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Conflict of Interest Management Policy

Name of FSPCAPITAL LEGACY SOLUTIONS (PTY) LTD
FSP Number43826
FSP FIC Registration Number25646

Background

We are a fiduciary services business that is passionate about efficient, convenient solutions through the use of innovation and technology. We are underwritten by Guardrisk Life Ltd and we are an authorised financial services provider.

Section 3A(2)(a) of the General Code of Conduct stipulates that every provider, other than a representative, must adopt, maintain and implement a conflict of interest management policy that complies with the provisions of the Act. The policy is to provide for mechanisms in place at CAPITAL LEGACY to identify, mitigate and manage the conflicts of interest to which CAPITAL LEGACY is a party. This Conflict of Interest Management Policy is designed as prescribed in Board Notice 58 of 2010 which amends the General Code of Conduct for Financial Services Providers and Representatives published in Board Notice 80 of 2003, as amended by Board Notice 43 of 2008. 

Objective of the Policy

This Conflict of Interest Management Policy does not change our existing conflict of management procedures but intends to document them in simple form as required by the Financial Services Board.

In terms of the Financial Advisory and Intermediary Services Act, 2002, CAPITAL LEGACY is required to maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to identify, monitor and manage conflict of interest. CAPITAL LEGACY has put in place a policy to safeguard its clients’ interests and ensure fair treatment of clients. 

All providers, key individuals, representatives, associates and administrative personnel will commit to such policy and the processes will be monitored on an ongoing basis.

CAPITAL LEGACY keeps and maintains a register in which all actual or potential conflicts are recorded. 

Mission Statement on Conflict of Interest

CAPITAL LEGACY is committed to ensuring that all business is conducted in accordance with good business practice. To this end CAPITAL LEGACY conducts business in an ethical and equitable manner and in a way that safeguards the interests of all stakeholders to minimise and manage all real and potential conflicts of interests. Like any financial services provider, CAPITAL LEGACY is potentially exposed to conflicts of interest in relation to various activities. However, the protection of our clients’ interests is our primary concern and so our policy sets out how: 

  • we will identify circumstances which may give rise to actual or potential conflicts of interest entailing a material risk of damage to our clients’ interests; 
  • we have established appropriate structures and systems to manage those conflicts; and 
  • we will maintain systems in an effort to prevent damage to our clients’ interests through identified conflict of interest. 

Understanding the Definitions

Conflict of Interest:

A conflict of interest may occur when in rendering a financial service to you we do not act objectively or do not render an unbiased or fair service to you or do not act in your interests, including but not limited to:

a)  A financial interest

b)  An ownership interest

c)  Any relationship with a third party.


A Financial Interest:

Any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, valuable consideration, other incentive or valuable consideration (exceeding R1000 per annum) other than – 

  1. An ownership interest
  2. Training, that is not exclusively available to a selected group of providers or representatives, on – 
  1. Products and legal matters relating to those products;
  2. General financial and industry information;
  3. Specialised technological systems of a third party necessary for the rendering of a financial service, but excluding travel and accommodation associated with that training.

An Ownership Interest:

(i)   any equity or proprietary interest for which a fair value was paid on acquisition other 

       than such an interest held by a nominee;

(ii)  includes any dividend, profit share or similar benefit derived from such interest.


Fair Value:

Has the meaning assigned to it in the financial reporting standards adopted or issued under the Companies Act, 61 of 1973.

What may we Give and Receive

We confirm that we will only receive financial interest from the aforesaid providers in the form of: 

(i)Commission authorized under the Long-term Insurance Act, 52 of 1998;
(ii)Fees under the aforesaid acts if these fees are reasonably commensurate to the service being rendered;
(iii)Fees for rendering a financial service in respect of which no commission or fees are paid as aforesaid, if those fees are specifically agreed to by you in writing and may be stopped at your discretion;
(iv)Fees or remuneration for the rendering of a service to a third party, which fees are reasonably commensurate to the service being rendered;
(vii)Subject to any other law, an immaterial financial interest;
(viii)A financial interest for which a consideration, fair value or remuneration that is reasonably commensurate to the value of the financial interest, is paid at the time of receipt thereof.

