FAIS Conflict of Interest Management Policy
1. Purpose
To ensure that objective, unbiased and fair financial services are rendered to clients.
Conflict of interest is any situation in which Intembeko has an actual or potential interest that may, in rendering financial services to clients, influence the objective performance of its obligations, or the rendering of an unbiased and fair financial service, or acting in the best interest of its clients.
2. Policy Statement
Intembeko is committed to the prudent management of its business in accordance with the rules regarding “Conflict of Interest” in the FAIS Act, and in particular the provisions of the General Code of Conduct, which limits the payment between Financial Service Providers and has implemented measures to ensure compliance with FAIS.
In support of the principles of good corporate governance, Intembeko also undertakes to conduct its business with integrity and due diligence, complying with both the spirit and letter of the law, as well as all internal policies and procedures.
The policy describes the procedures that must be followed to ensure that any potential conflict of interest is avoided to protect our client’s interest. Where the avoidance of a potential conflict is not possible and our client’s interests might not be sufficiently protected, Intembeko must disclose all the relevant facts to the client to make an informed decision. The policy further encompasses monitoring, reviewing and reporting to the Financial Sector Conduct Authority (“FSCA”). The policy is published and is easily accessible for public inspection.
3. Key Definitions
“Conflict of Interest” means any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client:
a) influence the objective performance of his, her or its obligations to that client; or b) prevent a provider or representative from rendering an unbiased and fair financial service to that client; or from acting in the interest of that client, including, but not limited to: i) a financial interest; ii) an ownership interest; iii) any relationship with a third party.
“Financial Interest” means any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration, other than:
a) an ownership interest; or b) training, that is not exclusively available to a selected group of providers or representatives, on: i) products and legal matters relating to those products; ii) general financial and industry information; iii) specialised technological systems of a third party necessary for the rendering of a financial service; but excluding travel and accommodation associated with the training.
“Provider” means an authorised financial services provider, and includes a representative.
“Ownership Interest” means:
a) any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition, other than equity or an proprietary interest held as an approved nominee on behalf of another person; and b) includes any dividend, profit share or similar benefit derived from the equity or ownership interest.
“Third Party” means:
a) a product supplier; b) another provider; c) an associate of a product supplier or a provider; d) a distribution channel; e) any person who in terms of an agreement or arrangement with a person referred to in paragraphs (a) to (d) above provides a financial interest to a provider or its representatives.
“Immaterial Financial Interest” means any financial interest with a determinable monetary value, the aggregate of which does not exceed R1 000 in any calendar year from the same third party in that calendar year received by:
a) a provider who is a sole proprietor; or b) a representative for that representative’s direct benefit; c) a provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives.
4. Principles
4.1 Principle 1 – Avoid Conflict of Interest
Intembeko is committed to the fair treatment of current and prospective clients and aims for the provision of objective and unbiased financial services. Therefore Intembeko must avoid conflict of interest, subject to Principle 2.
4.2 Principle 2 – Manage Conflict of Interest Where it Cannot be Avoided
Where avoidance of conflict of interest is not possible, mechanisms are in place to identify such conflict and measures must be taken to mitigate the risk and make required disclosures to clients.
The following mechanisms are in place to identify conflict of interest: a) All conflicts to be identified by the Management Team and referred to the Compliance Officer for consideration and guidance. b) Ad hoc reviews are performed by the Management Team to identify and address any conflicts of interest.
Where a conflict of interest cannot be avoided, the Management Team must obtain guidance from the Compliance Officer on the reasons why the conflict cannot be avoided with proposed mitigating measures. If the parties are satisfied that a conflict of interest cannot be avoided and will not negatively impact the client, full and frank disclosure of the circumstances of the conflict of interest must be included in the standard disclosures of all representatives (as defined in FAIS) of Intembeko are obliged to make to clients.
4.3 Principle 3 – Controls Should be Implemented to Avoid Conflict of Interest
Intembeko adopted appropriate processes, procedures and internal controls, where applicable, throughout the business to manage all conflict of interest and to facilitate compliance with this policy. The Management Team and employees (employees consist both of staff and representatives) will be trained on this policy and relevant controls. Regular monitoring and reviews are conducted to test compliance with the policy. In instances of non-compliance the standard Intembeko disciplinary processes will be followed.
