In terms of clause 3 and 3A of the General Code of Conduct (GCoC) for Financial Services Providers (FSPs) all FSPs are required to have a Conflict of Interest Management Policy. This Policy is intended to align with both the Imperial Group’s commitment to conducting ethical and honest business at all times as well as the GCoC. This policy therefore binds all directors and employees of THE BUSINESS and is incorporated into the terms and conditions of all employees’ contracts of employment. This policy regulates processes and procedures in accordance with existing legal duties that an employee owes to his or her clients and employer. This policy is required to be adopted by the Directors before it can take effect.
The following items are covered in this document:
2. General Disclosure Requirements
3. Fees, Commissions and Structures
4. Mechanisms for Identification of Conflicts of Interest
5. Measures to Mitigate Conflicts of Interest
6. Processes, Procedures and Internal Controls to Facilitate Compliance
7. Consequences of Non-compliance
8. Type of and basis on which a representative will qualify for a financial interest
9. GCoC Required Disclosures
1.1 "associate" –
(a) in relation to a natural person, means –
(i) a person who is recognised as the spouse, life partner or civil union partner of a person;
(ii) a child of that person, including a stepchild, adopted child and a child born out of wedlock;
(iii) a parent or stepparent of that person;
(iv) a person in respect of which that person is recognised in law or appointed by a Court as the person legally responsible for managing the affairs of or meeting the daily care needs of the first mentioned person;
(v) a person who is the spouse, life partner or civil union partner of a person referred to in subparagraphs (ii) to (iv);
(vi) a person who is in a commercial partnership with that person;
(b) in relation to a juristic person –
(i) which is a company, means any subsidiary or holding company of that company, any other subsidiary of that holding company and any other company of which that holding company is a subsidiary;
(ii) which is a close corporation registered under the Close Corporations Act, 1984 (Act No. 69 of 1984), means any member thereof as defined in section 1 of that Act;
(iii) which is not a company or a close corporation as referred to in subparagraphs (i) or (ii), means another juristic person which would have been a subsidiary or holding company of the first-mentioned juristic person –
(aa) had such first-mentioned juristic person been a company; or (bb) in the case where that other juristic person, too, is not a company, had both the first-mentioned juristic person and that other juristic person been a company;
(iv) means any person in accordance with whose directions or instructions the board of directors of or, in the case where such juristic person is not a company, the governing body of such juristic person is accustomed to act;
(c) in relation to any person –
(i) means any juristic person of which the board of directors or, in the case where such juristic person is not a company, of which the governing body is accustomed to act in accordance with the directions or instructions of the person first-mentioned in this paragraph;
(ii) includes any trust controlled or administered by that person.
1.2 "conflict of interest" means 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, –
(a) influence the objective exercise of his, her or its obligations to a client; or
(b) prevent a provider or representative from rendering an unbiased and fair financial service, or from acting in the interests of a client, including, but not limited to –
(i) a financial interest;
(ii) an ownership interest;
(iii) any relationship with a third party;
1.3 "financial interest" means any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, training, sponsorship, other incentive or valuable consideration, other than –
(a) An ownership interest;
(b) Training, that is not exclusively available to a selected group of providers or representatives, on –
(i) Products and legal matters relating to those products;
(ii) General financial industry information;
(iii) Specialised technological systems of a third party necessary for the rendering of a financial service; but excluding travel and accommodation associated with that training;
1.4 "immaterial financial interest" means any financial interest with a determinable monetary value, the aggregate of which does not exceed R1 000 in any calendar year from the same third party in that calendar year received by –
(a) A representative for that representative’s direct benefit;
(b) A provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives;
1.5 "ownership interest" means –
(a) any equity or proprietary interest, for which fair value was paid by the owner at the time of the acquisition, other than equity or a proprietary interest held as an approved nominee on behalf of another person; and
(b) includes any dividend, profit share or similar benefit derived from that equity or ownership interest;
1.6 "third party" means –
(a) a product supplier;
(b) another provider;
(c) an associate of a product supplier or a provider;
(d) a distribution channel;
(e) any person who in terms of an agreement or arrangement with a person referred to in paragraphs (a) to (d) above provides a financial interest to a provider or its representatives
2.1 Employees must communicate and disclose any conflict of interest that could impair or be perceived to impair the employee‟s ability to act with integrity or objectivity in his or her role at THE BUSINESS.
2.2 Disclosures must be made on the prescribed form set out in Annexure 1 to this policy.
2.3 Employees must submit their disclosures to their particular Line Manager who must forward the disclosures to their Director who will consider the disclosures and decide on their permissibility.
