The FAIS General Code of Conduct, explained section by section

How to read the Code: what it is, and what it is not

The Code is subordinate legislation made under section 15 of the FAIS Act, so it binds like the Act does, and section 1(3) applies it to all financial services providers and representatives unless a provision says otherwise. Section 1(2) settles conflicts: a specific code for a category of provider (the discretionary or administrative codes) prevails over the General Code, and a law that specifically regulates conduct for a particular product prevails over both unless it conflicts with the Act. Read the section numbers against the current consolidation — the 2020 amendments renumbered nothing but rewrote or inserted a great deal, and older copies still circulate.

Section 1 — Definitions that decide the rest

Most of section 1 is machinery, but a handful of definitions carry the weight of the sections that use them. The ones a short-term broker meets:

1. 01“Conflict of interest” — any actual or potential interest that may influence the objective performance of your duties or prevent an unbiased service, including a financial interest, an ownership interest, or any relationship with a third party.
2. 02“Financial interest” — cash, vouchers, gifts, travel, hospitality, sponsorship or any other incentive from a third party, other than an ownership interest, permitted training, or a qualifying enterprise-development contribution. “Immaterial financial interest” caps the exception at R1 000 a year from the same third party.
3. 03“Replace or replacement” (2020) — substituting one product with another, or terminating or varying one product and buying another, to meet the same or similar needs, whichever order the transactions happen in.
4. 04“Variation” (2020) — expressly includes the non-renewal of a short-term insurance policy, which is what makes a renewal moved to a new insurer a replacement.
5. 05“Plain language” (2020) — clear, easy to understand, free of uncertainty, and adequate for the knowledge level of the person it is aimed at.
6. 06“Writing” — includes any electronic medium that is accurately and readily reducible to written or printed form.

Section 2 — The general duty

One sentence: a provider must at all times render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry. Every determination the FAIS Ombud has ever made against an adviser cites it, because it is the standard the specific sections particularise — if nothing else in the Code names the failure, section 2 does.

Section 3 — Specific duties, and the record-keeping rule

Section 3(1) is the list of how you deal with a client; section 3(2) is the record-keeping engine that sections 9 and 18 of the Act lean on.

1. 013(1)(a): everything you tell a client must be factually correct; in plain language; adequate for their level of knowledge; given in time for an informed decision; confirmable in writing on request; in a readable print size; with every amount, fee and commission in specific monetary terms (or its basis of calculation); and not repeated unless something material changes.
2. 023(1)(b)–(c): avoid conflicts of interest where possible, mitigate them where not, and disclose in writing — the measures taken under your conflict-of-interest policy, any ownership or financial interest beyond the immaterial threshold, and any third-party relationship that gives rise to a conflict — and tell the client how to access the policy.
3. 033(1)(d)–(f): carry out the client’s instructions promptly with their interests first, account accurately for their transactions, and never deal for your own account on advance knowledge of client transactions.
4. 043(2): have systems to record verbal and written communications, store and retrieve them, and keep them safe; keep every record for five years after the product terminates or the service is rendered; make them available within seven days of the regulator’s request; electronic storage is fine if readily reducible to print.
5. 053(3): no disclosure of confidential client information without written consent, unless the law or the public interest requires it.
6. 063(4)–(5) (2020): you may not imply the FSCA regulates business it does not license you for, and you may not call yourself “independent” if you or a product supplier hold a significant ownership interest in the other, or if you receive a financial interest from a supplier beyond the permitted commission, fees and immaterial interests, or if any other relationship creates a material conflict.

Section 3A — Financial interests and the conflict-of-interest policy

Inserted in 2010 and tightened in 2020. The core rule (3A(1)(a)) is a closed list of what a provider or representative may receive from, or offer to, a third party: commission and fees authorised under the Long-term, Short-term or Medical Schemes Acts; fees for a service where no such commission is paid, if the amount, frequency, method and recipient are agreed with the client in writing and the client may stop them; fees for a service to a third party; an immaterial financial interest; and any other financial interest for which fair value is paid at the time. Since December 2020, 3A(1)(b) bars a provider from offering a representative any financial interest determined by volume of business without regard to fair client outcomes, or for favouring a particular supplier or product — and 3A(1)(bA) requires the provider to show that entitlement takes measurable service, outcome and compliance indicators into account. Sign-on bonuses to new advisers are barred (3A(1A)). Every provider that is not a representative must adopt, publish, monitor and annually review a conflict-of-interest management policy covering identification, avoidance, mitigation, disclosure, internal controls, consequences, its associates and ownership links (3A(2)), report on it in its compliance reports (3A(4)), and may not route around any of this through an associate (3A(3)).

