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FAIS Act FAIS Act and Subordinate Legislation
Thuli is employed by an FSP. She never recommends products. Her work is to collect clients' monthly premiums, pay them over to the insurer, and receive and submit clients' claims. How does the FAIS Act classify her work?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) It is an intermediary service, so she renders a financial service and must be appointed as a representative.Correct
- b) It is an administrative function, so she falls outside the Act because she exercises no judgement for clients.
- c) It is an intermediary service, but she needs no appointment because only persons who give advice are representatives.
- d) It is advice, because handling premiums and claims implies a recommendation to keep the policy in force.
Why this is the answer
An intermediary service is any act other than advice performed for a client or product supplier, expressly including collecting or accounting for premiums and receiving, submitting or processing claims. That is a financial service, so the person rendering it for the FSP is a representative and must be appointed and registered. The clerical exclusion does not cover these listed acts, and a representative need not give advice.
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