2.4 Any Conflict of Interest that could potentially affect a client negatively, once assessed by a Line Manager or Director, must at the earliest reasonable opportunity be disclosed to a client, including:
(a) the measures taken, in accordance with this conflict of interest policy to avoid or mitigate the conflict;
(b) any ownership interest or financial interest, other than an immaterial financial interest, that THE BUSINESS or its representative may be or become eligible for;
(c) the nature of any relationship or arrangement with a third party that gives rise to a conflict of interest, in sufficient detail to a client to enable the client to understand the exact nature of the relationship or arrangement and the conflict of interest;
2.5 THE BUSINESS must inform its clients of the existence of this Conflict of Interest Management Policy and how it may be accessed.
3.1. THE BUSINESS, its associates or representatives may only receive or offer the following financial interest from or to a third party –
(a) commission authorised under the Long-term Insurance Act, 1998 (Act No. 52 of 1998) or the Short-term Insurance Act, 1998 (Act No. 53 of 1998);
(b) commission authorised under the Medical Schemes Act, 1998 (Act No. 131 of 1998);
(c) fees authorised under the Long-term Insurance Act, 1998 (Act No. 52 of 1998) or the Short-term Insurance Act, 1998 (Act No. 53 of 1998) or the Medical Schemes Act, 1998 (Act No. 131 of 1998), if those fees are reasonably commensurate to a service being rendered;
(d) fees for the rendering of a financial service in respect of which commission referred to in subparagraph (a) or (b) or (c) is not paid, if those fees –
(i) are specifically agreed to by a client in writing; and
(ii) may be stopped at the discretion of that client;
(e) fees for the rendering of a service to a third party, which fees are reasonably commensurate to the services being rendered;
(f) subject to any other law, an immaterial financial interest; and
(g) a financial interest, not referred to under subparagraphs (a) to (f), 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.
3.2 THE BUSINESS may not offer any financial interest to a representative for –
(a) giving preference to only the quantity of business secured for THE BUSINESS to the exclusion of the quality of the service rendered to clients; or
(b) giving preference to a specific product supplier, where a representative may recommend more than one product supplier to a client; or
(c) giving preference to a specific product of a product supplier, where a representative may recommend more than one product of that product supplier to a client.
3.3 Commission and target structures are constantly being updated to comply with the above requirements so as to ensure that clients receive unbiased advice when Financial Services are rendered in order to allow for a free and fair purchasing decision.
3.4 Commission will not be paid solely on any criteria referred to in clause 3.2 above as factors such as Quality and Compliance will be taken into account and weighted accordingly
4.1. A conflict of interest may arise out of the employee’s relationship with a third party, or from an ownership interest the employee has with a third party or from a financial interest the employee has or may have in a third party. A financial interest includes:
(b) a cash equivalent,
(c) a voucher,
(d) a gift,
(e) a service,
(f) an advantage,
(g) a benefit,
(h) a discount,
(i) domestic or foreign travel,
(m) any other incentive,
(n) valuable consideration
4.2. The receipt or the offer of such is prohibited where this interferes with or may interfere with the employee’s ability to render a financial service to a client in an unfair, biased or subjective manner.
4.3. The following, when directed to the General Public, are not deemed to be areas in which COIs will be created
(a) Advertising and Marketing
(b) Brand awareness and Brand building activity
4.4. The following, when directed to employees, are not deemed to be areas in which COIs will be created
(a) Training (but excluding travel and accommodation associated with the training)
(b) Corporate social responsibility (CSI) activity
(c) Internal staff (employee) recognition awards
(d) Enterprise Development
4.5.To adequately identify conflicts of interest, THE BUSINESS undertakes to use its best efforts to identify all real and potential conflicts in a timeous manner by:
(a) Making each employee individually responsible for identifying specific instances of conflict of interest within his or her sphere of activity and is requiring him or her to notify their Line Manager immediately of any conflicts they become aware of.
(b) Maintaining a COI Risk Matrix of potential conflict risks, taking into consideration a variety of sources based on the complexity of the business. The COI Risk Matrix is updated regularly and consists of several areas, ratings, mitigation strategies and task owners.
5.1. In terms of clause 2 above, any internal conflict of interest that is identified will be disclosed to the client in a manner that is easy to understand.
In the event that it is not entirely clear that a conflict of interest exists, the employee with the potential conflict shall disclose this potential conflict of interest to his or her Line Manager or Director for a determination. Such determination will be documented.
5.3. In terms of clause 3 above, payment and commission structures have been amended to ensure that the representative gives the client full disclosure and unbiased advice at all times.
5.4. In terms of clause 4 above, real and potential conflicts of interest are identified, listed and dealt with on the COI Risk Matrix with controls put in place to mitigate the effect of each risk.
5.5. Directors and Senior Management are required to declare any conflict of interest in terms of Corporate Governance requirements.
