Conflict of Interest Management Policy

1.       PREAMBLE

Section 3A(2)(a) of the FAIS General Code of Conduct (“GCOC) stipulates that every financial services provider, other than a representative, must adopt, maintain and implement a Conflict of Interest Management Policy that complies with the provisions of the Financial Advisory and Intermediary Services Act, 2002.

2.       PURPOSE

In terms of the General Code of Conduct a provider and a representative must avoid, and where this is not possible, mitigate any conflict of interest between the provider and a client, or a representative of the provider and his, her or its clients.

The FSP and its representatives are committed towards acting within the best interests of our clients and to avoid all conflict of interests in relation to the provision of financial services. Where we are unable to avoid a conflict of interest, we will take all necessary precautions to ensure that any actual or potential conflict of interest is mitigated and adequately disclosed to our clients.

In order to ensure the continued demonstration of our commitment, management has adopted a Conflict of Interest Management policy to provide for the effective management of any actual or potential conflicts of interest that may arise wholly or partially, in relation to the provision of financial services.

The purpose of the Conflict of Interest Management Policy is therefore to:

• establish internal controls and mechanisms towards the identification of conflicts of interest
• establish measures to avoid conflicts of interest, and where avoidance is not possible, to provide the reasons therefore
• establish measures to ensure that any unavoidable conflicts of interest are mitigated
• establish measures to ensure the proper disclosure of any conflicts of interest
• establish processes, procedures and internal controls to facilitate compliance with the policy

3.       DEFINITIONS

Conflict of Interest

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:

• influence the objective performance of his, her or its obligations to that client; or
• 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:

• a financial interest;
• an ownership interest;
• any relationship with a third party.

Financial Interest

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:

• an ownership interest;
• training, that is not exclusively available to a selected group of providers or representatives, on:
  • products and legal matters relating to those products;
  • general financial and industry information;
  • specialised technological systems of a third party necessary for the rendering of a financial service, but excluding travel and accommodation associated with that training.
• a recognised qualifying enterprise development contribution to a qualifying beneficiary by a provider that is a measured entity.

Immaterial Financial Interest

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 provider who is a sole proprietor; or
• a representative for that representative’s direct benefit;
• a provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives.

Ownership Interest

Ownership Interest means;

• any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition, other than equity or a proprietary interest held as an approved nominee on behalf of another person, and
• includes any dividend, profit share or similar benefit derived from that equity or ownership interest.

Third Party

Third Party means;

• a product supplier;
• another provider;
• an associate of a product supplier or a provider;
• a distribution channel;
• any person who in terms of an agreement or arrangement with a person referred to above provides a financial interest to a provider or its representatives.

Associate

Associate means;

• in relation to a natural person:
  • a person who is recognised in law or the tenets of religion as the spouse, life partner, or civil union partner of that person
  • a child of that person, including a stepchild, adopted child and a child born out of wedlock
  • a parent or stepparent of that person
  • a person in respect of which that person is recognised in law or appointed by a Court as the person legally responsible for managing the affairs of or meeting the daily care needs of the first mentioned person
  • a person who is a spouse, life partner or civil union partner of a person referred to above
  • a person who is in a commercial partnership with that person

• in relation to a juristic person:
  • which is a company, means any subsidiary or holding company of that company, any other subsidiary of that holding company and any other company of which that holding company is a subsidiary
  • which is a close corporation registered under the Close Corporations Act, means any member thereof as defined in section1 of that Act
  • which is not a company or a closed corporation, means another juristic person which would have been a subsidiary or holding company of the first-mentioned juristic person:
    • had such first-mentioned juristic person been a company, or
    • in the case where that other person, too, is not a company, had both the first-mentioned juristic person and that other person been a company
    • means any person in accordance with whose directions or instructions the board of director of or, in the case where such juristic person is not a company, the governing body of such juristic person is accustomed to act.

• in relation to any person:
  • means any juristic person of which the board of directors or, in the case where such juristic person is not a company, of which the governing body is accustomed to act in accordance with the directions or instructions of the person first-mentioned in this paragraph
  • includes any trust controlled or administered by that person

Distribution Channel

Distribution Channel means;

• any arrangement between a product supplier of any of its associates and one or more providers or any of its associates in terms of which arrangement any support or service is provided to the provider or providers in rendering a financial service to a client.
• any arrangement between two or more providers or any of their associates, which arrangement facilitates, supports or enhances a relationship between the provider or providers and a product supplier.
• any arrangement between two or more product suppliers or any of their associates, which arrangement facilitates, supports or enhances a relationship between a provider or providers and a product supplier.

