# Task 1 QC2

https://www.youtube.com/watch?v=0zuRGIfzDos

[00:03] task one
[00:04] task one talks about demonstrating an
[00:06] talks about demonstrating an understanding of the phase act
[00:08] understanding of the phase act as a regulatory framework
[00:14] task one has four qualifying criteria
[00:18] task one has four qualifying criteria let's look at task one qualifying
[00:20] let's look at task one qualifying criteria two
[00:23] criteria two provide an overview of the financial
[00:25] provide an overview of the financial services and different types of
[00:27] services and different types of financial products
[00:28] financial products a representative can deal with
[00:32] we now know that the phase act regulates
[00:35] we now know that the phase act regulates the business of
[00:36] the business of fsps and the conducts of its kis and
[00:39] fsps and the conducts of its kis and rapes
[00:40] rapes who give advice and or provide
[00:42] who give advice and or provide intermediary services
[00:44] intermediary services to clients let's explain in more detail
[00:48] to clients let's explain in more detail what advice is and what intermediary
[00:51] what advice is and what intermediary service is
[00:54] service is we will start with advice
[00:58] we will start with advice advice is essentially when an fsp
[01:01] advice is essentially when an fsp its ki and representatives who are
[01:05] its ki and representatives who are agents and brokers give financial advice.
[01:08] agents and brokers give financial advice to clients.
[01:10] to clients when we talk about advice in terms of.
[01:12] when we talk about advice in terms of the phase act.
[01:13] the phase act we also refer to one.
[01:17] we also refer to one a recommendation on a financial product.
[01:21] a recommendation on a financial product two guidance on a financial product.
[01:26] two guidance on a financial product and three a proposal of a financial.
[01:29] and three a proposal of a financial product to a client.
[01:30] product to a client that results in a client making an.
[01:33] that results in a client making an informed decision.
[01:36] a financial decision made by a client.
[01:39] a financial decision made by a client can either be a decision to.
[01:42] can either be a decision to buy or invest in a financial product.
[01:46] buy or invest in a financial product or change replace or cancel.
[01:50] or change replace or cancel a financial product the overall.
[01:53] a financial product the overall principle here.
[01:54] principle here is this where a client makes a decision.
[01:58] is this where a client makes a decision that changes their financial position.
[02:00] that changes their financial position based on an fsp's recommendation.
[02:03] based on an fsp's recommendation guidance.
[02:04] guidance or proposal then that input from an fsp.
[02:08] or proposal then that input from an fsp is considered to be advised under the.
[02:10] is considered to be advised under the phase act.
[02:14] intermediary service on the other hand.
[02:17] intermediary service on the other hand does not involve giving advice to a.
[02:19] does not involve giving advice to a client.
[02:21] client rather it's any service either than.
[02:24] rather it's any service either than giving advice.
[02:25] giving advice performed by an fsp ki.
[02:28] performed by an fsp ki or rip on behalf of a client or a.
[02:31] or rip on behalf of a client or a product supplier.
[02:33] product supplier this service still needs to be from a.
[02:35] this service still needs to be from a client's instruction.
[02:37] client's instruction after making an informed decision.
[02:41] here is an example to help you.
[02:43] here is an example to help you understand the difference between advice.
[02:45] understand the difference between advice and intermediary service.
[02:48] and intermediary service think of intermediary service as a.
[02:50] think of intermediary service as a client.
[02:52] client wanting to buy a financial product and.
[02:54] wanting to buy a financial product and needing help.
[02:55] needing help to complete the transaction.
[02:58] to complete the transaction maybe a client wants to buy listed.
[03:01] maybe a client wants to buy listed shares.
[03:01] shares and also rip of an fsp to buy.
[03:05] and also rip of an fsp to buy on their behalf here the client.
[03:08] on their behalf here the client is acting on his or her own free will
[03:11] is acting on his or her own free will and
[03:11] and only requires a rep to process the
[03:14] only requires a rep to process the transaction further
[03:16] transaction further intermediary service involves a service
[03:19] intermediary service involves a service that results in the following
[03:21] that results in the following 1. dealing in financial products on
[03:25] 1. dealing in financial products on behalf of a client
[03:27] behalf of a client for example buying selling
[03:31] for example buying selling managing keeping safe or servicing
[03:35] managing keeping safe or servicing a financial product two
[03:39] a financial product two collecting premiums from clients that
[03:41] collecting premiums from clients that are related to a financial products
[03:45] are related to a financial products and three receiving
[03:48] and three receiving submitting processing or settling claims
[03:52] submitting processing or settling claims on behalf of a product supplier from a
[03:55] on behalf of a product supplier from a client
[03:59] so you see if an
[04:02] so you see if an fsp ki or rep recommends
[04:06] fsp ki or rep recommends guides or proposes to a client to buy a
[04:09] guides or proposes to a client to buy a financial product.