Section 4 — Information about product suppliers

At the earliest reasonable opportunity, and where appropriate, tell the client who the insurer is and how you relate to it: name and contact details; your contractual relationship with it and whether you have others; any restrictions the insurer places on what you may sell; and — where it applies — that you hold more than 10% of the insurer or received more than 30% of your remuneration from it in the last year. Where your licence lets you choose between suppliers, section 4(3) requires you to exercise that judgment objectively in the client’s interest, and section 4(4) bars comparing products or suppliers unless their differing characteristics are made clear, and bars inaccurate or unsubstantiated criticism of any of them. Since 2020, section 4(5) applies the advertising rules on comparisons (section 14(10)) to comparisons in advice — like for like on cover, exclusions and waiting periods, not price alone.

Section 5 — Information about you, the provider

The disclosure most brokers make on their letterhead and most forget to update: full business and trade names, registration number, addresses and contact details; your legal and contractual status — which entity takes responsibility for the advice; the compliance department’s details; which financial services your licence authorises and any restrictions; whether you hold professional indemnity or fidelity cover; whether a representative acts under supervision; and any exemption the Registrar has granted you. Oral disclosure must be confirmed in writing within 30 days.

Section 6 — Contacting the client

Two lines with a long reach: act honourably and professionally with due regard to the client’s convenience in every contact, and — at the start of any contact you initiate — say what it is for and give the section 5 information at the earliest opportunity.

Section 7 — What must be disclosed about the product and the service

The disclosure section, and the one whose omissions surface at claim stage. Section 7(1)(a) asks for a reasonable general explanation of the contract’s nature and material terms and “full and frank disclosure” of anything the client would reasonably need for an informed decision. Section 7(1)(c) then lists what must be given at the earliest reasonable opportunity, where applicable — for short-term cover the ones that matter are:

1. 01the name, class or type of product and the nature and extent of the benefits (i)–(ii);
2. 02the client’s monetary obligations to the insurer — premium, how it is paid, what happens on non-payment, any contractual escalation (iv) — and, since 2020, to the provider: the amount, frequency and method of any fee, the services it buys, and the client’s right to terminate it (v);
3. 03commission and any other “valuable consideration” you will receive, or the prescribed maximum rate where the law sets one (vi);
4. 04special terms and conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions, and circumstances in which benefits will not be provided (vii) — the underinsurance and average conversation lives here;
5. 05restrictions or penalties on early termination (x), cooling-off rights (xii), material risks (xiii), and for policies with built-in premium increases, the increased premium for five years and on a five-year basis after that (xiv);
6. 06section 7(1)(d): before any proposal form is completed, that material facts must be accurately disclosed, that the client is responsible for the accuracy of the answers even when you complete the form, and what non-disclosure can cost them — with a copy of the form on request;
7. 07section 7(2): never have a client sign a blank or incomplete form; 7(3A) (2020): everything above that was given orally must be confirmed in writing after the transaction; 7(4): where you render an ongoing service, an annual written statement of the products still in force, their obligations, benefits and the commission still payable to you.

Section 7A — Forecasts, illustrations and past performance

New in 2020 and mostly aimed at investment advice, but it reaches any broker who quotes a projected benefit or a track record. Past performance may only be stated if the basis of measurement is clear, the presentation is fair, the statement carries a warning that past performance does not indicate future performance, and the performance is relevant to the service. Forecasts and illustrations must come with their assumptions, be labelled as not guaranteed, disclose any dependence on market factors, and warn of the risk of acting on them.

Section 8 — Suitability

The section that decides whether the advice was any good. Before advising, section 8(1) requires you to (a) obtain the client’s needs and objectives, financial situation, risk profile, and financial product knowledge and experience, and to advise in a way that takes into account their ability to bear the product’s costs and risks and their understanding of those risks (rewritten in 2020); (b) analyse that information; (c) identify products appropriate to the client’s risk profile and needs, within the limits of your licence and contracts; (cA) (2020) where those limits mean you cannot identify an appropriate product, say so, decline to recommend, and refer the client elsewhere; (d) where the product replaces one the client holds, fully disclose the implications — fees and charges compared, special terms and exclusions compared, age and health effects on premium, tax, investment-risk and penalty differences, accessibility, benefits and guarantees lost, and the commission you earn on both; and (e) take reasonable steps to establish whether a replacement is what you are recommending. Section 8(2) requires reasonable steps to ensure the client understands the advice and can make an informed decision; 8(3) requires notice to both insurers when long-term cover is replaced; and 8(4), rewritten in 2020, allows the analysis to be limited by what the client asked you to focus on, what you agreed, the circumstances, or the client declining to give information — provided you alert the client that the advice may be limited as a result, and, where a client elects not to follow your advice, that you alert them to any clear risk.

