Bank bill aims to ensure fair charges

The Conduct of Financial Institutions (Cofi) Bill, destined for Parliament by year-end, will impose standards on products and services offered by banks, including assessing whether charges levied are fair, says the Banking Association SA (Basa).

Banks had adopted treatingcustomers-fairly principles in the interim and were working hard to reach necessary outcomes, said Marguerite Jacobs, Basa’s GM for legislation and regulatory oversight.

This included reducing the costs of certain products and services, Jacobs said.

Cofi would consolidate market conduct regulation of banks, she said. This would be the first time banks reported to a designated market conduct regulator.

The bill, which replaced 13 financial sector laws, was expected to reach Parliament by the end of 2017 or early in 2018, said Kershia Singh, deputy director at the Treasury.

This depended on when twin peaks, or the Financial Sector Regulation Bill, which is before Parliament, is promulgated.

Under twin peaks, the Prudential Authority will replace the Reserve Bank in overseeing financial soundness.

The Financial Services Conduct Authority (FSCA) will replace the Financial Services Board (FSB) and supervise market conduct of financial firms.

The FSCA, which would ensure firms treat customers fairly, will examine company culture, including how staff were incentivised, said Caroline da Silva, deputy executive officer for financial advisory and intermediary services at the FSB.

It is widely thought bank traders involved in manipulating forex trades did so for profit and bigger bonuses, which speaks to incentive structures.

The FSCA would also have jurisdiction over the conduct of credit providers, said Da Silva.

The National Credit Regulator would continue to regulate credit products. The two were drafting an agreement to delineate their roles under twin peaks, she said.