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Banking Regulations Compliance in South Africa: Post-Conduct Standard Era

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In July 2020, the Financial Sector Conduct Authority (FSCA) introduced the Conduct Standard for Banks to ensure fair treatment of financial customers. This regulatory framework enables the FSCA to supervise the market conduct of South Africa’s banking sector, as outlined in the Financial Sector Regulation Act, 2018.

Treating Customers Fairly Outcomes

The Conduct Standard is designed to give effect to six Treating Customers Fairly (TCF) Outcomes:

  • Providing customers with clear information and keeping them informed before, during, and after a sale.
  • Ensuring that banks conduct business with integrity, honesty, due care, skill, and diligence.

Governance and Oversight Mechanisms

Section 3 of the Conduct Standard requires banks to demonstrate how fair treatment of customers is central to their culture, governance, and oversight mechanisms. Banks must:

  • Avoid conflicts of interest.
  • Conduct business with transparency and accountability.

Additional Requirements for Retail Financial Customers

The FSCA has imposed additional requirements in sections 2, 4, 6, 7, and 8 of the Conduct Standard to ensure fair treatment of retail financial customers.

Transparency and Disclosure

The Conduct Standard aims to promote transparency and disclosure relating to the offering of financial products and services targeted at appropriate customer groups. The standard also empowers the FSCA to:

  • Identify risks that may negatively impact customers.
  • Engage with banks to remedy the situation or seek redress.

Impact on Banking Sector

Banks will need to assess the potential cost implications of implementing this Conduct Standard, which is expected to lead to improved outcomes for customers. As a result, ENS will be hosting an upcoming webinar on July 21, 2020, to explore the impact of the Conduct Standard on the banking sector.

Topics Covered

  • Advertising
  • Liability for distribution networks
  • Product design
  • Customer complaints
  • Termination or switching of financial products