South Africa: Lloyd's Brokers and the FAIS Act
The Financial Advisory and Intermediary Services Act (FAIS) establishes very specific requirements regarding the provision of advice and the performance of intermediary services in South Africa (RSA) by financial services providers.
This has a potential bearing on Lloyd’s brokers who visit the Republic of South Africa (RSA) to give their clients advice locally.
There is nothing in the Insurance Act that prohibits foreign independent intermediaries from giving advice to a local policyholder. Furthermore, the FAIS Act provides an exemption relating to foreign-based financial services providers, with regard to such requirements. However, foreign financial intermediaries must apply for authorisation to operate as financial services providers. Without this authorisation, they may not solicit business relating to financial services in South Africa, whether they are based abroad or domestically.
Moreover, the extent of the exemption on offer to foreign-based financial services providers is limited in that it requires foreign financial services providers to register and comply with the requirements of the FAIS Act. The exemption relates more to financial aspects, namely the waving of the requirement to appoint an auditor or to provide financial statements under local returns, if they are already doing so in their foreign jurisdiction. Foreign financial service providers are also exempted from reporting to the South African Registrar.
In light of this, we would urge any Lloyd’s brokers intending to do business in South Africa to comply with the FAIS Act and, where necessary, apply for authorisation as a financial services provider.
A copy of the FAIS Act and all of its amendments can be found on the South African Government Information website (www.info.gov.za/)
Last updated on 22 Dec 2008
