What is the main objective of the FAIS Act?

To regulate the rendering of financial advisory and intermediary services to clients. It does that mainly by licensing who may render those services (section 7), setting duties on providers for their representatives (sections 13 and 14), and authorising codes of conduct that carry the detailed conduct rules (sections 15 and 16).

What is the difference between the FAIS Act and the General Code of Conduct?

The Act is the statute; the General Code of Conduct is subordinate legislation made under it. The Act licenses providers and creates the Ombud. The Code contains the duties brokers are measured on day to day — disclosure, suitability, the Record of Advice, the client-file retention. When someone says “FAIS requires…”, they are almost always citing the Code.

Does the FAIS Act require a Record of Advice?

Not directly. The Record of Advice is section 9 of the General Code of Conduct, which is made under sections 15 and 16 of the Act. The Act makes the Code binding, so the duty is enforceable — but it is not in the Act’s own text.

Does section 18 of the FAIS Act cover the client advice file?

No. Section 18’s five-year list is premature cancellations, complaints, continued fit-and-proper compliance, cases of non-compliance, and representatives’ continued compliance. The client advice file is held for five years by section 3(2) of the General Code instead. Both are five years, and they are different duties.

Can you go to prison for a FAIS contravention?

Section 36 provides for it. Contravening section 7(1), 8(8), 13(1), 14(1), 18, 19(2) or 34(4) or (6) is an offence, and the penalty on conviction is a fine of up to R1 000 000 or imprisonment for up to 10 years, or both. Operating without a licence and failing to keep the section 18 records are both on that list.

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The FAIS Act, explained

Most of what brokers call “FAIS” is not in the FAIS Act. The Act — the Financial Advisory and Intermediary Services Act 37 of 2002 — is short, structural and mostly about who may render a financial service and what happens when they get it wrong. The duties you are actually measured against day to day — the disclosures, the suitability analysis, the Record of Advice, the five years on the client file — live in the General Code of Conduct, which the Act authorises but does not contain. This page walks the Act as it stands: the two definitions the whole regime turns on, the licence, representatives and debarment, what is delegated to the Codes, the records the Act itself demands and the criminal penalty behind them, the Ombud, and what the 2017 Financial Sector Regulation Act changed.

Reviewed 8 September 2026 · Broker AI team

What the Act is for

The long title is the clearest statement of scope: to regulate the rendering of certain financial advisory and intermediary services to clients. Two consequences follow, and they are the reason the Act reads so unlike a compliance manual.

who

It licenses the person

Section 7(1) makes it unlawful to act, or offer to act, as a financial services provider without a licence. The Act is largely concerned with entry — who may render the service, on what terms, and how that permission is taken away.

what

It regulates the act, not the product

The trigger is rendering a financial service to a client, not selling a particular product. Whether you need a licence and which duties attach turns on what you did — advised, or acted as an intermediary — which is why the two definitions below carry so much weight.

The two definitions everything else hangs on

Section 1 defines “advice” and “intermediary service” separately, and the split is not academic: it decides your licence categories, which Code duties apply, and whether a complaint against you is about the recommendation or about the administration.

advice

“Advice”

Any recommendation, guidance or proposal of a financial nature furnished to a client, by any means or medium, on buying or investing in a financial product, on concluding a transaction aimed at acquiring a right or benefit in one, or on varying, replacing or terminating one — whether or not it forms part of financial planning, and whether or not a transaction actually follows.

intermediary

“Intermediary service”

Any act OTHER than furnishing advice, done for or on behalf of a client or product supplier, whose result is that a client may enter into, offers to enter into, or enters into a transaction with a product supplier — or that involves dealing in, managing, administering, keeping in safe custody, maintaining or servicing a financial product.

why

Why brokers should care

Placing a renewal with no recommendation is an intermediary service. Telling the client which of two quotes to take is advice, and it pulls in the whole of Part VII of the General Code — the suitability analysis and the Record of Advice. The same conversation can contain both.

