HOW YOU’LL BE BETTER PROTECTED

WHILE the Prudential Authority will look after the stability of financial institutions, the Financial Sector Conduct Authority will have a more direct effect on your dealings with services providers.

The mandate of the Conduct Authority, Desiree Reddy and Sascha Graham say, will be to protect you by:

• Ensuring that financial institutions treat you fairly;

• Enhancing the efficiency and integrity of the financial system; and

• Providing financial customers and potential customers with financial education programmes, and otherwise promoting financial literacy and financial capability.

In the past, some types of financial companies, notoriously property syndications, fell between cracks in the legislation. In keeping with the consumer-protection objective of the twin peaks model, Reddy and Graham say, the Financial Sector Regulation Act makes provision for the publication of regulations that designate, as a financial product, any facility or arrangement that is not currently regulated in terms of a specific financial sector law.

“It is likely that financial providers that have until now managed to operate outside the ambit of financial regulation will be caught within the scope of the new regulation,” Reddy and Graham say.

In falling under the ambit of the Conduct Authority, banks will be more tightly regulated than in the past in terms of customer service and applying Treating Customers Fairly principles. “While banks may until now have been regulated on primarily a prudential level, they will be regulated equally strictly on the market conduct front,” Reddy and Graham say.