Subject Title - INSETA

8.4 MANAGING TRANSPARENCY AND CONFLICT OF INTEREST8.4.1 TransparencyTransparency is a direct result of adequate disclosures. Disclosure will ensuretransparency in the relationships between clients and FSPs as well asbetween FSPs, product suppliers and representatives. Transparency startseven before a financial service has been rendered.The information about products, financial services, FSPs and productsuppliers must be transparent in all its formats. Commission and relateddisclosures add to the transparency of the services and products and it formsthe cornerstone for avoiding or disclosing possible conflict of interest. Therequirements for commission disclosures especially, apply to themanagement of conflict of interests.8.4.2 Conflict of interestConflict of interest means a situation where a provider or a representativehas an actual or potential interest that may influence the objective exercisingof obligations to the client or prevent the rendering of financial services in anunbiased and fair manner.It will therefore occur when two (2) or more interests conflict with oneanother and can render the financial service biased or inadequate.This typically presents itself where product sales are linked to incentives,monetary or other lavish rewards (such as overseas trips). The danger is thatthe representative or provider may be influenced by these considerationswithout due care to the client and his needs, to the detriment of the client.The General Code requires the following in respect of conflict of interestmanagement:When a provider(including a the existence of any personal interest inthe relevant service;Representative) renders afinancial service theprovider must disclose to or of any circumstance which gives rise toan actual or potential conflict of interest inrelation to the servicethe client: and the provider must take all reasonablesteps to ensure fair treatment of theclient.144 © INSETA - Section 1 12a