Section 7 and section 8: the licence

Section 7(1) prohibits acting or offering to act as a financial services provider without a licence issued under section 8. Section 8 puts the fit-and-proper requirements at the centre of the application — the applicant must satisfy the regulator that it meets the requirements determined for providers or categories of provider. Two practical points fall out of the wording:

01“Offer to act” is in section 7(1) as well as “act”. Marketing a service you are not licensed for is inside the prohibition, before a single client is advised.
02Section 8 makes fit and proper a continuing test, not an entry test — section 18(c) then requires you to keep records of your continued compliance with the section 8 requirements.

Representatives: sections 13 and 14

A representative is a person who renders a financial service to a client for or on behalf of a provider. The Act makes the PROVIDER responsible for them.

01Section 13 sets the qualification and supervision duties: a provider must be satisfied its representatives meet the fit-and-proper requirements, must maintain the register, and must ensure work is done under supervision where competence is not yet complete.
02Section 14 is debarment — the provider itself debars a representative who no longer meets the requirements or has materially contravened the Act. It is a duty on you, not a sanction applied to you.
03Contravening section 13(1) or 14(1) is an offence under section 36, with the same penalty as an unlicensed provider (below).

What the Act leaves to the Codes — and why that matters

This is the section that answers the question most often asked as “where does FAIS say that?”. Sections 15 and 16 empower the making of codes of conduct and set the principles they must satisfy — that clients are able to make informed decisions, that their reasonable expectations are appropriately met, and that services are rendered honestly, fairly, with due skill, care and diligence. The Act then stops. Everything that follows is Code, not Act:

01The disclosure duties — product, provider, fees, commission, exclusions, waiting periods — are section 7 of the GENERAL CODE, not section 7 of the Act. The two are unrelated provisions with the same number, which is the single most common citation error in broker files.
02The suitability analysis is section 8 of the General Code. The Record of Advice is section 9. Neither appears in the Act.
03The five-year retention of the client advice file is section 3(2) of the General Code. Section 18 of the Act is a different, narrower list (next section).
04So “FAIS requires…” is almost always a Code citation. When a complaint is adjudicated, the Ombud quotes the Code — the Act is what makes the Code binding.

Section 18, and the criminal penalty behind it

Section 18 requires a provider to keep records for a minimum of five years, and the list is specific — and specifically NOT the advice file:

01(a) known premature cancellations of transactions or products by clients of the provider;
02(b) complaints received, with an indication of whether each was resolved;
03(c) continued compliance with the section 8 fit-and-proper requirements;
04(d) cases of non-compliance with the Act, and the reasons for them;
05(e) continued compliance by representatives with the section 13(1) and (2) requirements.
06The client file — the quote comparison, the needs analysis, the Record of Advice, the correspondence — is held for five years by section 3(2) of the General Code instead. Both are five years; they are different duties over different documents, and only one of them is in the Act.

Section 36: this is criminal law, not only regulation

Section 36 makes it an OFFENCE to contravene or fail to comply with sections 7(1), 8(8), 13(1), 14(1), 18, 19(2) or 34(4) or (6) — or to make a deliberately misleading, false or deceptive statement, or conceal a material fact, in an application under the Act. The penalty on conviction is a fine not exceeding R1 000 000, or imprisonment not exceeding 10 years, or both.

s.18

Records are on that list

Failing to keep the section 18 records is not a paperwork lapse with a regulatory consequence — section 36 names section 18 on the same short list as operating without a licence, and attaches the same penalty.

s.33

And it stacks with civil remedies

Section 33 preserves the client’s civil claim for damages. Sections 37(1) and (2) simply require a court setting one to take the other into account, in both directions — the criminal penalty does not displace the claim.

The Ombud: sections 20, 27 and 28

Chapter VI creates the Office of the Ombud for Financial Services Providers and gives it real teeth. Section 27 governs receipt, prescription, jurisdiction and investigation of complaints; section 28 governs the determination itself.

