POLICY CONTEXT
Introduction
In terms of Section 3A(2) every provider, other than a representative, must adopt, maintain and implement a conflict of interest management policy which complies with the provisions of the Financial Advisory and Intermediary Services Act, 37 of 2002.
In terms of the General Code of Conduct a provider and a representative must avoid, and where this is not possible, mitigate any conflict of interest between the provider and a client, or a representative of the provider and his, her or its clients.
Truzo and its representatives are committed towards acting within the best interests of our clients and to avoid all conflict of interests in relation to the provision of financial services. Where we are unable to avoid a conflict of interest, we will take all necessary precautions to ensure that any actual or potential conflict of interest is mitigated and adequately disclosed to our clients.
In order to ensure the continued demonstration of our commitment, management has adopted a Conflict of Interest Management policy to provide for the effective management of any actual or potential conflicts of interest that may arise wholly or partially, in relation to the provision of financial services.
The purpose of the Conflict of Interest Management Policy is therefore to:
- establish internal controls and mechanisms towards the identification of conflicts of interest;
- establish measures to avoid conflicts of interest, and where avoidance is not possible, to provide the
reasons therefore; - establish measures to ensure that any unavoidable conflicts of interest are mitigated;
- establish measures to ensure the proper disclosure of any conflicts of interest;
- establish processes, procedures and internal controls to facilitate compliance with the policy ; and
- communicate the consequences of non-compliance with the policy.
Scope
In Scope
This policy applies to:
- Truzo Ltd (UK registered) and all its subsidiaries, of which Truzo (Pty) Ltd is part of, collectively referred to as “Truzo”.
- All employees and workers of Truzo. For the purposes of this document, “employees” includes permanent employees and fixed term employees; “workers” includes contingency workers (also referred to as agency workers) and secondees to Truzo from a third party, irrespective of their location, function, and grade or standing.
Out of Scope
This policy does not apply to:
- Any entity in which Truzo has any interest and which is a non-consolidated entity, or to any employee of any such entity.
DEFINITIONS
Conflict of Interest
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:
- 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 interest of that client, including but not limited to:- a financial interest;
- an ownership interest;
- any relationship with a third party.
Financial Interest
Financial Interest means any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration, other than:
- an ownership interest;
- training, that is not exclusively available to a selected group of providers or representatives, on:
- products and legal matters relating to those products;
- general financial and industry information;
- specialised technological systems of a third party necessary for the rendering of a financial service,
but excluding travel and accommodation associated with that training.
- a recognised qualifying enterprise development contribution to a qualifying beneficiary by a provider
that is a measured entity.
Immaterial Financial Interest
Immaterial Financial Interest means any financial interest with a determinable monetary value, the aggregate of which does not exceed £50 / R1 000 in any calendar year from the same third party in that calendar year received by:
- a provider who is a sole proprietor; or
- a representative for that representative’s direct benefit;
- a provider, who for its benefit or that of some or all of its representatives, aggregates the
immaterial financial interest paid to its representatives.
Ownership Interest
Ownership Interest means
- any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition,
other than equity or a proprietary interest held as an approved nominee on behalf of another person,
and - includes any dividend, profit share or similar benefit derived from that equity or ownership interest.
Third Party
Third Party means
- a product supplier;
- a service provider;
- an associate of a product supplier or a service provider;
- a distribution channel; or
- any person who in terms of an agreement or arrangement with a person referred to above provides a
financial interest to a provider or its representatives.
Associate
Associate means
- in relation to a natural person:
- a person who is recognised in law or the tenets of religion as the spouse, life partner, or civil union
partner of that person; - a child of that person, including a stepchild, adopted child and a child born out of wedlock;
- a parent or stepparent of that person;
- 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; - a person who is a spouse, life partner or civil union partner of a person referred to above ; or
- a person who is in a commercial partnership with that person.