Fair Value

Has the meaning assigned to it in the financial reporting standards adopted or issued under the Companies Act, 61 of 1973.

FSC

Means the Financial Sector Code published in terms of section 9(1) of the Broad-Based Black Economic Empowerment Act, (Act 53 of 2003), as amended from time to time.

New Entrant

Is a person who has never been authorised as a financial services provider or appointed as a representative by any FSP.

No-claim bonus means

Any benefit that is directly or indirectly provided or made available to a client by a product supplier in the event that the client does not claim or does not make a certain claim under a financial product within a specified period of time.

Measured Entity

Has the meaning assigned to it in the FSC insofar it relates to a qualifying enterprise development contribution.

Qualifying Beneficiary Entity

Has the meaning contemplated in the FSC insofar as it relates to a qualifying enterprise development contribution.

Qualifying Enterprise Development Contribution

Has the meaning assigned to it in the FSC.

Sign-On Bonus means

• any financial interest offered or received directly or indirectly, upfront or deferred, and with or without conditions, as an incentive to become a provider; and
• a financial interest referred to in paragraph (a) includes but is not limited to–
  • compensation for the–
    • potential or actual loss of any benefit including any form of income, or part thereof; or
    • cost associated with the establishment of a provider’s business or operations, including the sourcing of business, relating to the rendering of financial services; or
• a loan, advance, credit facility or any other similar arrangement.

4.       POLICY SCOPE

This policy is applicable to the FSP, all Providers of the FSP, Key Individuals, Representatives, Associates and Administrative personnel. The FSP is committed to ensuring compliance with this policy and the processes will be monitored on an ongoing basis.

Any non-compliance with the policy will be viewed in a severe light. Non-compliance will be subject to disciplinary procedures in terms of FAIS and employment conditions and can ultimately result in debarment or dismissal, as applicable.

Avoidance, limitation or circumvention of this policy via an associate will be deemed non-compliance.

Assured Life Consultants (PTY) Ltd an authorised FSP and subsidiary of Financial Wealth Holdings (Pty) Ltd.  Assured Life is a Non-Mandated Intermediary (NMI) of Old Mutual Alternative Risk (OMART) who is the Insurer to the Assured Life Consultants’ range of products.

The current product offering includes:

• Credit Life cover – Debt Review
• Funeral Cover – Debt Review
• Funeral Cover – Non-debt review

Understanding Conflict of Interest

4.1          When is it a Conflict of Interest?

A COI means any situation in which the FSP or one of our representatives has an actual or potential interest that may, in rendering a financial service to our clients;

• influence the objective performance of obligations to that client; or
• prevents us from rendering an unbiased and fair financial service, or
• prevents us from acting in the interests of that client.

An “actual or potential interest” includes but is no limited to:

• A financial interest, which includes any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, valuable consideration, other incentive or valuable consideration which exceeds R1000 per calendar year.[1]
• An ownership interest which means any equity or proprietary interest and any dividend, profit share or similar benefit derived from that equity or ownership interest.
• Any relationship with a third party, meaning any relationship with a product supplier, other FSP’s, an associate of a product supplier or an associate of the FSP. A third party also includes any other person who, in terms of an agreement or arrangement, provides a financial interest to the FSP or its representatives.
• An immaterial financial Interest, which is any financial interest with a determinable monetary value, the aggregate of which does not exceed R 1 000 in any calendar year from the same third-party in that calendar year received by;
  • a provider who is a sole proprietor; or
  • a representative for that representative’s direct benefit;
  • a provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives;

4.2          What type of interest may we Give and Receive?

The FSP and our representatives may only offer to and receive specific financial interests from a third party[2], which includes the following:

1. Commission as authorised under the Long-term Insurance Act (52 of 1998), the Short-term Insurance Act (53 of 1998) and the Medical Schemes Act (131 of 1998).
2. Fees as authorised under the Long-term Insurance Act (52 of 1998), the Short-term Insurance Act (53 of 1998) and the Medical Schemes Act (131 of 1998).
3. “Other fees” specifically agreed to by the client and which can be stopped by the client at their discretion but only if agreed in writing with the client, including details of the amount, frequency, payment method and recipient of those fees, as well as the details of services to be provided in exchange for the fees.
4. Fees or remuneration for services that were rendered to a third party.
5. An immaterial financial interest.
6. Any other financial interest not mentioned above for which a consideration, fair value or remuneration that is reasonably commensurate is paid by that provider or representative, at the time of receiving that financial interest.