[04:10] financial product like shares that would fall under advice.
[04:14] like shares that would fall under advice but if a client wants to buy a financial.
[04:17] but if a client wants to buy a financial product.
[04:18] product out of his or her own free will and.
[04:21] out of his or her own free will and needs an fsp.
[04:22] needs an fsp ki or rape to help finalize the.
[04:25] ki or rape to help finalize the transaction.
[04:26] transaction then that would fall under intermediary.
[04:29] then that would fall under intermediary service.
[04:36] the giving of advice and or rendering of.
[04:39] the giving of advice and or rendering of intermediary service.
[04:40] intermediary service may lead to the conclusion of a.
[04:42] may lead to the conclusion of a transaction for a particular financial.
[04:45] transaction for a particular financial product.
[04:46] product let us now talk about the different.
[04:48] let us now talk about the different types of financial products.
[04:50] types of financial products as classified under the phase act.
[04:54] as classified under the phase act these are the products that an fsp ki.
[04:58] these are the products that an fsp ki and rep may render financial services on.
[05:03] and rep may render financial services on let us start with securities and.
[05:05] let us start with securities and instruments.
[05:08] when we talk about securities and.
[05:10] when we talk about securities and instruments we refer to products like instruments we refer to products like shares in a company which are also shares in a company which are also called equities debentures money market instruments debentures money market instruments warrants options and other similar warrants options and other similar instruments derivatives and bonds derivatives and bonds
[05:36] these terms may sound complicated but these terms may sound complicated but what you need to remember what you need to remember is that they basically give the buyer a claim or a choice to potential financial claim or a choice to potential financial gains gains that are linked with those securities that are linked with those securities and instruments and instruments
[05:51] for example when a client buys shares in for example when a client buys shares in a company a company he or she receives a confirmation in a he or she receives a confirmation in a form of a share certificate form of a share certificate which confirms their rights as an owner which confirms their rights as an owner or shareholder
[06:03] but unlike when you buy a shareholder but unlike when you buy a house house or a car and you get something that you or a car and you get something that you can physically touch
[06:11] can physically touch when you buy shares or debentures or one of the other securities and instruments.
[06:17] you don't receive a physical product that you can touch.
[06:21] you receive a confirmation of your right as an owner or shareholder.
[06:24] the potential gains on these types of financial products are dividends for shares and interest for debentures and similar interest earning products.
[06:41] next we have participatory interest or one or more collective investment schemes or unit trusts.
[06:50] with unit trusts clients monies are pulled together to buy different types of investments that are held as a unit.
[06:56] each client that invests will share the risks and rewards of that investment in the proportion of his or hershey.
[07:09] the unit trusts are managed by fsps.
[07:12] The unit trusts are managed by FSPS called discretionary.
[07:13] Called discretionary FSPS or fund managers.
[07:18] Next we have long-term and short-term.
[07:21] Next we have long-term and short-term insurance products.
[07:23] Insurance products, long-term insurance products cover lasting events in life.
[07:26] Long-term insurance products cover lasting events in life like death, retirement, and disability.
[07:27] Like death, retirement, and disability.
[07:32] A good example of a long-term insurance product is a life cover that pays out when a client passes away, retires, or becomes disabled and can no longer work.
[07:34] A good example of a long-term insurance product.
[07:35] Product is a life cover that pays out when a client passes away, retires, or becomes disabled and can no longer work.
[07:37] Is a life cover that pays out when a client passes away, retires, or becomes disabled and can no longer work.
[07:39] Client passes away, retires, or becomes disabled and can no longer work.
[07:42] Retires or becomes disabled and can no longer work.
[07:44] Longer work.
[07:44] Short-term insurance products on the other hand cover personal positions or assets on a short-term base such as a car or a house and its contents.
[07:47] Short-term insurance products on the other hand.
[07:48] Other hand cover personal positions or assets.
[07:51] Cover personal positions or assets on a short-term base such as a car or a house and its contents.
[07:54] On a short-term base such as a car or a house and its contents.
[07:55] House and its contents.
[07:59] And its contents.
[07:59] Next we have pension funds and friendly societies as financial products.
[08:02] Next we have pension funds and friendly societies.
[08:03] Societies as financial products.
[08:03] A pension fund is basically a fund that is set up to cater for employees for when they reach their retirement.
[08:07] As financial products.
[08:07] A pension fund is basically a fund that is set up to cater for employees for when they reach their retirement.
[08:08] Basically a fund that is set up to cater for employees for when they reach their retirement.
[08:11] That is set up to cater for employees for when they reach their retirement.
[08:13] for when they reach their retirement age a client would contribute towards this fund via his or her employer through deductions from their salary.
[08:23] then when the client retires they can access the money that they saved.
[08:29] this will be the retirement income.
[08:32] there are several types of retirement funds such as pension funds, provident funds and retirement annuities.
