Section 45 Conflict of Interest Management (FAIS)
The FAIS General Code of Conduct requires every South African FSP to identify, mitigate and disclose conflicts of interest. This is a plain-English guide to what section 45 requires, what your policy must contain, and how to run the gifts and conflicts register properly.
What is Section 45 of the FAIS General Code?
Section 45 of the General Code of Conduct for Authorised Financial Services Providers and Representatives requires every FSP to adopt, maintain and implement a written Conflict of Interest Management Policy. The policy is one of the compliance documents an FSCA inspector will ask for early — and it must be a real, current document, not boilerplate.
What is a conflict of interest under FAIS?
A conflict of interest exists where the FSP or a Representative has an actual or potential interest that may influence the objective performance of obligations owed to a client, or may prevent the FSP from rendering an unbiased service. Examples: commission structures, product-provider incentives, cross-holdings, gifts, ownership overlaps, and dual roles.
What must a conflict-of-interest policy contain?
The Section 45 policy must set out: mechanisms for identifying conflicts (before onboarding a product, hiring a rep, taking a gift); measures for avoidance where possible; mitigation measures where avoidance isn’t; a disclosure protocol to clients (what, when, how); the consequences and disciplinary steps for non-compliance; a schedule listing associates and third-party providers with material interests; and processes for the annual review and staff training.
What is the gifts and conflicts register?
The register is the running log of every gift, benefit or hospitality (given or received above the threshold) and every identified conflict. Each entry is dated, describes the interest, states the mitigation or avoidance action, and links to the client disclosure where relevant. It is the auditable evidence that the Section 45 policy is being lived, not filed.
What are permissible representative benefits?
The General Code sets thresholds and prohibitions on benefits a Representative may receive from a product provider — both financial (commission, sponsorships) and non-financial (travel, hospitality, training). Some benefits are permitted with disclosure; others are prohibited outright. The Section 45 policy must reflect the current thresholds and the FSP’s own stance where it is stricter than the minimum.
How do I manage conflicts of interest in a small FSP?
For a one-KI FSP the practical answer is: keep the register meticulously (even single-entry months), disclose in writing on every product recommendation where a commission is earned, and review the policy annually with a dated sign-off. The FSCA does not expect a large bureaucracy from a small FSP; it does expect visible, current evidence that the policy is being applied.