4.3          On what basis may the we Give and Receive Financial Interests?

The financial interest referred to in points 2, 3, and 4 above may only be offered or received by the FSP or it’s representatives, if:

• The financial interests are proportionate (reasonably commensurate) to the service being rendered, considering the nature of the service, the resources, skills and competencies that are reasonably required to perform it.
• The payment of those financial interests does not result in the FSP or representative being remunerated more than once for performing the same service.
• Any actual or potential conflicts between the interests of clients and the interests of the person receiving those financial interests are effectively mitigated; and
• The payment of those financial interests does not impede the delivery of fair outcomes to clients.

4.4          Financial Interests for Representatives of the FSP

The FSP may not offer any financial interest to a representative of that FSP –

• For giving preference to a specific product of a product supplier, where a representative may recommend more than one product of that product supplier to a client.
• For giving preference to a specific product supplier, where a representative may recommend more than one product supplier to a client
• That is determined with reference to the quantity of business, without also giving due regard to the delivery of fair outcomes for clients.

In relation to delivery of fair outcomes for clients, the FSP must demonstrate that a determination of a representative’s entitlement to a financial interest, considers measurable indicators, relating to the:

• Achievement of minimum service level standards in respect of clients
• Delivery of fair outcomes for clients; and
• Quality of the representative’s compliance with the FAIS Act.

The measurable indicators are agreed in writing between the FSP and its representative and sufficient weight (significance) are attached to these indicators to materially mitigate the risk of the representative(s) giving preference to the quantity of business secured for the FSP over the fair treatment of clients.

The FSP does not offer a sign-on bonus^[3] to any person, other than a new entrant[4], as an incentive to become a provider authorised or appointed to give advice.

The way in which the FSP remunerates it’s representatives and complies with these requirements, is set out in section 6 of this policy.

5.       PROCESSES AND INTERNAL CONTROLS TO MANAGE CONFLICT OF INTEREST

5.1     Identification of Conflict of Interest

To adequately manage COI, the FSP must identify all relevant conflicts timeously.  In determining whether there is or may be a COI to which the policy applies, the FSP considers whether there is a material risk of unfair treatment or bias for the client, taking into account whether the FSP or its representative, associate or employee:

• is likely to make a financial gain, or avoid a financial loss, at the expense of the client;
• has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome;
• has a financial or other incentive to favour the interest of another client, group of clients or any other third party over the interests of the client;
• receives or will receive from a person other than the client, an inducement in relation to a service provided to the client in the form of monies, goods or services, other than the legislated commission or reasonable fee for that service.

Our policy defines possible conflict of interest or examples of conflict of interest as, inter alia,-

• between the FSP and the client.
• between our clients if we are acting for different clients and the different interests conflict materially.
• where associates, product suppliers, distribution channels or any other third party is involved in the rendering of a financial service to a client.
• storing confidential information on clients which, if we would disclose or use, would affect the advice or services provided to clients.

 

All employees, including internal compliance officers and management, are responsible for identifying specific instances of conflict and are required to notify the Key Individual of any conflicts they become aware of. The Key Individual will assess the implications of the conflict and how the conflict should be managed, acting impartially to avoid a material risk of harming clients’ interests.

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3 This requirement is only applicable to CAT I providers that are authorised to give advice. Refer to the definitions section of this policy.

4 A person who has never been authorised as a financial services provider or appointed as a representative by any financial services provider.

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5.2          Measures for avoidance and mitigation of Conflict of Interest

To ensure that the FSP can identify, avoid and mitigate COI situations, the FSP creates awareness and knowledge of applicable stipulations, through training and educational material. Where a COI situation cannot be avoided, these instances are recorded on the FSP’s conflict of interest register.

The FSP ensures the understanding and adoption of the FSP’s conflict of interest policy and management measures by all employees, representatives and associates through training on the COI policy.

The Key Individual will assess each conflict, including whether the conflict is actual or perceived, what the value of the conflict or exposure is and the potential reputational risk. Compliance and management then agree on the controls that need to be put in place to manage the conflict. Once a conflict of interest has been identified it needs to be appropriately and adequately managed and disclosed, in line with the below steps.

5.3          Measures for mandatory disclosure of Conflict of Interest

Where there is no other way of managing a conflict, or where the measures in place do not sufficiently protect clients’ interests, the conflict must be disclosed to allow clients to make an informed decision on whether to continue using our service in the situation concerned.