- in relation to a juristic person:
- 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; - which is a close corporation registered under the Close Corporations Act, means any member
thereof as defined in section1 of that Act; or - which is not a company or a closed corporation, means another juristic person which would have
been a subsidiary or holding company of the first-mentioned juristic person:- had such first-mentioned juristic person been a company; or
- in the case where that other person, too, is not a company, had both the firstmentioned juristic person and that other person been a company;
- means any person in accordance with whose directions or instructions the board of
director of or, in the case where such juristic person is not a company, the governing
body of such juristic person is accustomed to act.
- in relation to any person:
- 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; and - includes any trust controlled or administered by that person.
Distribution Channel
Distribution Channel means
- any arrangement between one or more product / service providers or any of their associates, in which
arrangement facilitates, supports or enhances a relationship for any of the product / service providers.
IDENTIFYING A CONFLICT OF INTEREST
Individual Identification
The primary responsibility for the identification of a conflict of interest rests with the representatives, employees and individual members of the governing body of Truzo. Throughout the process of rendering a financial service to a client, a representative must apply his or her mind to answering the following questions:
- is there any situation that exists that influences the objective performance of my obligations to my
client? - is there any situation that exists that prevents me from rendering an unbiased and fair financial service
to my client? - is there any situation that exists that prevents me from acting in the best interest of my client?
If the answer to all three questions is “no”, then there is no conflict of interest associated with the financial
service and the representative may proceed.
If the answer to any one of the three questions is “yes”, the representative must proceed to answer the
following additional questions:
- is the situation caused as a result of an actual or potential relationship with a third party? (see
definition of “third party”); - is the situation caused by an actual or potential financial or ownership interest? (see definition of
“financial interest” and “ownership interest”).
If the answer to any one of these questions is “yes”, an actual or potential conflict of interest will have been identified.
The definition of a Conflict of Interest incorporates the following terminology:
- …influence the “objective performance” of his, her or its obligations to that client…;
- …prevent a provider or representative from rendering an “unbiased and fair financial service” to that
client…; or - …including but not limited to a “financial interest”.
It is generally understood that the word “objective” refers to a situation where an individual’s personal feelings
or opinions are completely removed from the equation. The “objective performance” of Truzo or
representative’s obligations therefore implies a situation where financial services are rendered without any
untoward influences.
The word “bias” or “biased” is understood to mean a form of prejudice towards a particular person or viewpoint,
whereas the word “fair” or “fairness” indicates a situation of just circumstances or being treated on an equal
footing. An unbiased financial service therefore implies a financial service that does not lend itself to a particular
persuasion, where no reasonable justification for such persuasion can be found. Similarly, a fair financial service
implies a situation where the same conclusion or outcome will consistently present itself given the exact same
set of circumstances.
Subject to section 3A(1)(c) of the General Code of Conduct, Truzo and its representatives may only receive or
offer the following “financial interest” from or to a “third party”:
- *fees for the rendering of a financial service in respect of which commission or fees referred to above is
not paid, if:- the amount, frequency, payment method and recipient of those fees and details of the services
that are to be provided by the provider or its representatives in exchange for the fees are
specifically agreed to by a client in writing; and - those fees may be stopped at the discretion of that client.
- *fees or remuneration for the rendering of a service to a third party [*Truzo or its representatives may
only receive or offer these financial interests if –
- those financial interests are reasonably commensurate with the service being rendered, taking
into account the nature of the service and the resources, skills and competencies reasonably
required to perform it; - the payment of those financial interests does not result in Truzo or representative being
remunerated more than once for performing a similar service; - any actual or potential conflicts between the interests of clients and the interests of the person
receiving the financial interests are effectively mitigated; and - the payment of those financial interests does not impede the delivery of fair outcomes to
clients.]
- an immaterial financial interest (subject to any other law);
- 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 Truzo or representative at the
time of receipt thereof.
