The Financial Advisory and Intermediary Services Act, 2002, governs the marketing and selling of financial goods in FSP South Africa (FAIS). Financial service providers (FSPs) are subject to FAIS regardless of where they are located. All financial service providers (FSP) are subject to FAIS’s rules, regardless of location. When it comes to conducting business with South African investors, foreign-based financial service providers (FSPs) have a variety of possibilities.
Section 1 of FAIS defines a “financial product” as securities and foreign currency-denominated investment instruments. People who give financial product advice or intermediary services (any activities undertaken on behalf of a customer to buy, sell, or otherwise deal in a financial product) must register as an FSP South Africa under FAIS.
FAIS Registration: –
Unless a person is licensed in line with section 8 of FAIS, no person may operate or offer to act as an FSP South Africa. Foreign financial service providers (FSPs) cannot offer financial services in South Africa unless they are licensed to do so. Section 8(1) of FAIS states that applications from foreign financial service providers (FSPs) must be filed to the FSP South Africa registrar (the Registrar). FAIS has construed to allow South African investors to invest in international financial instruments on their initiative. FAIS licensing is still required for foreign FSPs dealing in financial products unless all activities related to the financial products are carried out outside of South Africa, and the sale of financial product interests to South African investors is also carried out outside of FSP South Africa. Because of this, international financial service providers (FSPs) can market financial products to South African investors without obtaining a FAIS registration.
FAIS license: –
FSP South Africa, which does not have a FAIS license, are advised to log any communication with a potential South African client as a “reverse enquiry” from the customer. The FSP may be given some regulatory protection as a result of this. As a reminder, a “reverse inquiry,” on its own, cannot give any regulatory protection in South Africa if any marketing takes place there.
The FSPs without a FAIS license should also avoid contacting prospective clients by phone or email, and they should generally avoid meeting with clients in person in South Africa. If a foreign FSP without a FAIS license receives monies from South African clients, they should deposit them in an account outside South Africa.
Financial Services: –
Two options are available to foreign financial service providers (FSP South Africa) who want to sell financial goods in South Africa. It can get a license from FAIS. To meet the “fit and appropriate requirements,” an applicant must apply to the Registrar, along with a list of required documents. Terms and restrictions may accompany the acceptance of a request. There is, nevertheless, the possibility of a lengthy registration process.Foreign financial service providers (FSPs) could also partner with an FSP South Africa licensee. As opposed to applying for a license, this method may be faster. However, this strategy isn’t without its drawbacks.