Transcription
Task 1 focuses on demonstrating an understanding of the Financial Advisory and Intermediary Services Act (FAIS) as a regulatory framework. Task 1 has four qualifying criteria. Let's look at Task 1's qualifying criteria three: apply knowledge of financial products within the financial services environment.
In a previous video, we discussed various financial products a representative might encounter under FAIS. These range from shares and debentures to bank deposits, foreign financial instruments and products, health service benefits, and pension funds. We also explored the different licensed categories used to classify financial products. This video will test your knowledge of these financial products through a series of true or false questions.
True or false: The following statement is an example of an intermediary service. Dinero signs a debit order with her bank for an insurance policy to cover her car. The insurance policy is not with the bank but another insurer; her bank simply collects the premiums and passes them over to the insurer. The service by her bank can be considered an intermediary service. False. Dinero's bank provides a platform through which payments can be made to her insurer; this is not an intermediary service.
Which statement is incorrect and does not describe the intermediary service within the FAIS Act? 1. Intermediary service only relates to factual information given by a representative to a client with regards to a financial product. Incorrect. 2. Intermediary service means an activity other than giving advice that is performed by a person for or on behalf of a client or product supplier. Correct.
Which of the following are correct about categories and sub-categories of financial products under the FAIS Act? Category 2: All persons authorized as discretionary FSPs? Yes. Category 3: All persons authorized as assistance business FSPs? No. Category 4: All persons authorized as administrative FSPs? No. All persons authorized as administrative FSPs are in Category 3.
Indicate which of the following sectors fall under financial services as defined in the FAIS Act: Long-term insurance? Yes. Collective investments? Yes. Banks? Yes. Postal services? No. However, please note that this would be a different answer if the postal services extended into financial services such as selling insurance policies or collecting premiums on behalf of an insurance company.
Indicate whether the following are part of the definition of financial services as indicated in the FAIS Act: Rendering of intermediary services? Yes. Providing only advice? Yes. Providing both advice and rendering an intermediary service? Yes. All these are financial services. An applicant can apply for advice only, or for intermediary services only, or for both advice and intermediary services.
Indicate which of the following are examples of financial products under the FAIS Act: Deposits? Yes. Cell phone insurance? Yes. Loans? No. Loans fall outside the scope of the FAIS Act; they are covered by the National Credit Act. This also includes bonds on properties. Unit trusts? Yes.
The FAIS Act states that a client must be offered a product that matches his or her specific needs. Choose one statement that best describes what needs to be considered: Establishing the amount of additional income the client has to meet her financial goals? No. Establishing the client's objective financial background and financial knowledge and experience? Yes.
When can a policy be regarded as invalid under the FAIS Act? When the client is registered as a policyholder on the insurer's database? No. This is no reason for a policy to be invalid. When the FSP or insurer underwriting the policy does not have a license from the FSCA to do so? Yes. This means that the policy cannot be enforced in law. When the client has not read their policy summary and the details within the policy to check if they are correct? No. The client has the responsibility to read the policy document and make sure it has the correct details.
Which of the following actions can be regarded as rendering a financial service to clients? Handing out brochures and explaining factual information about products to clients? No. Updating policy details of clients such as the risk address or make/up of vehicle? Yes. Sharing one's opinion about financial products to clients and recommending some? Yes.
Which of the following products are governed by the FAIS Act? Short-term insurance policies? Yes. Collective investment schemes? Yes. Wills and testaments? No. Fixed deposits? Yes. These are long-term deposits.
What are the two main requirements of giving advice to clients? Keeping a record of advice and updating client details? No. Establishing the suitability of products and keeping a record of advice? Yes. Keeping a record of advice and making sure the FIC Act requirements are met? No.
True or false: The following are examples of a financial product in terms of the FAIS Act: Shares and debentures? True. Health service benefits? True. Property? False. Life insurance? True.
We hope you enjoyed the video and learned a lot. Please make sure to check out our other ORI videos.