Processes and Internal Controls

Identification of Conflict of Interest

To adequately manage conflicts of interest we must identify all relevant conflicts timeously.  In determining whether there is or may be a conflict of interest to which the policy applies, CAPITAL LEGACY (considers whether there is a material risk of damage to the client, taking into account whether CAPITAL LEGACY or its representative, associate or employee:

  • is likely to make a financial gain, or avoid a financial loss, at the expense of the client; 
  • has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome; 
  • has a financial or other incentive to favour the interest of another client, group of clients or any other third party over the interests of the client; 
  • receives or will receive from a person other than the client, an inducement in relation to a service provided to the client in the form of monies, goods or services, other than the legislated commission or reasonable fee for that service. 

Our policy defines possible conflicts of interest as, inter alia

  • conflicts of interest between CAPITAL LEGACY and the client; 
  • conflicts of interest between our clients if we are acting for different clients and the different interests conflict materially; 
  • conflicts of interest where associates, product suppliers, distribution channels or any other third party is involved in the rendering of a financial service to a client; 
  • storing confidential information on clients which, if we would disclose or use, would affect the advice or services provided to clients. We may only receive commissions authorised in terms of applicable legislation.

CAPITAL LEGACY maintains an index of potential conflict risks, taking into consideration all business areas and income streams. The index is updated with all new conflicts identified, and to ensure completeness is reviewed on an annual basis. 

All employees, including internal compliance officers and management, are responsible for identifying specific instances of conflict and are required to notify the Key Individual of any conflicts they become aware of. The Key Individual will assess the implications of the conflict and how the conflict should be managed and act impartially to avoid a material risk of harming clients’ interests.

Measurement for avoidance and mitigation of Conflict of Interests

Create awareness and knowledge of applicable stipulations of the General Code of Conduct and relevant legislation relating to conflict of interest, through training and educational material.

Ensure understanding and adoption of conflict of interest policy and management measures by all employees, representatives and associates.

Regular inspections on all commissions, remuneration, fees and financial interests proposed or received in order to avoid non-compliance.

Keep a register of conflict of interest.

Once a conflict of interest has been identified it needs to be appropriately and adequately managed.

The Key Individual will assess each conflict, including whether the conflict is actual or perceived, what the value of the conflict or exposure is and the potential reputational risk. Compliance and management then agree on the controls that need to be put in place to manage the conflict.

Disclosure:
Where there is no other way of managing a conflict, or where the measures in place do not sufficiently protect clients’ interests, the conflict must be disclosed to allow clients to make an informed decision on whether to continue using our service in the situation concerned. In all cases, where appropriate and where determinable, the monetary value of non-cash inducements will be disclosed to clients.

Publication:
We will publish our conflict of interest management policy in appropriate media and ensure that it is easily accessible for public inspection at all reasonable times. CAPITAL LEGACY’S COI Policy is available on our employee shared drive and stored electronically on the cloud server. A copy of our COI will be provided on the client’s request.

  • Declining to act:
    We may decline to act for a client in cases where we believe the conflict of interest cannot be managed in any other way. 

Ongoing monitoring of Conflict of Interest Management 

This policy will be reviewed annually and must be included in CAPITAL LEGACY’S annual FSB compliance report, containing details “…on at least the implementation, monitoring and compliance with, and the accessibility of the conflict of interest management policy.” 

Eduann Louis Vorster is in charge of supervision and monitoring of this policy – will regularly monitor and assess all related matters. 

Training and Staff

All employees and representatives are required to read Board Notice 58 of 2010 as well as this policy and to sign a statement to the effect that they have done so and fully understand the provisions of both documents and the application thereof.

Comprehensive training on the Conflict of Interest policy will be provided to all employees and representatives as part of specific and/or general training on the FAIS Act. Training will be incorporated as part of all new appointees’ induction and refresher training provided on an annual basis.

The Key Individual (Eduann Louis Vorster) will conduct ad hoc checks on business transactions to ensure the policy has been complied with.

The Compliance Officer will include monitoring of the Conflict of Interest policy as part of her general monitoring duties and will report thereon in the annual compliance report. 

Non-compliance will be subject to disciplinary procedures in terms of FAIS and employment conditions and can ultimately result in debarment or dismissal as applicable.

Avoidance, limitation or circumvention of this policy via an associate will be deemed non-compliance.

This policy shall be reviewed annually and updated if applicable. 

Representative Incentives

We confirm we will not offer any financial interest to our key individuals or representatives for-

(i)   favouring quantity of business over quality of service; or

(ii)   giving preference to a specific product supplier where more than one supplier can be   

       recommended to a client; or

(iii) giving preference to a specific product of a supplier where more than one product of that 

       supplier can be recommended.


