South Africa’s Financial Regulatory Bodies Split into Two New Agencies
In a major overhaul of the country’s financial regulatory landscape, the Financial Services Board (FSB) has been dissolved and its responsibilities split between two new agencies: the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA). This significant change is expected to bring greater efficiency and effectiveness to South Africa’s financial sector.
Background
The FSB was established in 1990 with a mandate to supervise and regulate non-bank financial services in South Africa. Over the years, its role expanded to include aspects of market conduct in the banking industry and combating money laundering. The Financial Sector Regulation Act (FSR Act), signed into law in August 2017, paved the way for the reorganization of the FSB into two separate agencies.
New Agencies
The Financial Sector Conduct Authority (FSCA) has taken over the FSB’s responsibilities for market conduct, including regulating financial products and services provided by licensed financial institutions. The FSCA is responsible for ensuring that financial institutions comply with relevant legislation and capital adequacy requirements.
The Prudential Authority (PA) has assumed the FSB’s prudential supervision role, focusing on regulating banks, insurers, cooperative financial institutions, financial conglomerates, and certain market infrastructures.
Key Responsibilities
- The FSCA is responsible for:
- Regulating financial products and services provided by licensed financial institutions
- Ensuring compliance with relevant legislation and capital adequacy requirements
- Running a customer complaints service and an independent appeals board
- The PA is responsible for:
- Regulating banks, insurers, cooperative financial institutions, financial conglomerates, and certain market infrastructures
- Providing prudential supervision to ensure the stability of the financial system
Legacy and Impact
The FSB’s dissolution marks a significant change in South Africa’s financial regulatory landscape. While some experts welcome the move as a step towards greater efficiency and effectiveness, others are critical of the FSB’s failure to prevent several high-profile scandals and disasters in the country’s pension funds industry.
Despite its failures, the FSB played a significant role in promoting financial stability and consumer protection in South Africa. Its legacy will be remembered as an important milestone in the country’s journey towards financial sector regulation.
Conclusion
The split of the FSB into two new agencies is expected to bring greater efficiency and effectiveness to South Africa’s financial sector. The FSCA and PA are tasked with promoting financial stability and protecting consumers, and their success will be crucial in shaping the country’s financial future.