Truzo may not offer any financial interest to its representatives:
- that is determined with reference to the quantity of business secured for the FSP without also giving
due regard to the delivery of fair outcomes for clients; or - for giving preference to a specific product supplier, where a representative may recommend more than
one product supplier to a client; or - for 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.
Truzo must be able to demonstrate that the determination and entitlement to the financial interest, that may
not be offered to representatives as determined by quantity of business secured without also giving due regard
to the delivery of fair outcomes for clients, takes into account measurable indicators relating to the:
- achievement of minimum service level standards in respect of clients;
- delivery of fair outcomes for clients; and
- quality of the representative’s compliance with this Act.
As agreed between Truzo and the representative, and that sufficient weight is attached to such indicators to
materially mitigate the risk of the representative giving preference to the quantity of business secured for the
provider over the fair treatment of clients.
Internal Controls to Identify Conflicts of Interest
Truzo has implemented the following internal controls to identify actual or potential conflicts of interest that
may arise:
- The governing body of Truzo conducts annual reviews on all contracts held with third parties in order to
assess whether the contractual relationship in any way influences the Truzo’s objective performance
towards its clients; - The governing body of Truzo conducts annual reviews on all contracts held with third parties in order to
assess whether the contractual relationship in any way influences Truzo’s ability to render fair and
unbiased financial services towards its clients; - The governing body of Truzo conducts annual reviews on all contracts held with third parties in order to
assess whether the contractual relationship in any way influences Truzo’s ability to act in the best
interest of the client; - The governing body of Truzo conducts annual reviews on all relationships where an ownership interest
exists between Truzo and a third party. The purpose of the review is to assess whether the relationship
in any way influences Truzo’s objective performance towards its clients; - The governing body of Truzo conducts annual reviews on all relationships where an ownership interest
exists between Truzo and a third party. The purpose of the review is to assess whether the relationship
in any way influences the Truzo’s ability to render fair and unbiased financial services towards its clients; - Conflict of Interest declarations are signed by all relevant personnel on a quarterly basis. The purpose of
collecting Conflict of Interest declarations is to assist Truzo and the appointed Compliance Officer to
identify actual or potential conflicts of interest; - A list of Truzo’s associates is attached as an annexure hereto. The list is reviewed on an annual basis;
- A list of all third parties in which Truzo holds an ownership interest is attached as an annexure hereto.
The list is reviewed on an annual basis; - A list of all third parties that holds an ownership interest in Truzo is attached as an annexure hereto. The
list is reviewed on an annual basis; - Truzo maintains a Gift Register. All gifts received from a third party with an estimated value of R500 or
more will be recorded in Truzo’s Gift Register. The Gift Register is kept in Truzo’s Compliance Manual; - All relevant personnel (Key Individuals and Representatives) are required to immediately disclose in
writing to the governing body of Truzo and Truzo’s Compliance Officer, any actual or potential conflicts
of interest as soon as they become aware of such situation.
AVOIDING AND MITIGATING A CONFLICT OF INTEREST
Once an actual or potential conflict of interest has been identified, the following procedures will be followed in
order to determine whether the conflict of interest is avoidable:
- The governing body of Truzo will convene and evaluate the actual or potential conflict of interest in an
open and honest manner; - All information that’s led up to and resulting in, or causing the actual or potential conflict of interest will
be disclosed to the Truzo’s governing body and Truzo’s compliance officer; - The governing body of Truzo will apply its mind and determine by way of majority vote whether Truzo is
in a position to avoid the actual or potential conflict of interest; - During the evaluation process, the governing body of Truzo will consider the following possible
outcomes prior to a finding in favour of unavoidability:- The possible negative impact it will have on Truzo’s clients where the actual or potential
conflict of interest is deemed to be unavoidable; - The possible negative impact it will have on the integrity of the financial services industry
where the actual or potential conflict of interest is deemed to be unavoidable.