Section 9 — The record of advice

Section 9(1) requires a record of every piece of advice that reflects the basis on which it was given — a brief summary of the information relied on, the products considered, the product recommended with an explanation of why it is likely to satisfy the client’s identified needs and objectives, and, where the recommendation replaces an existing product, the item-by-item comparison and the reasons the replacement is more suitable than retaining or modifying the old one. A 2020 proviso limits the duty to advice that leads to a transaction; 9(1A) lets the Registrar prescribe the format; and 9(2) requires a written copy to the client, from every provider. Each element, with the record-keeping duties section 9 is “subject to and in addition to”, is worked through on the record-of-advice page linked below.

Section 10 — Client funds and documents

If you hold a client’s documents of title or money, you must confirm receipt in writing, safeguard them, and — for funds — keep a separate bank account for client money into which everything is paid within one business day, with the interest accruing to the client. Section 10(3) carves out premium collection: a provider that deals with short-term premiums under section 45 of the Short-term Insurance Act (the intermediary guarantee regime) is exempt from the separate-account rule if it complies with that section. Most short-term brokerages sit in that carve-out and should be able to say so.

Sections 11 to 13 — Risk management

Section 11 requires resources, procedures and systems that eliminate, as far as reasonably possible, the risk of loss to clients from theft, fraud, poor administration, negligence or culpable omissions. Section 12 turns that into three control objectives for the provider (not its representatives): orderly business, reliable information, and compliance with all applicable laws. Section 13 requires professional indemnity or fidelity cover where the registrar demands it — and section 5(e) requires you to tell clients whether you hold it.

Section 14 — Advertising

Rewritten in 2020 and now the longest section in the Code. It applies to any advertisement in any medium, the website included, and treats the general public as the client. In short:

1. 01Governance (14(2)): documented approval by a key person, checked for consistency with this section, and withdrawn or corrected when found wanting.
2. 02Content (14(3)): factually correct, balanced, not misleading; statistics and awards must carry their source and date; escalating premiums must say so; key limitations, exclusions, risks and charges must be stated plainly, not worded to imply a benefit; no undue urgency; warnings must be prominent.
3. 03Identification (14(5)): the insurer or provider must be clearly and prominently identified, and a white-labelled product must name the real product supplier at equal prominence (14(14)(c)).
4. 04Plain language (14(6)), records kept for five years (14(7)), no negative-option marketing (14(8)), an opt-out from unwanted direct advertising at no charge (14(9)).
5. 05Comparative marketing (14(10)): comparisons must be by an independent party or say they are not, be current and like for like — for insurance, on equivalent terms, insured events, cover levels, exclusions and waiting periods — and may not focus on price to the exclusion of suitability.
6. 06Puffery (14(11)), testimonials and endorsements (14(12)) — genuine, attributed, with any payment disclosed and a statement that the endorsement is not advice — and loyalty or no-claim bonuses (14(13)), which must show their cost as a percentage of premium where not negligible.

Section 15 — Direct marketing

A direct marketer — a provider whose business is predominantly by telephone, internet or mail — must give the client its business name, licence details, contact details, its compliance department’s number and whether it holds PI cover; must record all telephone conversations and be able to retrieve them (15(5)); must confirm the section 4 and 5 information in writing after the transaction (15(6)); and must make recordings available to the client on request (15(7)).

Sections 16 to 19 — Complaints management

Part XI was replaced wholesale in 2020, with the framework, categorisation and record-keeping provisions taking effect on 26 June 2021. It applies to providers, not to representatives, and it is where the FSCA now looks first when it inspects an FSP.