In all cases, where appropriate and where determinable, the monetary value of non-cash inducements will be disclosed to clients. The Key Individual will ensure transparency and manage conflict of interests. The client must be informed on the Conflict of Interest Policy and where they may access the policy.

5.4          Ongoing monitoring of Conflict of Interest Management

The key individual or staff member in charge of supervision and monitoring of this policy will regularly monitor and assess all related matters. The FSP will conduct ad hoc checks on business transactions to ensure the policy has been complied with.

The Compliance Officer will include monitoring of the Conflict of Interest policy as part of his/her general monitoring duties and will report thereon in the annual compliance report.

This policy shall be reviewed annually and updated if applicable. The compliance function is outsourced to an external Compliance company with no shareholding in this FSP. The Compliance practice functions objectively and sufficiently independently of the FSP and monitors the process, procedures and policies that the FSP has adopted to avoids conflicts of interest.

5.5          Training and Staff

Comprehensive training on the Conflict of Interest is provided to all employees and representatives as part of specific and/or general training on the FAIS Act and GCOC.

Training will be incorporated as part of all new appointees’ induction. Ongoing and refresher training on the FSP’s Conflict of Interest management processes and policy is provided on an annual basis.

5.6          Registers

With regard to existing third-party relationships, being the product suppliers listed in our Contact Stage Disclosure letter, we confirm that there are no circumstances which could lead to a potential conflict of interest.  Should any conflicts arise with regard to any of these, prior to entering into any business transaction with you, we undertake to disclose these in the registers below.

All gifts, financial interest, immaterial financial interest and any other COI situations as outlined in this policy, must be recorded in the FSP’s COI register, attached as Annexure A.

6.       REMUNERATION POLICY

This section of the Policy specifies the type of and the basis on which a representative of the FSP will qualify for a financial interest that the FSP offers and motivates how that financial interest complies with the requirements of this policy.

Our remuneration policy is commission based for Representatives and are based on sales targets in conjunction with a Quality Control process.  Our support staff receive a basic salary.  We do not charge any service fees or policy fees.  We are partnered with Old Mutual Alternative Risk Transfer (OMART) and receive a binder fee on all premiums received as per our Binder Agreement for performing administrative functions on behalf of the OMART, the policy Insurer.

 

Our representatives are mandated to sell the Assured Life Credit Life policy for clients under debt-review.

All the new business are monitored for quality and compliance purposes to ensure that all clients are treated fairly and legislative requirements are met.

All commission earned is received from OMART.

The FSP caries out regular inspections on all commissions, remuneration, fees and financial interests proposed or received in order to avoid non-compliance. This includes but is not limited to:

• Analysis of Management Information to identify trends and outliers
• TCF client feedback program results assessments/review
• Compliant trend and root cause analysis

7.       Annexures

Annexure A – Conflict of Interest Register

Type	Date Received	From	To	Reason	Value	Approved?	Approver	Sign
Financial Interest						Yes/No
Ownership Interest						Yes/No
Immaterial Financial Interest						Yes/No
Relationship Interest						Yes/No
Other						Yes/No

We take pride therein that our advice is objective and free of external influence, but wish to disclose to you, our valued client, that we have received the following financial interests and wish to disclose the value and the reason for receiving the financial interests.

Annexure B – Policy adoption and version control

Date	Version	Detail of change or amendment	Person
01/02/2023	V2	GCOC updates	Group Risk Manager

Policy owner: Directors

The Group Risk Manager will be responsible for supervision and monitoring of this policy as well as the process to be followed e.g. inspection of new business transactions, client interviews, discussion with Insurer and referral partners.

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[1] Financial Interest excludes an ownership interest and Training, that is not exclusively available to a selected group of providers or representatives where that training is related to products and legal matters relating to (1) those products, (2) General financial and industry information, (3) Specialised technological systems of a third party necessary for the rendering of a financial service, but excluding travel and accommodation associated with that training and (4) qualifying enterprise development contribution to a qualifying beneficiary entity.

[2]  FAIS GCOC S3A. FAIS GCOC S1 “third party” means a product supplier, another provider, associate of a product supplier or a provider, a distribution channel and any person who in terms of an agreement or arrangement with a person referred to previously provides a financial interest to a provider or its representatives.

[3] This requirement is only applicable to CAT I providers that are authorised to give advice. Refer to the definitions section of this policy.

[4] A person who has never been authorised as a financial services provider or appointed as a representative by any financial services provider.

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