Overview

In terms of the Financial Advisory and Intermediary Services Act, 2002, Sticitt (“Sticitt”) 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 (“COI”). Section 3A(2)(a) of the FAIS General Code of Conduct (“GCOC) stipulates that every financial services provider, other than a representative, must adopt, maintain and implement a conflict of interest management policy that complies with the provisions of the Act.

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Objectives

The purpose of this policy is to comply with these obligations and provide mechanisms in place to identify, mitigate and manage the conflicts of interest to which Sticitt is a party. In addition, to ensure alignment between the values of the Company and the conduct of its people by safeguarding clients’ interests and ensuring the fair treatment of clients.

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Sticitt is committed to ensuring that all business is conducted in accordance with good business practices. To this end, Sticitt 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 interest. Like any financial services provider, Sticitt 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: 

1. Sticitt will identify circumstances which may give rise to actual or potential conflicts of interest entailing a material risk of damage to our clients’ interests,

2. Sticitt have established appropriate structures and systems to manage those conflicts, and 

3. Sticitt will maintain systems in an effort to prevent damage to our clients’ interests through identified conflicts of interest. 

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To achieve the objectives set out above, this policy sets out the rules, principles and standards of Sticitts COI management procedures, by documenting them in a clear and understandable format.

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Understanding conflict of interest

When is it a Conflict of Interest

A COI means any situation in which Sticitt or one of our representatives has an actual or potential interest that may, in rendering a financial service to our clients: 

1. Influence the objective performance of obligations to that client, or
2. Prevents us from rendering an unbiased and fair financial service, or 
3. Prevents us from acting in the interests of that client. 

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An “actual or potential interest” includes but is no limited to:

1. A financial interest, which includes any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, valuable consideration, other incentive or valuable consideration which exceeds R1000 per calendar year. 
2. An ownership interest which means any equity or proprietary interest and any dividend, profit share or similar benefit derived from that equity or ownership interest,
3. Any relationship with a third party, meaning any relationship with a product supplier, other FSP’s, an associate of a product supplier or an associate of Sticitt. A third party also includes any other person who, in terms of an agreement or arrangement, provides a financial interest to Sticitt or its representatives,
4. An immaterial financial Interest, which is any financial interest with a determinable monetary value, the aggregate of which does not exceed R 1 000 in any calendar year from the same third-party in that calendar year received by:
   
   1. A provider who is a sole proprietor, or
   2. A representative for that representative's direct benefit,
   3. A provider, who for its benefit or that of some or all of its representatives, aggregates the immaterial financial interest paid to its representatives.

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What type of interest may we Give and Receive

Sticitt and our representatives may only offer to and receive specific financial interests from a third party, which includes the following: 

1. Commission as authorised under the Long-term Insurance Act (52 of 1998), the Short-term Insurance Act (53 of 1998) and the Medical Schemes Act (131 of 1998),
2. Fees as authorised under the Long-term Insurance Act (52 of 1998), the Short-term Insurance Act (53 of 1998) and the Medical Schemes Act (131 of 1998),
3. “Other fees” specifically agreed to by the client and which can be stopped by the client at their discretion but only if agreed in writing with the client, including details of the amount, frequency, payment method and recipient of those fees, as well as the details of services to be provided in exchange for the fees,
4. Fees or remuneration for services that were rendered to a third party,
5. An immaterial financial interest,
6. Any other financial interest not mentioned above for which a consideration, fair value or remuneration that is reasonably commensurate is paid by that provider or representative, at the time of receiving that financial interest.

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On what basis may we Give and Receive Financial Interests

The financial interest referred to in points b, c, and d above may only be offered or received by Sticitt or its representatives, if: 

1. The financial interests are proportionate (reasonably commensurate) to the service being rendered, considering the nature of the service, the resources, skills and competencies that are reasonably required to perform it,
2. The payment of those financial interests does not result in Sticitt or the representative being remunerated more than once for performing the same service,
3. Any actual or potential conflicts between the interests of clients and the interests of the person receiving those financial interests are effectively mitigated, and
4. The payment of those financial interests does not impede the delivery of fair outcomes to clients.

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Financial Interests for Representatives of Sticitt

Sticitt may not offer any financial interest to a representative of that FSP: 

1. 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,
2. For giving preference to a specific product supplier, where a representative may recommend more than one product supplier to a client,
3. That is determined with reference to the quantity of business, without also giving due regard to the delivery of fair outcomes for clients. 

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In relation to the delivery of fair outcomes for clients, Sticitt must demonstrate that a determination of a representative’s entitlement to a financial interest considers measurable indicators, relating to the:

1. Achievement of minimum service level standards with respect of clients,
2. Delivery of fair outcomes for clients, and
3. Quality of the representative’s compliance with the FAIS Act. 

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The measurable indicators are agreed upon in writing between Sticitt and its representative and sufficient weight (significance) is attached to these indicators to materially mitigate the risk of the representative(s) giving preference to the quantity of business secured for Sticitt over the fair treatment of clients.

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Sticitt does not offer a sign-on bonus to any person, other than a new entrant, as an incentive to become a provider authorised or appointed to give advice.

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The way in which Sticitt remunerates its representatives and complies with these requirements is set out in Sticitt’s Remuneration policy. 