1. 01Section 16 defines the terms: a “complaint” is any expression of dissatisfaction alleging a breach of a rule or agreement, harm from maladministration, or unfair treatment; a “reportable complaint” is any complaint not resolved within five business days through ordinary client-query processes; “upheld” and “rejected” have fixed meanings.
2. 02Section 17(1)–(2): a documented complaints management framework proportionate to the business, covering objectives and responsibilities, performance standards, procedures and timeframes, escalation, record-keeping and analysis, communication, ombud engagement, reporting, and the handling of complaints about representatives and service suppliers.
3. 03Section 17(3): the board or key individuals own it; decision-makers must be trained, experienced, free of conflicts and empowered.
4. 04Section 17(4): every reportable complaint is categorised into at least nine classes — product design, information, advice, product performance, service, accessibility and switches, complaints handling, insurance claims (including non-payment), other.
5. 05Section 17(5)–(6): an internal escalation and review process that is not burdensome; upheld complaints paid or remedied without delay; rejected complaints given clear reasons and told how to escalate.
6. 06Section 17(7)–(8): accurate records of every reportable complaint and running data on numbers received, upheld, rejected, escalated, referred to an ombud, and compensation and goodwill payments made; complaint channels that are visible, free, in plain language, with a single point of contact, an acknowledgment, timelines, and progress updates.
7. 07Sections 18–19: processes for engaging the relevant ombud, telling clients about it at the start and throughout the relationship, resolving before a ruling where possible, and reporting complaints information to the Authority as prescribed.

Sections 20 to 22 — Termination, waivers, and the Code’s name

Section 20: give immediate effect to a client who wants to terminate, and where the termination is on your advice make sure they understand the implications; a provider that ceases business must notify every affected client and see outstanding business completed or transferred, and the same applies when a representative leaves. Section 21: no provider may ask a client to waive any right the Code gives them, and any such waiver is void. Section 22 names the Code and fixes its commencement.

Which sections a short-term brokerage is measured against

Every section applies, but an FSCA inspection, an Ombud complaint or a professional-indemnity claim reads the same handful of them. In rough order of how often they decide the outcome:

Frequently asked questions

Is the General Code of Conduct law, or guidance?

Law. It is a board notice made under section 15 of the FAIS Act, which makes it subordinate legislation, and section 1(3) of the Code applies it to all financial services providers and representatives unless a provision says otherwise. Breaching it is a breach of the Act’s conduct requirements and is what the FAIS Ombud measures a complaint against.

What changed in the 2020 amendment?

Board Notice 706 of 26 June 2020 inserted or rewrote: definitions (replacement, variation, plain language, and the advertising terms); section 3(4)–(5) on implying FSCA regulation and calling yourself independent; the fee rules and representative-incentive rules in section 3A; section 7(1)(v) and 7(3A) on fees to the provider and written confirmation; section 7A on forecasts; section 8(1)(a), (cA) and (4); the section 9 proviso, 9(1A) and 9(2); section 14 on advertising in full; section 15; and the whole complaints regime in sections 16 to 19. Most took effect on 26 December 2020, the complaints framework on 26 June 2021.

Does the Code apply to short-term insurance brokers?

Yes. Short-term personal and commercial lines advice and intermediary services are financial services under the FAIS Act, and section 1(3) of the Code applies it to all providers and representatives. The Short-term Insurance Act and the Policyholder Protection Rules apply alongside it, and section 1(2)(b) says a conduct rule specific to a product prevails over the Code where they differ.

Where do I get the current text of the Code?

The consolidated text as amended to June 2020 is linked in the sources below. Older copies — including some hosted on official sites — carry only the amendments to 2008 and omit section 3A, section 7A, the current section 8 and 9 wording, the new section 14 and the complaints regime. Check the amendment table on the first page before relying on a copy.

What is the difference between the FAIS Act and the Code?

The Act (No. 37 of 2002) creates the licensing regime, the fit-and-proper requirements, the Ombud, and the duty in section 16 to act in accordance with a code of conduct. The Code is the conduct rulebook made under it: how you disclose, advise, record, handle money and handle complaints. Section 18 of the Act sets the five-year record-keeping duty that section 3(2) of the Code fleshes out.

Where is the record-of-advice rule, exactly?

Section 9, in Part VII (Furnishing of advice), immediately after section 8 on suitability. Its four elements, the 2020 proviso and the written-copy duty are worked through one by one on the record-of-advice page linked in the related guides.

This page is general information about the FAIS General Code of Conduct, not legal or compliance advice. Section references are to Board Notice 80 of 2003 as amended to Board Notice 706 of 26 June 2020; check the current text before relying on it.

Sources

1. 01General Code of Conduct for Authorised Financial Services Providers and Representatives, Board Notice 80 of 2003 as amended to Board Notice 706 of 26 June 2020 (consolidated text hosted by Masthead)
2. 02Financial Advisory and Intermediary Services Act 37 of 2002 — sections 15 (codes of conduct), 16 (principles), 18 (maintenance of records)
3. 03Office of the FAIS Ombud — determinations and annual reports