Divisions of Khwezi Financial Services
FSP Licence Number 44816

FSB Approved Licence Categories

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Conflict of Interest Management Policy

Scope of this Policy

In terms of the General Code of Conduct, a Conflict of Interest Management Policy must be maintained and provide mechanisms for the identification of conflicts of interest.

Khwezi Financial Services (Pty) Ltd and its representatives must avoid, and where this is not possible, mitigate any conflict of interest between KFS and a client or our representatives and a client.

In order to adhere to this requirement, KFS must ensure that adequate procedures are in place for the management of conflicts of interests that may arise wholly or partially, in relation to the provision of any financial services to clients by KFS, or any of our representatives.

Our Conflict of Interest Management Policy will attempt to provide adequate procedures for the management of any identified conflicts and must contain the following procedures and information:

What is a Conflict of Interest

A conflict of interest, means any situation in which a Financial Services Provider or a representative of that provider has an actual or potential interest that may, in rendering a financial service to a client:

  1. influence the objective performance of his, her or its obligations to that client; or
  2. 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 -

    1. a financial interest;
    2. an ownership interest;
    3. any relationship with a third party

Our understanding of objective performance, unbiased and fair financial services are derived from the general meaning of the words. It is generally accepted 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 an FSP’s obligations therefore implies a situation where financial services are rendered without the influence of unrelated feelings or opinions. If an unrelated feeling or opinion of an individual, influences the performance of such said individual’s obligations, it cannot be said to be an objective performance of that individual’s obligation.

The word “bias” indicates an inclination or prejudice in favour of a particular person or viewpoint. Similarly, the word “fair” indicates a situation of just circumstances or treating people equally. Unbiased financial services therefore imply financial services that do not lend itself to a particular preference towards a person or viewpoint, if an accompanying, reasonable justification for such preference cannot be found. “Fair” financial services on the other hand imply a situation where the same conclusion or outcome is consistently reached given the same exact set of circumstances.

A Financial Services Provider may not offer any financial interest to a representative of that provider for:

Annexure A – Definitions

In this document unless the context clearly indicates otherwise:

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:

  1. influence the objective performance of his, her or its obligations to that client; or
  2. 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 -

    1. a financial interest;
    2. an ownership interest;
    3. any relationship with a third party

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 –

  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 accommodations associated with that training

Ownership interest: means -

  1. any equity or proprietary interest, for which fair value was paid by the owner at the time of acquisition, other than equity or an proprietary interest held as an approved nominee on behalf of another person; and
  2. includes any dividend, profit share or similar benefit derived from that equity or ownership interest

Third party: means –

  1. a product supplier;
  2. another provider;
  3. an associate of a product supplier or a provider;
  4. a distribution channel;
  5. any person who in terms of an agreement or arrangement with a person referred to in paragraphs (a) to (d) above provides a financial interest to a provider or its representatives

Associate: means –

  1. in relation to a natural person, means –
    1. a person who is recognised in law or the tenets of religion as the spouse, life partner, or civil union partner of that person;
    2. a child of that person, including a stepchild, adopted child and a child born out of wedlock;
    3. a parent or stepparent of that person;
    4. 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
    5. a person who is the spouse, life partner or civil union partner of a person referred to in (ii), (iii) and (iv)
    6. a person who is in a commercial partnership with that person
  2. in relation to a juristic person,
    1. 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
    2. which is a closed corporation registered under the Close Corporations Act, means any member thereof as defined in section 1 of that Act
    3. 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 first-mentioned juristic person and that other juristic person been a company
    4. means any person in accordance with whose directions or instructions the board of directors of or, in the case where such juristic person is not a company, the governing body of such juristic person is accustomed to act
  3. in relation to any person,
    1. 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
    2. includes any trust controlled or administered by that person

Distribution channel: means –

  1. any arrangement between a product supplier or any of its associates and one or more providers or any of its associates in terms of which arrangement any support or service is provided to the provider or providers in rendering a financial service to a client
  2. any arrangement between two or more providers or any of their associates, which arrangement facilitates, supports or enhances a relationship between the provider or providers and a product supplier any arrangement between two or more product suppliers or any of their associates, which arrangement facilitates, supports or enhances a relationship between a provider or providers and a product supplier

Annexure B – Mechanisms for the Identification of Conflicts of Interest

When rendering financial services to our clients a Representative and his or her Key Individual must apply their minds to answering the following questions:

Due to the intangible nature of an actual or potential conflict of interest, any such manifestation will only be identified once the subjective realisation of its presence has been acknowledged by an individual. The legal duty to avoid whenever possible an actual or potential conflict of interest is therefore, to a large extent, dependent on whether a particular individual believe or perceive a conflict of interest to begin with. It is for this reason that Key Individuals must apply honest and sage judgement whenever confronted with a situation that may give rise to an actual or potential conflict of interest.

Annexure C - Measures for Avoidance and / or Mitigation

The following avoidance procedures will be consulted. Our policy will always attempt to avoid conflicts and management policy must provide measures for the avoidance of conflicts of interest, and where avoidance is not possible, the reasons therefore and the measures for the mitigation of such conflicts of interest.

Once an actual or potential conflict of interest has been identified the following measures will be followed in order to determine whether the conflict of interest is avoidable:

If it has been determined that the actual or potential conflict of interest is avoidable, the following processes must be adhered to:

If it has determined that the actual or potential conflict of interest is unavoidable, the following mitigation processes must be adhered to:

Full disclosure of the actual or potential conflict of interest must be made to the Financial Service Board during the submission of the annual compliance report.

Annexure D – Disclosure of Conflicts

In situations where avoidance of conflicts are not possible, we will make appropriate disclosures to third parties including clients, as part of our management of conflicts of interest procedure. It is acknowledged that while disclosure alone will often not be enough, disclosure must be treated as an integral part of managing conflicts of interest. We are committed to adequately informing our clients about any conflicts of interest that may affect the provision of financial services to them. Our client must be afforded the opportunity to decide for him/herself whether the conflict of interest is significant and to what extent he/she will rely on the advice or intermediary service.

On the discovery and identification of a conflict of interest, and the subsequent determination of its unavoidability, the following disclosure processes will be implemented:

Annexure E – Processes and Procedures for Compliance Facilitation

Internal Controls and Processes include the following:

Annexure F – Consequences of Non-Compliance by Staff

Any non-disclosure or failure to disclose any conflict of interest, will be seen is a serious light and may result in disciplinary action being taken against the individual.

If there is reason to believe that an employee, Key Individual or a Representative has failed to disclose actual or possible conflicts of interest, the individual shall be afforded the opportunity to explain the alleged failure to disclose. If after hearing the response of the individual and making such further enquiries as may be warranted in the circumstances, and where management determines that the employee or representative has in fact failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.

Annexure G – How we are Remunerated

As a Financial Services Provider or representative, we are only entitled to receive or offer the following financial interests:

We receive the following remuneration from product suppliers: Commission, Management Fees, Performance Fees, Rebate on Trade Fees, Fees (Spread Fees / Trade Costs) and Treasury Fees (Points). All these Fees are disclosed to the client upfront.

Annexure H – Associates and Ownership Interests

Khwezi has no associations or ownership interests in any third party and no third party has any ownership interests in Khwezi.