Termination of Agreement Or Business

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I received an enquiry from a reader last week who decided to leave the industry after 30 years. He asked for advice on what he needs to do, as another advisor offered to take over his client base.

The FSB’s Newsletter 12, published last week, contained the following guidelines from Section 20 of the General code of conduct:

Voluntary Lapsing of license:

If the FSP ceases to operate, he/she is obliged to ensure that:

  • All the clients are notified of this; and
  • Any business that has not been concluded at the time, is completed promptly OR transferred to another FSP who is suitable. This must be done in consultation with the client and the product supplier(s) concerned
  • Where a FSP voluntarily lapses their license, they must ensure that an instruction is sent to Faispfc@fsb.co.za to lapse the license.

Suspension or withdrawal of license:

This sub-section will also apply to any FSP whose license is suspended or withdrawn by the FAIS Compliance Department. As soon as a license is suspended or withdrawn, the FSP is required to immediately cease conducting business and:

  • Must inform all affected clients and product suppliers concerned that its licence has been suspended. The Registrar must be copied with such correspondence
  • Must return all funds of clients and must in consultation with clients and product suppliers concerned, take reasonable steps to ensure that any outstanding business is transferred to another licensed financial services provider in the best interest of clients. The licensee must advise the Registrar accordingly.
  • Where applicable, the licensee’s registered auditor/accounting officer must furnish the Registrar with a report confirming that all client funds were transferred as stipulated.

A representative ceases to act as a representative for a specific FSP:

If a representative leaves the employ of the FSP, that FSP is obliged to ensure that:

  • The clients that were allocated to the representative are notified of this; and
  • All outstanding business at the time is completed or transferred to the FSP or another representative of the FSP. This must be done in consultation with the client and the product supplier(s) concerned.