 2 | Disclosures, needs analysis, records of advice |
| Compliance officer and procedures | Section 17 | Approval, compliance reports, procedures manual |
| Records for at least five years | Section 18 | Cancellations, complaints log, non-compliance register |
| Debarment when required | Section 14 | Debarment file and notice to the FSCA |
None of these obligations mentions WhatsApp, and none needs to: the Act regulates the service, not the channel. The risk is organisational. When representatives advise from personal phones, the FSP cannot show that the service was rendered in its name, cannot produce the record, and loses the history when the person leaves. A brokerage that keeps client conversations on a number it controls, attached to the client file and visible to the compliance officer, has most of the evidence above in one place. In ORIS the brokerage connects one WhatsApp Business number, conversations sit on the customer record in a shared inbox, admin and broker roles are separate and activity is logged; the compliance decisions remain the FSP's.
It is the South African law that regulates anyone who gives advice on, or acts as an intermediary for, financial products such as insurance. It requires a licence for the business (the FSP), appointment of representatives, ongoing fit and proper requirements, record-keeping and access to the FAIS Ombud for clients.
The Financial Sector Conduct Authority (FSCA). The Act still refers to the "registrar" in many sections because it predates the Financial Sector Regulation Act, but those functions are exercised by the FSCA.
Board Notice 194 of 2017 lists six: honesty and integrity, good standing, competence, continuous professional development, operational ability and financial soundness. Competence includes experience, a qualification, the regulatory examination and class of business and product training.
For a Category I FSP, the FSP and its key individuals must pass RE1 and representatives must pass RE5, according to Table A in section 26 of Board Notice 194 of 2017.
At least five years under section 18 of the Act, for cancellations, complaints, continued compliance, non-compliance and representatives' compliance, unless the FSCA has granted an exemption.
Section 17 requires one where the FSP has more than one key individual or one or more representatives. An FSP without representatives and with a single key individual still has to keep compliance procedures and submit compliance reports.
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