IT WAS suggested in a circular released to members of the SA Association of Freight Forwarders (SAAFF) late last year that becoming a financial services provider (FSP) – i.e. direct registration – was the only way to go if the freight forwarder wanted to be compliant “within the spirit of the act”. “Not true,” said Eikos Risk Applications, one of the leaders in the marine insurance market whom we approached for comment. “The Financial and Intermediary Services (FAIS) act makes very specific provision for a freight forwarder – or, for that matter, any other party providing insurance services (such as motor dealers, and the like) – to act as a representative of an already approved FSP,” Eikos MD Victor Vaz told FTW. “How then can it be outside of the spirit of an act when making use of a provision of that act?” Some brokers (FSPs), of course, may not be prepared to expose themselves to the potential liabilities of such a solution, leading their clients to accept the expense and burden of compliance “at their own risk”, he said. “It is in fact our contention,” said Vaz, “that this is an abrogation of the broker’s responsibility. The spirit of the act is better served by an insurance professional (i.e a qualified insurance broker) putting his money where his mouth is, and taking responsibility (always in partnership with his client the freight forwarder) to ensure that the insurance products sold can withstand the spirit and the scrutiny of the FAIS act – and, for that matter, any other related acts.” The way Eikos sees this is that by signing on as a representative of a properly qualified FSP - which then takes on the monitoring role as well as the role of the provider of any “advice” that has to be given - the freight operator achieves two goals. “First,” he said, “is full compliance with the provisions of the act - ensuring that the ultimate consumer has access to a valid insurance product, that premiums are paid timeously and that claims will be dealt with professionally. “Secondly, in an environment of chronic shortage of qualified staff, the technical and administrative burden created by the act is transferred to specialists who must in any event be structured to handle the load.”