[08:40] or ras for short a friendly society also commonly known as a burial society is like a stock file with its operations managed by a board of trustees.
[08:56] next we have a financial product called foreign currency denominated investment also known as a foreign financial product or foreign financial instrument.
[09:08] a good example is when an fsp makes an arrangement on behalf of a client to buy a product.
[09:15] on behalf of a client to buy a product or investment
[09:16] or investment that is available outside of the
[09:18] that is available outside of the republic of south africa
[09:21] republic of south africa in this case south african currency
[09:25] in this case south african currency will have to be converted into a
[09:27] will have to be converted into a currency
[09:28] currency of the country where the investment is
[09:31] of the country where the investment is like the british pound or u.s dollar
[09:35] like the british pound or u.s dollar another example is where a client buys
[09:38] another example is where a client buys shares of a foreign company
[09:40] shares of a foreign company using foreign currency
[09:45] next we have long-term deposits and
[09:48] next we have long-term deposits and short-term deposits
[09:49] short-term deposits as defined in the banks act
[09:53] as defined in the banks act these have been classified as financial
[09:55] these have been classified as financial products
[09:57] products banks perform many functions one of
[10:00] banks perform many functions one of which is receiving deposits from clients
[10:02] which is receiving deposits from clients on a long-term period that is a period
[10:05] on a long-term period that is a period of more than 12 months or a short-term
[10:08] of more than 12 months or a short-term period
[10:09] period that is a period of less than 12 months
[10:13] that is a period of less than 12 months this function of receiving deposits
[10:16] this function of receiving deposits falls within the phase act
[10:18] falls within the phase act another function that a bank performs is
[10:21] another function that a bank performs is providing loans
[10:22] providing loans and other forms of credit please note
[10:26] and other forms of credit please note that
[10:27] that this function does not fall under the
[10:29] this function does not fall under the phase act
[10:30] phase act but the national credit act
[10:35] next we have health service benefits
[10:38] next we have health service benefits that are provided under medical aid
[10:40] that are provided under medical aid schemes
[10:43] schemes please note that a medical aid is a form
[10:45] please note that a medical aid is a form of insurance
[10:47] of insurance where a client pays a monthly
[10:48] where a client pays a monthly contribution or a premium
[10:51] contribution or a premium in exchange for financial cover of
[10:54] in exchange for financial cover of medical costs
[10:55] medical costs at an unforeseen future date
[10:58] at an unforeseen future date this is especially important if you want
[11:01] this is especially important if you want to access private medical
[11:03] to access private medical care
[11:07] having learned about different financial
[11:09] having learned about different financial products as defined in the phase act
[11:12] products as defined in the phase act we then turn our focus on licensed
[11:14] we then turn our focus on licensed categories
[11:17] categories the license categories are covered in the license categories are covered in more detail more detail in the videos about licenses.
[11:23] in the videos about licenses for now let's mention the different types of license categories.
[11:29] types of license categories there are five licensed categories.
[11:32] there are five licensed categories category 1 is for fsps who only give advice.
[11:36] advice and render financial services this is for fsps that are not in specialist categories of 2 2a 3 or 4.
[11:48] if the business activities of an fsp do not fall under one of the specialist categories then category 1 license authorization will apply.
[12:03] category 2 is for discretionary fsps.
[12:07] category 2 is for discretionary fsps also known as fund or investment managers.
[12:11] managers these fsps invest funds on behalf of clients.
[12:14] these fsps invest funds on behalf of clients at their own discretion this can be
[12:19] at their own discretion this can be locally or outside of the republic of south africa.
[12:23] in this category there is no bulking or pulling of client funds.
[12:31] category 2a is for hedge fund fsps.
[12:35] these fsps function like the discretionary fsps but the funds that they invest are pooled funds.
[12:45] category 3 is for administrative fsps.
[12:48] these fsps buy and sell financial products in bulk and reconcile their books on a daily basis.
[12:59] they do this for their clients who can be either category to fsps or natural persons.
[13:08] category 4 is for administration functions and are only considered for intermediary services.
[13:17] services they intermediate between the insurance.
[13:19] They intermediate between the insurance companies.
[13:23] And the assistance business fsps like funeral parlors and undertakers.
[13:27] Funeral parlors and undertakers, they always have a binder agreement with the insurance company.
[13:31] The insurance company to perform the intermediary function.
[13:34] To perform the intermediary function.
[13:38] Please note that all categories except for category 1 are specialist categories or specialize in the functions they offer.
[13:46] The license categories mentioned have product sub categories.
[13:51] Product sub categories.
[13:54] This means an fsp that applies for a phase license would also have to apply for a specific product subcategory.
[14:04] We hope you enjoyed the video and learnt a lot.
[14:07] A lot.
[14:09] Please make sure to check out our other ori videos.
[14:35] you