5.6. The giving or receiving of modest items of appreciation as part of an expression of business courtesy unrelated to a specific financial service or transaction is permitted subject to the giving or receiving of such business courtesies being recorded in a gift register.
5.7. The gift register is regularly reviewed to ensure that the nature and extent of business courtesies received or given does not create a climate in which policyholders‟ interests are prejudiced.
5.8. It is necessary for an employee to record both the receipt and the giving of a gift/business courtesy.
5.9. An employee who has an interest in an FSP that transacts business with THE BUSINESS needs to disclose this interest. The disclosure of the interest does not necessarily „cure‟ the conflict and the Group may, at its discretion, require further steps from the employee.
5.10. The failure to accurately and timeously complete the gift register is an offence and could lead to dismissal.
5.11. THE BUSINESS strictly adheres to the Imperial Holdings Limited Gifts policy (both giving and receiving)
5.12. All risks identified should ideally be avoided, however, where this cannot be done, reasons will be listed on the COI Risk Matrix and where those affect the client, full disclosure will be made at the earliest reasonable opportunity.
5.13. It is a condition of employment that all employees –
(a) upon joining THE BUSINESS, who have an interest in any other business, must declare it to the Directors.
(b) may be required to cease any activity or sell any interests if the Directors believe it to be in conflict with the interests of THE BUSINESS or that it may negatively impact on the ability of the employee to perform in accordance with his or her contract of employment
(c) assign to THE BUSINESS, without charge, all claims and rights to any copyright, inventions, improvements, improvements to inventions, photographs, writings and the like which may now or in the future vest with the employee in any work of the employee, arising out of or in the scope of employment with THE BUSINESS,
(d) grant THE BUSINESS full right to alter and adapt such work.
(e) at the request and expense of THE BUSINESS do all such further acts and sign such further documents as may be necessary for purpose of confirming the vesting of any such copyrights, invention or improvement to an invention, photographs or writings in the name of THE BUSINESS or its nominee.
6.1. THE BUSINESS has an in-house Compliance Department that will provide the framework to ensure that this policy remains up to date and is widely distributed.
6.2. Using the COI Risk Matrix, identified risk areas will be managed by Risk Owners at all times.
6.3. The Compliance Department will monitor adherence to this policy and provide feedback to the Executive Committee and the Risk and Audit Committees.
6.4. Group Internal Audit will assess the level of THE BUSINESS’s Compliance with this policy during its annual audits.
7.1. If a conflict of interest arises and it is found that an employee has not disclosed the conflict, that employee will be charged under the Disciplinary Code.
7.2. Should a conflict arise in terms of clause 7.1 above, the level of the conflict will be assessed and the client informed in terms of clause 2.4 above.
7.3. For any detected conflict of interest that may have negatively influenced the client, THE BUSINESS will offer the client the option of cancellation of any product that may have been purchased with a full refund.
8.1. THE BUSINESS or its employees may only accept a financial interest if:
(a) It appears on the list of financial interests as set out in the definition at 1.3 above
(b) The interest is related to section 3A of Board Notice 58 of 2010
8.2. THE BUSINESS or its employees may only accept an immaterial financial interest if:
(a) The interest has a financial value of less than R1000
(b) The total value of interests received from a single provider does not exceed R1000 per annum
(c) This limit applies if the expense is for the direct benefit of the representative or FSP. If the benefit is for the direct benefit of the FSP, however, then no further benefit may be paid to that FSP or any representative of that FSP once the R1000 per annum limit is reached.
(d) It adheres to the requirements of this policy as well as
(e) The Imperial Holdings Limited Gift policy
(f) All immaterial financial interests are declared on a gift register (given & received),
(g) All real and perceived conflicts of interest are disclosed
8.3. THE BUSINESS offers its representatives, clients and associates financial interests as set out in the relevant
9.1. The juristic associates of THE BUSINESS are all the companies that form part of the Imperial Holdings Limited group of companies. A list of which is available at www.imperial.co.za
9.2. THE BUSINESS is a fully owned subsidiary of Associated Motor Holdings (Pty) Ltd which is in turn a 90% subsidiary of Imperial Holdings Limited.
Liquidcapital is a fully owned subsidiary of Associated Motor Holdings (Pty) Ltd which is in turn a 90% subsidiary of Imperial Holdings Limited, a JSE Listed Company. Details of all Imperial subsidiaries, JVs and associated companies can be found at www.imperial.co.za
THE BUSINESS holds an ownership interest in the following third parties: N/A
FINANCIAL INTERESTS OFFERED
The business offers the following financial interests:
To Third Parties: N/A
To Employees: Commission based on quality and quantity of work in terms of pre-set and defined targets, incentives for specified targets achieved, payment of travel and expenses for training, awards and rewards at Quarterly and Annual awards evenings.