The APBCO Conflict of Interest Policy
Introduction
In terms of the FAIS Act (Act 37 of 2002) as amended our company is required to develop and maintain a Conflict of Interest Policy to which all members of the company must comply with. Our Policy sets out the mechanisms in place to deal with the conflicts of interest. Our Conflict of Interest Policy is summarized in the section.
The purpose of this policy
Our company forms part of an Association of Companies under the Brand name APBCO. The broking companies within this association are Authorized Financial Services Providers providing advice and intermediary services to our clients on short term insurance products and is therefore potentially exposed to conflicts of interest. The purpose of this policy is to set out the process of how our company will comply with the requirements on conflicts of interest as set out by law.
What is a Conflict of Interest?
The FAIS Act defines a Conflict of Interest as any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client,
- influence the objective performance of his, her or its obligations to that client; or
- prevent a provider or representative from rendering an unbiased and fair financial service to that client, or from acting in the interests of that client, including, but not limited to:
- a financial interest;
- an ownership interest; or
- any relationship with a third party
Our Objectives with this Policy
Our company, including our Management and Representatives will seek to avoid any conflict or potential conflict of interest which may arise from conducting our business. Where we are unable to avoid such conflict of interest we will take all reasonable steps to mitigate such conflict of interest and will also disclose such conflict of interest to all our clients where required.
Identification of Conflicts
Our company provides a range of short term insurance products to our clients. Due to the nature of our business we are faced with conflicts. All employees, including Management and the company’s Compliance Officer are responsible for identifying specific instances of conflict and are required to notify their manager of any conflicts (or potential conflict) of interest they become aware of. The manager will then inform the Compliance Officer who will investigate the matter and will advise the manager on the implications of the conflict and how the conflict should be managed.
Managing Conflicts of Interest
If a conflict of interest exists or occurs it needs to be managed appropriately and adequately in order to mitigate the impact of such conflict. Once a conflict has been identified, a director of the company must assess the conflict and establish whether the conflict is actual or only perceived. If the conflict is actual, management will after consultation with the Compliance Officer decide whether it is viable and acceptable to proceed with the transaction or whether to decline the transaction. Where the company cannot avoid the conflict of interest, the company will:
- Where possible mitigate the conflict of interest;
- Disclose such conflicts to all relevant parties where required by law;
- Provide reasons why the conflict cannot be avoided;
- Keep record of the conflicts of interests.
All staff members were informed of our Conflict of Interest Policy and have received a copy thereof. Where necessary, staff members received guidance and training in these procedures.
Disclosure of possible conflict of interest
Our company wishes to disclose the following:
Both APBCO and Legacy Underwriting Managers lease office space in certain areas in the same building. The purpose of this arrangement is to enable both parties to provide clients with more effective service.
APBCO and Legacy Underwriting Managers utilise the same Human Resources, IT and Financial Organisation to perform administration functions which include Reception, Switchboard, Accounting Services, IT and Human Resources.
Furthermore it is to be noted that APBCO and Legacy Underwriting Managers employ a director who serves on both the boards of directors. This director acts as a mentor for both boards of directors.
We are acting for different clients.
We are involved with several associates, product suppliers, distribution channels and other third parties in the rendering of our financial services to clients.
Remuneration
Our company and its representatives receive only the following financial interests from financial services providers / suppliers and other third parties:
- Commission authorized under the Short-term Insurance Act, 1998
- Fees authorized under the Short-term Insurance Act, 1998 which fees are reasonably commensurate to the service being rendered.
Our company and its representatives however are allowed to also receive the following financial interests from financial services providers / suppliers and other third parties:
- Fees for the rendering of a financial service in respect of which commission or fees (as stated above) is not paid, if these fees are specially agreed to by a client in writing and may be stopped at the discretion of that client.
- Fees or remuneration for rendering services to third parties, which fees or remuneration are reasonably commensurate to the services being rendered to such parties.
- Subject to any other law, any immaterial financial interest (R1000.00 rule)
- A financial interest, not referred to above for which a consideration, fair value or remuneration that is reasonably commensurate to the value of the financial interest, is paid by that provider or representative at the time of receipt thereof.
Our company may not offer any financial interest to any of our representatives for:
- Giving preference to the quantity of business secured for the company to the exclusion of the quality of the service rendered to clients.
- Giving preference to a specific short-term insurance supplier, where the representative may recommend more than one short term insurance supplier to a client.
- Giving preference to a specific product of a short-term insurance supplier, where the representative may recommend more than one product of that short term insurance supplier to a client.
Non-Compliance with the Conflict of Interest Policy
Any staff member that does not comply with this policy will be subjected to disciplinary action as dictated by the FAIS Act and the company‘s internal Code of Conduct. The action that resulted in the non-compliance will be noted on the Non-Compliance Register and corrective measures will be investigated and where possible be implemented to prevent similar non-compliance in future.
The associated companies who provide financial services are all licensed as Authorised Financial Services Providers with the Financial Services Board. Further information with regards to these relationships are available on request to all parties who have a legal right to this information. Any requests for this information must be directed to the Board of Directors.