- Where the governing body of Truzo has determined that the actual or potential conflict of interest is in
fact avoidable, the following processes will be followed:- The governing body will remove the underlying cause or situation that results in the actual or
potential conflict of interest as soon as reasonably possible; - Any immediate negative impact or prejudice towards clients pending the removal of the actual
or potential conflict of interest will be kept to a minimum; - The reasons why the actual or potential conflict of interest was determined to be avoidable will
be recorded in Truzo’s Compliance Manual; - Similar circumstances that has led up to the actual or potential conflict of interest will be
avoided in the future.
- Where the governing body of the Truzo has determined that the actual or potential conflict of interest is
unavoidable, the following processes will be followed:- The governing body of Truzo and Truzo’s compliance officer will convene and determine the
measures that will be implemented in order to mitigate the actual or potential conflict of
interest as far as reasonably possible; - The reasons why the actual or potential conflict of interest was considered to be unavoidable
will be recorded in Truzo’s Compliance Manual.
- Any measures implemented towards mitigating the actual or potential conflicts of interest will include
the following arrangements:- The status of whether the actual or potential conflicts of interest’s is still deemed to be
unavoidable shall be reassessed on a continuous basis; - Where a previously deemed unavoidable actual or potential conflicts of interest is
subsequently deemed to be avoidable, such actual or potential conflict of interest shall
immediately be avoided; - All representatives will be notified of any actual or potential conflicts of interest as well as the
reasons for its unavoidability; - When rendering a financial service, a representative shall be required to disclose to the client
in writing that an actual or potential conflict of interest exist; - Truzo and/or Truzo’s compliance officer shall report on the status of the actual or potential
conflict of interest in Truzo’s compliance report to be submitted to the Financial Services
Board.
DISCLOSURE OF CONFLICT OF INTERESTS
It is acknowledged that while disclosure alone will often not be enough, disclosure must be treated as an integral part of managing conflict of interest. Truzo is therefore committed to ensure that clients are fully informed about actual or potential conflict of interest in relation to provision of financial services.
Truzo has adopted the following disclosure measures:
- Truzo shall disclose to a client any conflict of interest in respect of that client;
- The disclosure shall be made in writing at the earliest reasonable opportunity. The disclosure may be
communicated by way of appropriate electronic media; - The disclosure shall include the nature of any relationship or arrangement with a third party that gives
rise to a conflict of interest; - The disclosure shall be made in sufficient detail to enable the client to understand the exact nature of
the relationship or arrangement and the conflict of interest; - The disclosure shall include the measures taken to avoid or mitigate the conflict;
- The disclosure shall include any ownership interest or financial interest, other than an immaterial
financial interest, that Truzo or representative may be or become eligible for; - The disclosure shall include a reference to Truzo’s Conflict of Interest Management Policy and how it
may be accessed.
COMPLIANCE MEASURES
The measures implemented towards ensuring Truzo’s continued compliance with the Conflict of Interest Management Policy rests with the governing body of Truzo. Truzo’s appointed Compliance Officer will monitor Truzo’s continued compliance with the policy on an ongoing basis.
