Financial Sector Regulation Act 2017 – What It Means For SA Economy

Financial Sector Regulation Act 2017 – What It Means For SA Economy

South Africa (SA) follows other jurisdictions, such as the UK in implementing a Twin Peaks approach to regulation. Having dedicated regulatory authorities for prudential and conduct matters. In SA, these regulatory bodies will be the Prudential Authority (PA) and Financial Sector Conduct Authority (FSCA) respectively. 

The FSR Act, promulgated on 21 August 2017 and effective from 1 April 2018, provides a robust framework for the financial sector. It’s intended to support an extensive regulatory system. The Act is considered to be the most significant reform of the South African financial sector regulatory architecture in over 30 years. 

The current Financial Services Board (FSB) will ultimately be replaced by the FSCA. And the South African Reserve Bank will become the resolution authority responsible for protecting, maintaining and enhancing financial stability. 

The purpose of the FSR Act is to reinforce financial stability and maintain the soundness of individual institutions while protecting their customers. Other objectives of the Act include ensuring fair treatment of customers and productivity of the financial system, the prevention of financial crime, monetary consideration, changes of the sector and trust in the financial system. 

The FSR Act aims to improve the structure of the regulation of financial services by ensuring more consistent and complete regulation. It gives the PA and the FSCA jurisdiction over all financial institutions and will provide them with a range of supervisory tools to fulfill their objectives. 

There are no longer separate regulators for banks and insurers. The PA is responsible for the oversight of activities of financial institutions from a prudential perspective, and the FSCA is responsible for regulating conduct activities.  

The new regulators have the power to create regulatory standards and have supervisory tools and enforcement powers at their disposal, to enable them to fulfill their objectives. Sanctions may be imposed on organisations and individuals found to be in contravention of financial sector laws and regulations in the scope of the FSR Act. 

Categories: Finance

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