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Processes and Internal Controls to Manage Conflict of Interest

Identification of Conflict of Interest

To adequately manage COI, Sticitt must identify all relevant conflicts timeously.  In determining whether there is or may be a COI to which the policy applies, Sticitt considers whether there is a material risk of unfair treatment or bias for the client, taking into account whether Sticitt or its representative, associate or employee:

1. Is likely to make a financial gain, or avoid a financial loss, at the expense of the client,
2. 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,
3. 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,
4. 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. 

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In line with our COI policy, possible and actual conflicts of interest or examples of conflict of interest in our FSP are -

1. Any COI:
   
   1. between Sticitt and external parties:
      
      1. D6 Group.
   2. between Sticitt and the client,
   3. between our clients if we are acting for different clients and the different interests conflict materially,
   4. where associates, product suppliers, distribution channels or any other third party is involved in the rendering of a financial service to a client,
   5. storing confidential information on clients which, if we would disclose or use, would affect the advice or services provided to clients.

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

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Measures for avoidance and mitigation of Conflict of Interest

To ensure that Sticitt can identify, avoid and mitigate COI situations, Sticitt creates awareness and knowledge of applicable stipulations, through training and educational material. Where a COI situation cannot be avoided, these instances are recorded on Sticitt’s conflict of interest register. 

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Sticitt ensures the understanding and adoption of Sticitt’s conflict of interest policy and management measures by all employees, representatives and associates through training on the COI policy.

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The CEO or appointed 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. Once a conflict of interest has been identified it needs to be appropriately and adequately managed and disclosed, in line with the below steps.

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Measures for Mandatory Disclosure of Conflict of Interest

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. 

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In all cases, where appropriate and where determinable, the monetary value of non-cash inducements will be disclosed to clients. The CEO or appointed Key Individual will ensure transparency and manage conflict of interests. The client must be informed on the Conflict of Interest Policy and where they may access the policy.  

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Ongoing monitoring of Conflict of Interest Management 

The CEO or appointed key individual or staff member in charge of supervision and monitoring of this policy will regularly monitor and assess all related matters. Sticitt will conduct ad hoc checks on business transactions to ensure the policy has been complied with.

The Compliance Officer (internal or external) will include monitoring of the Conflict of Interest policy as part of his/her general monitoring duties and will report thereon in the annual compliance report.

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This policy shall be reviewed annually and updated if applicable. The compliance function is outsourced to an external Compliance company with no shareholding in this FSP. The Compliance practice functions objectively and sufficiently independently of Sticitt and monitors the process, procedures and policies that Sticitt has adopted to avoid conflicts of interest.

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Registers

With regard to existing third-party relationships Sticitt is comfortable that there are no 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, Sticitt undertake to disclose these in the Conflict of Interest register together with all gifts, financial interest, immaterial financial interest and any other COI situations as outlined in this policy.

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Remuneration Policy

None of Sticitt’s distribution team members, or any employee for that matter is eligible for commissions from third-party product providers. Sticitt pays commission only to Distribution personnel operating within the South African Schools market and this commission is not connected in any way to the sales performance on any third-party product Sticitt distributes.

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Related Policies

SP4 - Remuneration Policy

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Operationalising

Training

Comprehensive training on the Conflict of Interest is provided to all employees and representatives as part of specific and/or general training on the FAIS Act and GCOC. 

Training will be incorporated as part of all new appointees’ induction. Ongoing and refresher training on Sticitt’s Conflict of Interest management processes and policy is provided on an annual basis.

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Implementation

Sticitt will implement the Conflict of Interest Management Policy through annual mandatory training for all employees. Employees must declare potential conflicts, with all disclosures reviewed by the Compliance Officer. Conflict resolution procedures will be followed for all conflict of interest disclosures to ensure transparency, and all cases will be documented for compliance and audit purposes.

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Monitoring

The Compliance Officer will review and update this policy on an annual basis. As changes to this policy are indicated in the course of the Company, any executive member or team lead may initiate a change management process to update this policy.

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Review and Changes

The Compliance Officer will review and update this policy on an annual basis. As and when the Policy Leadership realises that changes are required following the Monitoring of implemented procedures, a management review process may be kicked off by Theo Kitshoff or Marizanne Fourie aligned to the below Management review process.

Policy Leadership & Approval

The CEO is designated as the Executive owner responsible for the ultimate Conflict of Interest Management Policy of the Company.

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Management Review

The Compliance Officer will review and update this policy on an annual basis. As changes to this policy are indicated in the course of the Company, any executive member or team lead may initiate a change management process to update this policy.

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Enforcement

This policy is applicable to Sticitt, all providers of Sticitt, appointed key individuals, representatives, associates and administrative personnel. Sticitt is committed to ensuring compliance with this policy and the processes will be monitored on an ongoing basis. Avoidance, limitation or circumvention of this policy via an associate will be deemed non-compliance. 

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Penalties for Non-Compliance

In situations where Company continuity activities do not comply with this policy, the respective Management team will prepare a report stating the reason(s) for noncompliance and present it to the Executive team for resolution. Failure to comply with this policy and any SLAs established with external service firms within the allotted time for resolution may result in verbal reprimands, notes in personnel files and termination (for internal incidents) and fines, legal actions and such other remedies as deemed appropriate (for external incidents).

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Distribution

This policy is available on the company Google Drive and all relevant parties are notified via email when updates are made.

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