01A section 28 determination may dismiss the complaint, or uphold it wholly or partially. On upholding it, the Ombud may award the complainant fair compensation for financial prejudice or damage suffered, direct the provider or representative to take steps, and MAKE ANY OTHER ORDER A COURT MAY MAKE.
02Interest may be added, from a date the Ombud determines.
03The Ombud now operates under Ombud Council Rules made in 2024 under section 201 of the Financial Sector Regulation Act 9 of 2017. Those Rules set the current monetary jurisdiction, and it is far higher than the figure most published summaries still quote — the advice-file page covers what the Ombud actually looks for.

What changed after 2002

The Act you find on gov.za is the 2002 gazette as enacted. Two changes matter before you rely on a printed copy:

2018

The regulator has a different name — and a date

The Financial Sector Regulation Act 9 of 2017 brought in the Twin Peaks reform, and the FSCA records the handover precisely: the Financial Services Board ceased to exist on 31 March 2018. The Financial Sector Conduct Authority has administered the FAIS Act since 1 April 2018, and the same Act created the Ombud Council. The FAIS Act’s own text still says “registrar” and “Board” throughout; read those as the FSCA. Any summary that still names the FSB is describing a body that has not existed since March 2018.

2020

The General Code was amended

Board Notice 706 of 26 June 2020 substituted and inserted several provisions of the General Code — including the requirement that all of the section 7 disclosure information be given in writing after a transaction is concluded. The Act was not amended; the Code under it was.

The Code duties, done in the document itself

Broker AI drafts the Record of Advice the General Code asks for — the disclosures, the needs analysis, the reasons the product suits — from the policy documents in front of you, so the file the Ombud would read is produced as part of the advice rather than after it.

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Frequently asked questions

What is the main objective of the FAIS Act?: To regulate the rendering of financial advisory and intermediary services to clients. It does that mainly by licensing who may render those services (section 7), setting duties on providers for their representatives (sections 13 and 14), and authorising codes of conduct that carry the detailed conduct rules (sections 15 and 16).
What is the difference between the FAIS Act and the General Code of Conduct?: The Act is the statute; the General Code of Conduct is subordinate legislation made under it. The Act licenses providers and creates the Ombud. The Code contains the duties brokers are measured on day to day — disclosure, suitability, the Record of Advice, the client-file retention. When someone says “FAIS requires…”, they are almost always citing the Code.
Does the FAIS Act require a Record of Advice?: Not directly. The Record of Advice is section 9 of the General Code of Conduct, which is made under sections 15 and 16 of the Act. The Act makes the Code binding, so the duty is enforceable — but it is not in the Act’s own text.
Does section 18 of the FAIS Act cover the client advice file?: No. Section 18’s five-year list is premature cancellations, complaints, continued fit-and-proper compliance, cases of non-compliance, and representatives’ continued compliance. The client advice file is held for five years by section 3(2) of the General Code instead. Both are five years, and they are different duties.
Can you go to prison for a FAIS contravention?: Section 36 provides for it. Contravening section 7(1), 8(8), 13(1), 14(1), 18, 19(2) or 34(4) or (6) is an offence, and the penalty on conviction is a fine of up to R1 000 000 or imprisonment for up to 10 years, or both. Operating without a licence and failing to keep the section 18 records are both on that list.
Is the FAIS Act still administered by the FSB?: No — and the FSB no longer exists. The FSCA states that the Financial Services Board ceased to exist on 31 March 2018 under the Twin Peaks reform brought in by the Financial Sector Regulation Act 9 of 2017. The Financial Sector Conduct Authority has administered the FAIS Act since 1 April 2018, and the same Act created the Ombud Council, under whose 2024 Rules the FAIS Ombud now operates. The FAIS Act’s own unamended text still refers to the “registrar” and the “Board”.

This page is general information about the Financial Advisory and Intermediary Services Act 37 of 2002, not legal or compliance advice. Section references are to the Act as enacted in 2002; it has since been amended, notably by the Financial Sector Regulation Act 9 of 2017, and the codes made under it change independently of the Act. Check the current text before relying on it.