The Financial Sector Conduct Authority recorded a surplus of R118.7 million in 2025/26, reversing a budgeted R25.3m deficit after revenue came in R135.7m above forecast and expenditure R5.3m below budget.
The FSCA’s 2025/26 Integrated Report, published this week, shows that levies remained the regulator’s dominant source of income, accounting for almost 89% of revenue, while operating expenditure increased by 13%. Its audited financial statements also show that a R4.06 billion gross penalty-debtor balance was subject to a R4.04bn impairment allowance because of uncertainty about recoverability.
The surplus was R85.2m lower than the restated R203.9m recorded in 2024/25. The previous year’s figure was restated for prior-period errors identified during the current financial year.
The FSCA attributed the decline in its annual surplus primarily to the impairment of penalty receivables and increases in other expenditure.
The Auditor-General of South Africa issued an unqualified audit opinion on the financial statements.
Levy revenue exceeds forecast
The FSCA generated total revenue of R1.235bn, an increase of 4% from R1.19bn in the previous year.
Levies provided R1.093bn, up from R1.063bn in 2024/25. The financial advisory and intermediary services sector was the largest contributor, accounting for 32% of levy income. The insurance sector contributed 19%, retirement funds 18%, and the other regulated sectors collectively contributed 31%.
Revenue from non-exchange transactions was R91.9m above budget, mainly because annual levy variable increases were higher than budget.
Non-exchange revenue consists predominantly of statutory levies. These are not payments for services of approximately equal value supplied directly to individual levy payers.
Revenue from exchange transactions was R43.7m above budget, mainly because interest earned on investments was higher than expected and additional income was received that had not been budgeted for.
Exchange revenue includes fees and service charges, legal fees and other cost recoveries, interest income, dividend income, and other income.
Expenditure rises but remains within budget
Operating expenditure increased by R132.2m, from R987.5m to R1.12bn, compared with revenue growth of 4%.
Salaries, staff benefits, training, and other staff expenses rose by 8.4%, from R744.1m to R806.8m. These costs accounted for about 72% of operating expenditure and were R25.1m above budget.
The FSCA’s workforce increased by 3%, from 681 to 704 employees during the year.
Other expenses included R137.9m in other operating expenses, R39m in building rentals, R20.7m in professional and consulting fees, R18.1m in depreciation and amortisation, and R13.6m in legal fees.
Executive management remuneration increased from R20.6m to R21.4m. This covered Commissioner Unathi Kamlana and the three deputy commissioners.
Although staff costs were R25.1m above budget and an unbudgeted impairment loss of R54.2m was recognised, lower spending in several other categories kept total expenditure R5.3m below forecast.
Most of the penalty-debtor balance is impaired
At 31 March 2026, the FSCA had recorded gross penalty debtors of R4.064bn, up from R1.076bn a year earlier.
An impairment allowance of R4.042bn had been recognised against the balance, leaving a net carrying amount of about R22.2m.
The impairment is an accounting assessment of recoverability rather than a reduction in the gross legislative value of the receivables. In practical terms, the penalties remain recorded at their full legislated amounts, but the financial statements recognise that only a small portion could be treated as recoverable at year-end.
The FSCA’s accounting policy states that statutory receivables are recorded at their gross legislative value and impaired based on management’s assessment of recoverability, historical collection trends, legal enforceability, and collection status.
The FSCA said enforcement penalty receivables can be difficult to recover because of factors including company liquidations, debarments, and other circumstances that limit recoverability.
The significant increase in the impairment provision related primarily to enforcement penalties raised during 2025/26 on behalf of National Treasury. Recoverability remained uncertain because of ongoing legal processes and the collection-risk assessments performed at year-end.
The reconciliation of the impairment provision records R3.031bn in additions relating to enforcement penalties administered on behalf of National Treasury. This is distinct from the R54.2m impairment loss recognised in the FSCA’s own statement of financial performance.
Enforcement penalties are paid into the National Revenue Fund
The annual financial statements provide further context for the R2.8bn in penalties and fines reported as an enforcement outcome.
The principal-agent note records R2.834bn in penalties invoiced on behalf of National Treasury during 2025/26, as well as R150.5m in interest on overdue accounts.
The enforcement outcome and the amount invoiced under the principal-agent arrangement should not be treated as interchangeable because “imposed” and “invoiced” are different reporting concepts.
The FSCA administers the invoicing and collection of penalties imposed under the Financial Sector Regulation Act on behalf of National Treasury. Amounts recovered are paid into the National Revenue Fund rather than recognised as FSCA operating revenue.
The FSCA separately recognised R3.17m in penalty revenue under the sectoral legislation it administers, including penalties for the late submission of returns. This income is transferred to its discretionary reserve.
Cash balance rises to R949m
The FSCA generated R109.4m in net cash from operating activities and used R23.6m in investing activities, resulting in an R85.8m increase in cash and cash equivalents.
At year-end, it held R948.8m in cash and cash equivalents, comprising R633.5m in short-term deposits and R315.3m in bank balances. The short-term deposits are invested primarily with the Corporation for Public Deposits.
The financial statements identify several amounts within cash and cash equivalents that are internally designated for specific purposes:
- R217.6m to fund capital requirements and protect operating capacity against inflation and unforeseen events;
- R70.9m in discretionary funds for consumer education and consumer-protection expenditure; and
- R18.6m in an investment trading account designated to fund post-retirement medical scheme obligations.
The FSCA’s accumulated surplus increased from R841.5m to R960.2m.
Its accounting policy states that the accumulated surplus is used to fund working capital, capital expenditure, budgeted deficits, and unforeseen events. It is maintained at about two to six months’ operating expenditure, and National Treasury’s approval is obtained annually for the FSCA to retain it.
The accumulated surplus includes invoices that have not yet been collected, so the full balance is not necessarily represented by cash at year-end.
Net current assets, which the integrated report describes as working capital, increased from R702m to R812m.
Gross levy receivables rose from R81.1m to R107.6m. The FSCA collected 94.82% of invoiced levies by year-end, missing its target of 98% because late approval of its budget by Parliament and National Treasury delayed invoicing.
To download the report, go to www.fsca.co.za > About Us > Annual Reports
