It is no secret that the myriad of controls required by the Regulator is not often viewed in a positive light. Feedback after visits by the FSB to broker practices confirms that FSPs have the required documentation in place, but it is often just a template provided by a compliance company (or copied from a friend’s version) which was not personalised for that specific business.
In the latest finding by the FAIS Ombud, discussed below, there was a problem regarding the disclosure document. No doubt, most of us are using standardised forms to comply with requirements, but do they really protect us?
The annual compliance report checks on a number of control measures that you need to have in place, I am not sure that the actual content is verified for each report submitted. The sad reality is that, if you get no negative feedback regarding your compliance report, this does not mean that you are compliant.
One such document, the existence of which you need to confirm in the report, is the risk management framework of your business. This is to ensure that the risks to your business do not contain threats to your clients.
Although a service level agreement is not a FAIS requirement, it should form the cornerstone of your engagement with your clients. It is an extremely important part of managing your own risk. If you and the client agree at the outset on the obligations of each party, there can be very little grounds for complaints if things go wrong later.
The sad reality is that there is a myriad of consumer protection measures in place, in addition to FAIS and FICA, but very little for the financial advisor. This means that you must create your own cover with the resources at your disposal.
A professional service level agreement is one of the most important documents in your business to protect you and your business, and requires much more attention than just lip service.