Truzo has adopted the following internal controls and processes:
- The governing body of Truzo shall ensure that the Conflict of Interest Management Policy is kept in the
Truzo’s Compliance Manual; - The governing body of Truzo shall ensure that all relevant personnel read the Conflict of Interest
Management Policy and understand their duties in respect thereof; - The governing body of Truzo shall ensure that all personnel, and where appropriate, associates are made
aware of the contents of the Conflict of Interest Management Policy and shall provide personnel with
training and educational material where deemed appropriate; - The governing body of Truzo shall ensure that all Conflict of Interest declarations are signed by relevant
personnel on a quarterly (3 monthly) basis; - Where an employee or representative have any concerns whether or not an actual or potential conflict
of interest might arise in a particular situation, the employee or representative will be required to refer
his or her concern to the Truzo’s Compliance Officer; - The governing body of Truzo shall ensure that a list of all Truzo’s associates is annexed to the Conflict of
Interest Management Policy and that a review of the list shall be conducted annually; - The governing body of Truzo shall ensure that a list of all the parties in which Truzo holds an ownership
interest is annexed to the Conflict of Interest Management Policy and that a review of the list shall be
conducted annually; - The governing body of Truzo shall ensure that a list of all third parties that holds an ownership interest in
Truzo is annexed to the Conflict of Interest Management Policy and that a review of the list shall be
conducted annually; - The governing body of Truzo shall continue to maintain a Gift Register and shall ensure that all gifts
received from a third party with an estimated value of R500 or more are recorded in the FSP’s Gift
Register; - The governing body of Truzo shall ensure that the proper disclosures are made to the client regarding
actual or potential conflicts of interest; - The Conflict of Interest Policy shall be regularly reviewed by the appointed Compliance Officer, and
where necessary, updated to ensure that the measures contained herein remains effective ; - The governing body of Truzo shall publish its Conflict of Interest Management Policy in appropriate
media and ensure that it is easily accessible for public inspection at all reasonable times; - The governing body of Truzo shall ensure that the Conflict of Interest Management Policy is reviewed on
at least an annual basis.
CONSEQUENCES OF NON-COMPLIANCE
Where there is reason to believe that an employee or representative has failed to disclose an actual or potential conflict of interest via the proper communication channels, Truzo will proceed to investigate and take any appropriate steps it deems necessary to limit any financial prejudice that may be suffered by Truzo, its clients or any other third party.
Where an investigation concludes that an employee or representative of Truzo has indeed failed to disclose an actual or potential conflict of interest, Truzo shall immediately take appropriate disciplinary steps and corrective actions against such employee or representative.
Any failure by an employee to comply with the Conflict of Interest Management Policy will be considered serious form of misconduct and a dismissible offence.
ANNEXURE A: LIST OF ASSOCIATES
In terms of Section 3A(2)(b)(iii) of the General Code of Conduct, a Conflict of Interest Management Policy must
include a list of all Truzo’s associates.
Please refer back to the definition of an “associate” and list all Truzo’s associates, as well as the nature of the
associate relationship:
Truzo Limited, Registration number: 12528331
Founders Factory
ANNEXURE B: OWNERSHIP INTERESTS HELP BY TRUZO
In terms of Section 3A(2)(b)(v) of the General Code of Conduct, a Conflict of Interest Management Policy must
include the names of any third parties in which the provider holds an ownership interest.
Please refer back to the definition of a “third party” and “ownership interest” and list all third parties in which
Truzo holds an ownership interest. Also specify the nature and extent of the ownership interest.
Escrow Solved (SA) (Pty) Ltd, Registration Number: 2016/326121/07
ANNEXURE C: OWNERSHIP INTERESTS HELD IN TRUZO
In terms of Section 3A(2)(b)(vii) of the General Code of Conduct, a Conflict of Interest Management Policy must
include the names of any third parties that holds an ownership interest in the provider.
Please refer back to the definition of a “third party” and “ownership interest” and list all third parties that hold
an ownership interest in Truzo. Also specify the nature and extent of the ownership interest.
Truzo Limited, Registration number: 12528331
ANNEXURE D: TYPE OF FINANCIAL INTEREST AND ENTITLEMENT THERETO
In terms of Section 3A(2)(b)(ii), a Conflict of Interest Management Policy must specify the type of financial
interest that the provider will offer a Representative and the basis on which a Representative will be entitled to
such a financial interest. The Conflict of Interest Management Policy must also include a motivation regarding
how the financial interest complies with sections 3A(1)(b) and 3A(1)(bA).
Please refer back to the definition of “Financial Interest”, and specify in the table below which types of financial
interest is offered by the provider to its Representatives. Also specify the basis on which these Representatives
are entitled to such a financial interest. Lastly, specify how the financial interest afforded to the Representatives
comply with sections 3A(1)(b) and 3A(1)(bA).
