Financial Crime World

The Financial Sector Conduct Authority (FSCA): Regulating South Africa’s Financial Landscape

Overview of the FSCA

The Financial Sector Conduct Authority (FSCA) is a regulatory body in South Africa responsible for overseeing the conduct of financial institutions and entities that provide financial products and services. The FSCA plays a crucial role in ensuring the stability, integrity, and fairness of the country’s financial sector.

Types of Entities Regulated by the FSCA

The following types of entities are regulated by the FSCA:

  • Credit Providers: Companies that offer loans or credit facilities to customers.
  • Debt Collectors: Agencies that collect outstanding debts on behalf of creditors.
  • Retirement Funds: Schemes that provide financial assistance to individuals in retirement.
  • Pension Fund Administrators: Entities responsible for managing pension funds.
  • Life Insurers: Companies that offer life insurance products, such as death benefits and savings plans.
  • Friendly Societies: Organizations that provide social services and financial support to their members.
  • Non-life Insurers: Companies that offer non-life insurance products, such as property and liability insurance.
  • Payment Service Providers: Entities that facilitate payments between customers and merchants.
  • Commercial Banks: Institutions that provide banking services, including deposits, loans, and transactions.
  • Medical Schemes: Organizations that provide medical benefits to their members.
  • Financial Benchmark Providers: Entities that develop and maintain financial benchmarks.
  • Co-operative Financial Institutions: Member-owned organizations that provide financial services to their members.
  • Mutual Banks: Banks owned by their customers, who share the risks and profits of the institution.

Emerging Risks and Regulatory Approach

The FSCA has stated its intention to regulate emerging risks such as cryptocurrencies and property syndication schemes through a “substance over form” approach. This means that the authority will focus on the underlying activities and outcomes rather than just the formal structure or designation of an entity.

History and Evolution of the FSCA

The FSCA was established on April 1, 2018, replacing the Financial Services Board (FSB). Some key differences between the roles and operations of the FSCA and the FSB include:

  • Broader Mandate: The FSCA has a broader mandate that includes all financial institutions, whereas the FSB’s jurisdiction was limited to the non-banking financial sector.
  • Dedicated Market Conduct Regulator: The FSCA is a dedicated market conduct regulator, whereas the FSB had combined prudential and market conduct regulatory powers.
  • Governance Structure: The FSCA has its own governance structure, with an Executive Committee comprising the Commissioner and Deputy Commissioners appointed by the Minister of Finance.
  • Functional Design: The FSCA has a functional design, with cross-cutting licensing, enforcement, and conduct of business supervision divisions.