What is an Authorised FSP? (Financial Service Provider).
Even though we may not know it, many of our financial deals may pass through the hands of these people.
- A person or company that gives advice on financial plans.
- Someone who sells financial products on behalf of a third party.
- An authorised party that takes care of finance for a third party.
- An adviser on a deal, even though they are not directly selling it.
- A middleman between the issuers of a financial deal and the client.
An authorised FSP deals with Advice on Finance
How does the FAIS Act Define Advice?
Advising on anything that has to do with finance. This means more than just the sale of a financial product. For example, advice on which investment to take or how to manage your bank charges.
It also counts if the advisor is not actually involved in the sale itself. A client may get advice to buy stocks, or open a fixed deposit. The client considers this then makes the arrangements elsewhere.
What is an Intermediary Service?
An intermediary (or middleman) becomes the advisor between the company selling the product, and the supplier. As when a financial planner sells funeral cover. An insurer underwrites and manages the policy. Once the policy is bought, the go between has no further dealings with it.
In other words you don’t deal directly with the company that underwrites your policy until you need to claim.
An Intermediary service Continued
The act goes on to further define the service as follows –
Any action where the person or company is acting on the client’s behalf and dealing with the company for them. This applies even when no advice is provided.
A person Counts as a Middleman when They –
- Hold a financial deal for a client. As in keeping share certificates for the client, for example.
- Collect premiums for a particular client.
- Help clients with claims – whether assisting them to make a claim, submitting the claim on the client’s behalf or processing the claim themselves via the supplier.
- Manage a financial product, such as buying or selling shares.
- Administer financial instruments.
- Update and maintain a financial deal, like naming the beneficiary, or getting banking details updated.
Wrapping it All up
As you can see from the above, an FSP as defined in the FAIS Act is a much broader classification than most people would think.
Even when no advice is given, if the person is involved in any way with maintaining or administering a financial instrument, FAIS is likely to apply.