New entity to regulate financial sector established

FINANCE Minister Nhlanhla Nene has signed the Commencement Notice for the Financial Services Board (FSB), formally establishing the Financial Sector Conduct Authority (FSCA) and its sister organisation, the Prudential Authority.

The FSCA said in a statement this week that the FSB had officially taken up its new mandate as the FSCA, effective April 1 this year. This marks the formal implementation of the Twin Peaks model of financial sector regulation, as envisaged in the Financial Sector Regulation Act (FSRA). The FSCA’s key objectives are to: • Protect customers by promoting their fair treatment by financial institutions, providing education and promoting financial literacy;

• Enhance and support the efficiency and integrity of financial markets;

• Assist in maintaining financial stability; and

• Support inclusion and transformation in the financial sector.

FSCA says there won’t be a “big bang” approach to its implementation of the FSCA’s mandate, but gradual changes over the course of the year as sections of the FSRA come into operation. “In the main, financial institutions can expect their interactions with us to be business as usual in the short term.”

It says there are, however, a few immediate changes:

• All communications, regulatory actions and decisions will now be in the name of the FSCA.

• The new website, www.fsca.co.za, is live. All the key information that was available on the FSB website is still accessible.

• A Financial Sector Tribunal has been established, which any entity aggrieved by an FSCA decision can approach for adjudication. The tribunal replaces the FSB Appeal Board.

In terms of the FSRA, a commissioner and deputy commissioners will make up the executive committee that will lead the FSCA.

The minister published regulations setting out the process whereby the commissioner and deputy commissioners will be appointed, and it is expected that this process will start soon, says the FSCA.

“As an interim measure, the minister has determined that a transitional management committee will manage the FSCA until the commissioner is appointed. The committee has commenced its work, and its members will stay on in an advisory capacity for three months after the commissioner has been appointed. This process will ensure a seamless transition to the FSCA,” reads the statement.