The Financial Sector Regulation Bill, referred to in the article above, provides important information on the way forward as far as regulating the financial world is concerned.
The shift from the current status to the “twin peaks” model will be done in two phases.
This Bill only deals with the first phase – to establish the relevant authorities, to empower them with more general and consistent powers, and establish a common system for regulatory actions.
The second phase, which is expected to be effected in 2015, will focus on harmonising the sectoral law, like the Banks Act, Long-term Insurance Act, Short-term Insurance Act, and the Financial Advisory and Intermediary Services Act, into law streamlined to focus on either prudential or market conduct standards. Amendments to the Financial Sector Regulation Bill are expected to follow at this time.
The purpose of the proposed legislation is as follows:
- To establish regulatory authorities for the purposes of strengthening financial stability and the fair treatment of financial customers in the interest of a safer financial sector;
- To establish and provide for the Financial Stability Oversight Committee, the Prudential Authority, and the Market Conduct Authority;
- To provide for co-operation between the regulatory authorities, including co-operation in rule making;
- To provide for co-operation between regulatory authorities and other financial regulators;
- To promote the maintenance of financial stability;
- To provide for the management and mitigation of financial crisis;
- To provide for administrative penalties;
- To provide for the establishment of the Financial Services Tribunal to hear appeals;
- To provide for regulations and codes of good practice;
- To provide for transitional provisions; and
- To provide for matters connected therewith.
The focus on improved co-operation between various regulatory authorities will go a long way to help dispel the perception that, in the past, the left hand did not know what the right hand was doing. From an advisor perspective, it is important to understand what you are required to do. Most of us are inherently keen to do the right thing, but then we need to know what it is.
The regulatory exams certainly contributed a lot in this regard. It is not clear what the way forward is in terms of the proposed amalgamation of the various pieces of legislation under the Financial Services Laws General Amendment Bill and the level 2 REs. The latter have been postponed for an indefinite period. No doubt, the changes proposed for 2015, as indicated above, will need to be incorporated in such legislation.
It is vital that industry representative bodies contribute to the discussions, and finalisation, of the proposed new and amended legislation. There will be ample opportunity to assist in creating regulations that achieve in practice what the theory sets out to do.
A public workshop on the Financial Sector Regulation Bill was planned for December, but in view of Madiba’s passing away, it was postponed to January 2014. Details will be communicated in the next week or two. Interested persons are invited to submit their contact information to CommentDraftLegislation@treasury.gov.za or faxed to 012 315 5206.
To download a copy of the news release on the publication of this Bill, please click here.
A copy of the actual Bill can be downloaded here.