Engaging with your client
Introduction and gathering information - Part 2
In Part One of our series of articles titled “Engaging with your client” we had a look at the importance of having a client engagement strategy or process and what this process generally entails when rendering financial services.
In Part 2 of this series, we shall have a closer look at the first two steps or actions in this process and provisions of the General Code of Conduct relating to these steps.
Step 1: Introduction as a financial services provider
Section 6(b) of the General Code of Conduct states that when initiating contact with a client a financial services provider or FSP is required to:
State the purpose of the call, visit or any other contact; and
At the earliest opportunity, provide information about the financial services provider.
Section 5 of the General Code of Conduct lists the information that a financial services provider (or a representative) is required to give a client about the FSP namely:
If the aforementioned information is provided orally the provider must confirm the information in writing within 30 days.
The following information in relation to product suppliers has to be provided to clients:
The FSP may, as part of its disclosure documentation and introduction, include a section of waiver of rights to educate its clients on their rights. No provider may request or persuade a client to waive any right or benefit conferred on the client in terms of any provision of the General Code of conduct or accept or act on any such waiver given by the client. A waiver of rights will be null and void and an FSP will not be able to rely on such a waiver should a complaint be lodged against the FSP.
Step 2: Gather client information
Once the provider has made the necessary introductions it shall proceed to obtain further information from the client. The information will include personal information that will identify the client for the purposes of onboarding the client, and secondly, information the provider requires to render financial services.
Financial services providers are accountable institutions in terms of the Financial Intelligence Act( “FIC Act”) and as such are required to comply with the provision of the last mentioned Act.
Section 20(A) of the FIC Act, states that an accountable institution may not establish a business relationship or conclude a single transaction with an anonymous client or a client with an apparent false or fictitious name. The provider is at all times thus required to obtain the identity of the prospective client or client and to conduct customer due diligence process as provided for the FIC Act.
Section 8(1)(a) of the General Code of Conduct states that a provider must take reasonable steps to obtain information from the client which will enable the provider to provide sound and appropriate financial advice namely:
Client’s financial situation (income, expenses, assets, liabilities, investments etc);
Financial product experience;
Client’s risk profile.
Service level agreement
Once the Financial services provider has obtained the necessary information and received instructions from the client to provide financial services, the provider will also finalize its agreement or mandate with the client in accordance to Section 3(f) of the General Code of Conduct.