The importance of completing a record of advice for Short-term insurance policies in South Africa


Short-term insurance policies cater to a variety of needs in South Africa, from covering unforeseen household expenses to safeguarding against natural disasters. With the vast range of insurance options available, it’s crucial to choose a policy that suits your unique requirements, taking into account factors like your budget and potential risks. To ensure this, insurance providers need to tailor packages specifically for clients and offer advice based on an accurate assessment of associated risks. After all, a policy that works for one person may not necessarily work for another. Tailoring policies could be the difference between having adequate coverage during an unexpected event or potentially experiencing financial stress in the aftermath.

1. What is a Record of Advice (ROA)?

In simple terms, a ROA is a document that outlines the advice given by an insurance broker to their client. It’s a record of the discussion that took place between the broker and client, detailing the client’s needs, what products were recommended, and the reasons behind those recommendations. Essentially, it’s a paper trail for the entire insurance buying process.

In terms of Sections 3 and 9 General Code of Conduct (GCOC) issued in terms of the Financial Advisory and Intermediary Services Act No. 37 of 2002 (FAIS), Financial Services Providers (FSP), must prior to providing a client with advice comply with the requirements set out in the GCOC, which includes, but is not limited to the following:

(a) obtain from the client information regarding the client’s needs and objectives, financial situation, risk profile and financial product knowledge and experience that is deemed necessary for the FSP to provide the client with appropriate advice. The advice must take the following into account:

i) the client’s ability to financially bear any costs or risks associated with the financial product;

ii) the extent to which the client has the necessary experience and knowledge to understand the risks involved in the transaction; and

iii) where the client is a pension fund, medical scheme, friendly society, employer or other entity that is being advised on entering into a financial product or transaction aimed at providing benefits for its members, employees or other underlying natural persons, the reasonably identified collective needs and

(b) conduct an analysis based on the information obtained;

(c) identify the financial product or products that will be appropriate to the client’s risk profile and financial needs, taking into consideration the limitations imposed on the FSP under the FAIS Act or any contractual arrangement; and

(d) where as a result of limitations referred to in paragraph (c) the FSP is not able to identify a financial product or products that will be appropriate to the client’s needs and objectives, financial situation, risk profile and product knowledge and experience, the FSP must make this clear to the client, decline to recommend a product or transaction and suggest to the client that they should seek advice from another appropriately authorised FSP.

2. Why is a ROA important?

There are a number of reasons why completing a ROA is essential. Firstly, it provides proof that the broker did their due diligence by getting to know their client’s needs and recommending appropriate products. This can be especially important in the event of a dispute or claim.

Secondly, a ROA can help protect both the broker and the client. If there is ever a dispute, the ROA can be used as evidence to prove what was discussed and recommended. It can also help protect the client if they feel that they were given inappropriate advice. If the broker has recommended something that was not in the client’s best interest, they can be held accountable.

Lastly, completing a ROA is a regulatory requirement under the Financial Advisory and Intermediary Services (FAIS) Act. Failure to comply with this regulation can result in fines, suspension or even termination of a broker’s license.

3. How can a ROA benefit you and your Insurer?

For the client, completing a ROA means that you have a clear and concise record of what products were recommended and why. It ensures that you are fully informed about the products you’re buying and that you have selected the appropriate cover for your needs. It also provides you with peace of mind, knowing that your broker has done their due diligence and that you have legal protection in the event of a dispute.

For the insurer, having a completed ROA means that they have proof of the advice given and can use this in the event of a dispute or claim. It also ensures that the client has been properly informed about the products they’re buying, which can reduce the likelihood of disputes further down the line.

4. Why should a ROA be provided in writing?

When it comes to short-term insurance policies in South Africa, it is essential that clients receive accurate and comprehensive advice. And, equally important, is the recording of that advice in writing. By having a written record, both the client and insurer can be certain of the advice provided, reducing the likelihood of confusion or disagreements down the line. Providing a copy of this written record to all relevant parties ensures that everyone is on the same page and can refer back to the advice given at any point in the future. Ultimately, this leads to a more positive and transparent relationship between the client and insurer, with the client receiving the best possible advice and having access to insurance products that truly meet their individual needs.


When it comes to arranging a short-term policy for clients, ensuring that they receive the best possible advice should be a top priority for any FSP. Obtaining a record of advice is not only imperative for protecting the client’s financial interests but also for building trust in the relationship between the client and FSP. A comprehensive record of advice should cover all necessary aspects, including the client’s financial goals and objectives, any potential risks involved in the policy, and how the insurance product meets those goals and objectives. It should also provide clear-cut information about any conflicts of interest that may exist, important warnings or disclaimers associated with the policy, and any fees that may apply. Failing to obtain a detailed and accurate record of advice can result in complications and dissatisfied clients down the road. Therefore, it is essential for FSP’s to prioritise the documentation of record of advice to provide the best possible service to their clients.

Michelle du Plessis (nee Opperman)


Michelle du Plessis (nee Opperman) | Head of Governance & Compliance

Michelle Opperman is an admitted attorney with over 10 years’ experience in the legal industry, specialising in insurance for the past 7 years. She has extensive knowledge of the insurance industry and providing legal and technical advice and support to the business. As the Head of Governance and Compliance Michelle is responsible for identifying, managing, and reporting regulatory risks and assisting the business with overall compliance with legislation. Michelle views her role as a passion rather than a career and thrives on solving complex legal and compliance challenges.