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Settle Payments: A Game-Changer for Financial Markets

As the world becomes increasingly digital, the financial sector is undergoing a significant transformation. Settle payments, a technology that enables instant and secure transactions, is set to revolutionize the way we think about money. With the potential impact on financial markets being substantial, it’s essential to understand the operational, legal, and policy implications of this innovation.

Retirement Reforms

The National Treasury has been working tirelessly to address outstanding issues from the retirement reform process initiated in 2011. Two papers were released in 2021, proposing measures to:

  • Increase household savings
  • Improve flexibility through partial access to retirement funds
  • Widen coverage

The introduction of automatic enrolment is also expected to lead to mandatory enrolment for employed individuals who are not members of a retirement fund.

Governance of Umbrella Funds

The second paper focused on improving the governance of retirement funds, particularly commercial umbrella funds. It proposes that:

  • Members elect at least 50% of the board of trustees, which is currently not a requirement for commercial umbrella funds

Regulation and Legislation

Regulation 28 of the Pension Funds Act (1956) provides maximum investment limits for retirement funds. The Minister of Finance has initiated a process to amend this regulation to:

  • Enable greater infrastructure investment by retirement funds
  • Improve data reporting on such investments

The amendments are expected to be gazetted into law by March 2022.

Conduct of Financial Institutions Bill

The National Treasury has revised the Conduct of Financial Institutions Bill based on feedback from stakeholders. The bill aims to empower the Financial Sector Conduct Authority (FSCA) to:

  • Deliver its mandate, including the fair treatment of customers and the integrity of the financial system

Financial Sector Transformation and Financial Inclusion

The FSCA will publish its transformation strategy in February 2022, outlining its approach to promoting financial sector transformation within the existing policy framework. The strategy will set out how the FSCA intends to effect key proposals in the Conduct of Financial Institutions Bill and will be published for public comment.

Financial Inclusion Strategy

The National Treasury facilitated workshops with stakeholders during 2021 to discuss comments received on the draft policy paper “An Inclusive Financial Sector for All.” The policy framework aims to promote financial inclusion in South Africa and has been revised. The National Treasury will work with industry and civil society working groups and forums to develop a financial inclusion strategy to implement the new policy framework from 2023 to 2033.

As settle payments continue to shape the future of finance, it’s essential for policymakers, regulators, and stakeholders to stay informed about the latest developments and their implications. Stay tuned for further updates on this game-changing technology.