New Twin Peaks Regulators Established
The Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA) now in charge
Those of us tasked with staying abreast of regulatory change can be forgiven for mistaking the Easter weekend with the December holidays, given the vast amount of new information published since last Thursday.
A media release by Treasury provides the background to the new order.
On 1 April 2018, South Africa’s financial regulatory system will fundamentally change, as two new regulators come into operation - the Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA). This implements a new Twin Peaks model of financial sector regulation in South Africa.
Deputy Governor Kuben Naidoo is appointed as the CEO of the Prudential Authority. Established within the South African Reserve Bank, the PA will supervise the safety and soundness of all financial institutions. The FSR Act also provides for stronger oversight of financial conglomerates and of systemically important financial institutions (SIFIs). The Minister of Finance will initiate the legislated process to appoint a Commissioner and Deputy Commissioners for the FSCA, expected to take three months. The FSCA will supervise how financial institutions conduct their business and treat customers. It will be responsible for significantly improving customer protection in the financial sector, and driving better customer outcomes, ensuring that the sector serves South Africans best. It is also responsible for the efficiency and integrity of financial markets.
The current Financial Services Board (FSB) closed down on 31 March 2018. Transitional plans for the closing down of the FSB and the establishment of the FSCA are well-progressed. A Transitional Management Committee will be responsible for implementing transitional plans, until a FSCA Commissioner and Deputy Commissioners have been appointed. The chair of the FSB Board, together with the current executive committee of the Financial Services Board, are included in the Transitional Management Committee in order to ensure a smooth and non-disruptive process.
Both the PA and FSCA will publish regulatory strategies within six months of their establishment, setting out in further detail their intended regulatory focus areas and work plans over the next three years.
A Commencement Notice and Regulations have been published in the Government Gazette to give effect to the relevant provisions of the Financial Sector Regulation Act (Act 9 of 2017)(FSR Act) that provides for the Twin Peaks system.
In order to ensure a well-managed and non-disruptive transition to the new model, certain provisions of the FSR Act will be phased in over time. Once fully phased in, the Twin Peaks regulatory model will focus on a more harmonised system of licensing, supervision, enforcement, customer complaints (including ombuds), appeals, and consumer advice and education across the financial sector.
Ensuring that there is co-ordination across all regulators in the financial system is an important supporting pillar. These regulators include the PA and FSCA, the National Credit Regulator, the Financial Intelligence Centre, the Council for Medical Schemes and the South African Reserve Bank.
Both institutions’ websites are also live:
The Commencement Notice and Regulations can be found on www.treasury.gov.za/twinpeaks.
Paul Kruger: Moonstone Compliance (Pty) Ltd
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