Staff who issue policies should register under FAIS
Banks may be contravening the Financial Advisory and Intermediary Services (FAIS) Act by not ensuring that employees who issue personal loans and sell life assurance to cover debt are registered as representatives of financial services providers (FSPS).
Nedbank, which is registered with the Financial Services Board (FSB) as an FSP, has told Personal Finance that personal loans “are granted by bankers or personal loan agents, who are not registered under (a) FAIS licence to advise on life assurance. Nedbank financial planners (advisers) are not involved in the granting of personal loans in the unsecured environment.”
Asked whether Nedbank was contravening the FAIS Act, the bank replied that the Act was “not applicable, as bankers and personal loan agents, who grant personal loans, are not registered under FAIS to provide advice”.
In response to Nedbank’s claims, Gerry Anderson, the FSB’S deputy executive in charge of market conduct says: “I have perused the response received by you from Nedbank. It is incorrect to state that an individual who is involved in the sale of an insurance product of any nature (including a bank employee) is not required to be Fais-registered. The provision or not of advice in such cases is not the determining factor, as intermediary services (the other leg of FAIS) may be involved.”
In a follow-up response, Nedbank says that “due to the fact that personal loan consultants do not provide advice, and perform clerical and administrative services in a subordinate capacity which does not require judgment on the part of consultants, the consultants are not considered to be representatives in terms of FAIS, and accordingly are not required to be registered.
“We are compliant with the requirements of FAIS and are in line with the unsecured lending industry and our competitors.”