4.4 Principle 4 – Limitations Apply to Financial Interests Offered and Received by Intembeko
Intembeko must comply with the FAIS General Code of Conduct, including the limits on the provision and acceptance of financial interest:
i) regulated commission or fees under the Long-Term Insurance Act, the Short-Term Insurance Act or the Medical Schemes Act; ii) fees under the Long-term Insurance Act, the Short-term Insurance Act and the Medical Schemes Act, if those fees are reasonably in line with the service being rendered; iii) any other fees for the rendering of a financial service which have been specifically agreed to by the client in writing; and which may be stopped at the discretion of that client;
iv) fees or remuneration for the rendering of a service to a third party, where the fees are reasonably in line with the service being rendered; v) subject to any other law, an immaterial financial interest; and vi) a financial interest, not mentioned in (i) – (v), for which a consideration, fair value or remuneration that is reasonably in line with the value of the financial interest, is paid by that provider or representative at the time of receipt.
Intembeko and its representatives are also prohibited to offer or receive, directly or indirectly, any sign-on bonus or associated payments, as set out in the FAIS General Code of Conduct.
4.5 Principle 5 – Limitations Apply to Financial Interests Offered to Representatives
When offering financial interest to its representatives, Intembeko will comply with the provisions of section 3A (1) (b) of the FAIS General Code of Conduct by ensuring that they will not:
i) Give preference to quantity of business to the exclusion of quality of services rendered to clients. Prior to offering any financial interest to representatives, the following measures are to be taken into account: a. The quantity of business secured for Intembeko is determined; and b. The business secured is to be measured to assess the quality of the service rendered to the client by reference to the suitability of the advice and the general ability of the representative to continually satisfy the needs of his/her clients. ii) Give preference to a specific product supplier, where the representative can recommend more than one product supplier to the client. Representatives are to be offered the same financial interest on all products, regardless of the product supplier; iii) Give preference to a specific product of a product supplier, where the representative can recommend more than one product of the product supplier to the member. Representatives are offered the same financial interest on all comparable products;
Intembeko may offer the following types of financial interest (as envisaged in FAIS) to its representatives:
i) Cash or cash equivalent including commission, other fees payable and sponsorships for the provision of financial services, subject to the limits prescribed in legislation; ii) Other benefits and incentives, including but not limited to prizes, gifts and vouchers as a result of participation in competitions, special offers and other production based incentives; iii) Training; iv) Accommodation, domestic and foreign travel and other hospitality where appropriate; v) Other services, benefits and advantages associated with being an employee of Intembeko.
4.6 Principle 6 – Management and Employees Must be Trained
All relevant employees must know and understand this policy and related business processes relevant to their roles. These requirements are communicated mostly by specific training, but also by induction programmes and employee awareness initiatives.
5. Third Parties, Associates and Ownership Interest
The FAIS General Code of Conduct requires the disclosure of the following relationships of Intembeko as set out in Annexure 2:
• The associates of Intembeko; • Third parties in which Intembeko hold an ownership interest; and • Third parties that hold an ownership interest in Intembeko;
6. Acceptance of the Intembeko Conflict of Interest Management Policy
The Board of Directors will adopt this policy.
7. Publication of the Intembeko Conflict of Interest Management Policy
• The policy will be published on the Intembeko share-point site; • The policy is available to the public on written request .
8. Responsibilities and Accountabilities
8.1 Board of Directors
• To approve and adopt this conflict of interest management policy.
8.2 Risk and Audit Committee
• Review this conflict of interest management policy and recommend its approval to the Board of Directors. • Monitor and ensure compliance with the FAIS Act and this policy by ensuring the MD and Management Team adequately address compliance in this business.
8.3 Managing Director
• Ensuring compliance with the FAIS Act. • Accountable to the Board of Directors and the Risk and Audit Committee for the effective operation of compliance with the FAIS Act.
8.4 Compliance Officer
• Give guidance and advice to business on the legislative requirements. • Evaluate effectiveness of procedures and controls adopted to accommodate any legislative changes. • Accountable for statutory reporting requirements. • Assist with implementing procedures for reporting compliance breaches. • Develop systems for monitoring compliance. • Conduct regular, risk-based compliance monitoring to ensure appropriate levels of compliance are maintained.Keep a record of all monitoring conducted. • Report to the Board/ Committees, the Management Team and applicable regulators. • Ensure recommendations from the Board/ Committees, the Management Team and applicable regulators are attended to.
8.5 Management Team / Key Individuals
• Accountable for the status of compliance to this policy in the relevant business areas. • Ensures that processes are implemented to facilitate compliance with this policy in the relevant business area. • Reviews reports on compliance and ensures that corrective action is taken to address non-compliance to this policy in the relevant business areas. • Must adhere to the requirements of the policy and may not offer or accept any financial interest unless as authorised in terms of this policy. • Confirm compliance with this policy when required.
8.6 Employees
• Must adhere to the requirements of the policy and may not offer or accept any financial interest unless as authorised in terms of this policy. • Confirm compliance with this policy when required.
