Financial institutions face a proposed 3.7% increase in Prudential Authority (PA) levies and fees for 2027/28, even as the regulator plans to cut its overall expenditure by more than R300 million.
The PA’s proposed budget falls from R1.536 billion in 2026/27 to R1.224bn, a reduction of R312m, or 20.3%. Despite this, it proposes increasing levies and fees by 3.7%.
The increase is provisional and will be revised once Statistics South Africa (Stats SA) publishes the applicable Consumer Price Index (CPI) measure. For consultation purposes, the PA has used the Monetary Policy Committee’s May 2026 projection that inflation will average 3.7% in 2027.
The PA, a juristic person operating within the administration of the South African Reserve Bank, published its proposed budget, levies, and fees for public comment on 17 August 2026, as required by the Financial Sector Regulation Act (FSRA).
The financial institutions subject to PA supervision include banks, insurers, co-operative financial institutions, certain market infrastructures, over-the-counter derivative providers, and the Road Accident Fund. The market infrastructures covered by the levy schedule include exchanges, central securities depositories, clearing houses, central counterparties, and trade repositories.
The Financial Sector and Deposit Insurance Levies Act provides for levies to be imposed on supervised entities to fund the PA. Levies to fund the PA became payable under the Act on 1 April 2023. Table A in Schedule 1 sets out the formula for calculating the levy payable by each type of institution.
The levy generally consists of a base amount plus one or more variable amounts calculated using entity-specific measures, such as total liabilities, gross written premiums, or the value of trades cleared or settled. Applicable maximum amounts place a cap on the levy payable.
The PA proposes increasing the base amounts and, where applicable, the variable rates by 3.7%. The maximum levies payable would also increase by 3.7%.
Click here to download the proposed levies for each supervised entity in 2027/28.
Funding the PA
The PA says it is reviewing its funding model to promote greater financial independence. It says greater financial independence would be promoted if regulated entities bore the cost of prudential regulation and supervision, because they benefit from a stable, credible, and well-supervised financial sector.
The PA expects to receive about R667m from levies and fees in 2027/28, against total estimated expenditure of R1.224bn. The SARB is expected to contribute the remaining R557m.
Levies and fees would therefore cover about 54% of the PA’s total expenditure.
The position is different when measured against direct costs. The PA estimates its direct costs at about R855m, of which levies and fees would fund approximately 78%, with the SARB contribution covering the balance.
The PA says the principle underpinning its funding approach is that regulators should be appropriately and adequately funded to discharge their statutory mandates. It says operational budgets should ideally be funded by regulated entities in a way that supports regulatory effectiveness and mitigates potential conflicts of interest.
Levies and fees
The PA expects to collect approximately R656m in levies in 2027/28.
Banks are expected to contribute about R352.8m, or 54%, of the total. Insurers are expected to contribute about R268.3m, or 41%, while financial market infrastructures are expected to contribute about R34.5m, or 5%.
The proposed fees would also increase by 3.7%, in line with the proposed levy increase. The PA says the principle of proportionality was applied in determining the proposed fees for different types of supervised entities, with the aim of supporting financial inclusion and financial sector transformation objectives.
Fees operate on a user-pay basis. They are charged when the PA performs specified functions in response to applications and certain notifications. A supervised entity that does not request the PA to perform a specific function will not pay a fee.
The PA expects to collect about R11m in fees in 2027/28. Insurers are expected to account for 87% of projected fee revenue, with banks and other deposit-taking institutions accounting for the remaining 13%.
The PA says fees account for about 2% of the revenue it collects, compared with 98% from levies.
Click here to download the proposed fees for the 2027/2028 financial year.
Where the budget is changing
The 20.3% reduction in total expenditure does not represent an across-the-board reduction in the PA’s costs.
Operational costs are budgeted to fall from about R410m in 2026/27 to R208m in 2027/28, a reduction of 49.3%. This is driven mainly by professional fees, which decline by 59.36%, from about R329.5m to R133.9m, and total travel expenditure, which falls by 57.34%, from about R42.4m to R18.1m.
The PA says professional fees are difficult to predict because they are affected by the nature and progress of investigations, including investigations into illegal deposit-taking schemes and supervised institutions. The allocation also includes specialist support for its AML/CFT supervision.
Separately, the PA has made no provision for capital expenditure in 2027/28.
Personnel and technology
Personnel expenditure is budgeted to increase from about R602m to R647m, an increase of approximately 7.5%.
The PA has factored 61 additional positions into its 2027/28 salary budget. The PA has an approved headcount of 522. Its staffing information shows that a substantial number of approved positions were not occupied at the time of the budget preparation.
Technology is another area of increased expenditure.
Operational IT expenditure is budgeted to increase sharply, from R10m in 2026/27 to R23.6m in 2027/28, an increase of 136%.
The PA also refers to the ongoing development of its IT Solution as part of its broader supervisory technology, or Suptech, transformation. The Strategic Technology Solution is intended to support the collection, validation, storage, analysis, and dissemination of data. The PA expects the IT Solution to cost R1.1bn over the 10-year period from 2020 to 2030.
Final increases will depend on CPI
The proposed 3.7% increase is not necessarily the final increase.
The PA has used the SARB MPC’s May 2026 projected 2027 CPI rate of 3.7% for purposes of the consultation. The applicable Stats SA figure for 2027 had not yet been published when the proposals were prepared and is expected in December 2026.
The final levy increase will therefore be revised once the 2027 CPI figure is published.
However, section 10(4)(b) of the Levies Act provides for the levy schedules to be increased by the arithmetic mean of the CPI published by Stats SA in the preceding calendar year. The PA says the proposed adjustment will be revised when Stats SA publishes the applicable figure in December 2026. The proposed fee increase is aligned with the levy adjustment.
The Minister of Finance may amend a levy schedule by notice in the Government Gazette to give effect to the increase. The PA’s explanatory document says such an amendment does not require submission to Parliament for approval, although a copy of the notice must be tabled in Parliament for information.
The PA’s proposed fees determination is a separate regulatory instrument. It provides for fees payable in respect of specified applications and notifications under the Insurance Act, Banks Act, Mutual Banks Act, Co-operative Banks Act, and the FSRA.
Comments must be submitted using the PA’s prescribed template and sent to PA-Finance@resbank.co.za. Submissions are due by 30 September 2026.