Registers

With regard to existing third-party relationships, being the product suppliers listed in our Agreement , we confirm that we do not have an ownership interest or are subject to exclusive training nor are there any other circumstances which could lead to a potential conflict of interest.  Should any conflicts arise with regard to any of these prior to entering into any business transaction with you we undertake to disclose these in the registers below. CAPITAL LEGACY has implemented the registers below:

1. Nature and Extent of Ownership interests 

2. Financial Interest Received

3. Nature and Extent of Business Relationships

4. Associations

5. Register of Financial Interests, Ownership Interests and Business Relationships

CAPITAL LEGACY (PTY) LTD

FSP NO.: 43826

Dear Client

At CAPITAL LEGACY we believe in open, honest and transparent interactions with our clients. In the course of our business activities, situations may arise whereby we may become entitled to certain financial interests supplied by external parties in addition to the commission that we earn or the fees that we charge. 

At CAPITAL LEGACY we take pride therein that our advice is objective and free of external influence, but wish to disclose to you, our valued client, that we have received the following financial interests and wish to disclose the value and the reason for receiving the financial interests.

We do not believe that the financial interests received constitute a conflict of interest but would gladly address any concerns you may have. Please refer to Annexure 1 to this register for a complete list.

We may also enjoy a preferred status with one or more of the product supplier companies with whom we hold contracts. This status allows us and our customers certain benefits when dealing with these providers. 

We similarly make every effort to ensure that our advice is not influenced by our status with any one product supplier but believe that disclosure of these business relationships and the benefits they include, allow you to make informed decisions. Please refer to Annexure 2 for complete details of these business relationships.

In accordance with the General Code of Conduct for Financial Services Intermediaries we are required to disclose any ownership interest we may have in external parties. These are contained in Annexure 3.

Masthead Membership

We are proud to state that we are members of the Masthead Financial Advisors Association. This association is a voluntary body of independent financial advisors, regulated by its own constitution and code of conduct. This code of conduct requires its members to adhere to ethical and professional standards and to act in the best interest of our clients.

As members of the association CAPITAL LEGACY may become entitled to certain discounts by virtue of our membership. 

The Masthead Financial Advisors Association holds 25% of the issued share capital in Masthead (Pty) Ltd, which is a separate legal entity that specialises in providing support services to independent financial services intermediaries. We have contracted with Masthead (Pty) Ltd to deliver certain services to us, including compliance services. For these services we pay a monthly service fee. 

For the sake of full disclosure, please note that we derive no financial interest from Masthead other than services that are paid for.

Annexure 1

Financial Interest Received

Any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, valuable consideration, other incentive or valuable consideration (exceeding R1000 per annum) other than – 

  1. An ownership interest;
  2. Training, that is not exclusively available to a selected group of providers or 

representatives, on – 

  1. Products and legal matters relating to those products;
  2. General financial and industry information;
  3. Specialised technological systems of a third party necessary for the rendering of a financial service, but excluding travel and accommodation associated with that training.
DescriptionDate ReceivedFromReasonValue

Annexure 2

Business Relationship

CompanyNature of RelationshipStatusBenefits

Annexure 3

Ownership Interest

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. This includes any dividend, profit share or similar benefit derived from that equity or ownership interest.

Company NamePercentage OwnershipDate Obtained

RESOLUTION BY DIRECTORS OF CAPITAL LEGACY (PTY) LTD FOR ADOPTION OF THE CONFLICT OF INTEREST MANAGEMENT POLICY:

The Board of Directors of Capital Legacy Solutions (Pty) Ltd hereby affirm that:

  • They have read and understood the contents of this Conflict of Interest Management Policy, which have been distributed or otherwise made available to them, and they have also completed the necessary training offered by Capital Legacy in this regard; and
  • They acknowledge that to the extent that they do not understand any of their duties in terms of the Conflict of Interest Management Policy, they have contacted the Compliance Officer for clarifications; and
  • They undertake to observe strictly and diligently all their duties imposed by the Conflict of Interest Management Policy, fully understanding that failure to do so –
  1. could result in a material breach of the FAIS Code of Conduct and those found to have wilfully breached the regulatory requirements will face disciplinary action in accordance with the company’s disciplinary policy and procedures.

_____________________

Alexander John Simeonides 

(Identity Number: 830804 5093 084)

_______________________

Brandon James Garbutt

(Identity Number: 781001 5110 088)

_______________________

Carl Sonday 

(Identity Number: 700601 5269 087)

______________________

Eduann Louis Vorster

(Identity Number: 770922 5020 089)

__________________________

Joao Roberto Bico Da Silva Gomes

(Identity Number: 860508 5157 087)