The FSCA

It’s a new dawn for the financial services sector as the new Twin Peaks regulators officially opened their doors in April 2018.

The Financial Sector Regulation Act (FSRA), which was signed into law in August 2017, established two new financial sector regulators - the Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA) - both will reform the regulatory and supervisory system of the financial institutions.

The FSCA, which will regulate the conduct of the financial services providers, has replaced the Financial Services Board (FSB), while The PA will be located within the South African Reserve Bank (SARB) and will be responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates and certain market infrastructures.

According to the FSCA, there will not be a “big bang” approach to the implementation of its mandate, but rather gradual changes over the course of the current year, as sections of the FSRA come into operation in a phased manner. “In the main, financial institutions can expect their interactions with us to be business as usual in the short term,” it said in a statement released in April.

The FSCA’s key objectives will be to:

  • protect financial customers by promoting their fair treatment by financial institutions, providing financial education programmes, and promoting financial literacy
  • enhance and support the efficiency and integrity of financial markets
  • assist in maintaining financial stability
  • support the overall policy objectives of financial inclusion and transformation of the financial sector.

The FSCA explains that as an interim measure, Finance Minister Nhlanhla Nene has determined that a Transitional Management Committee will manage the FSCA until the Commissioner is appointed. The Committee comprises of the members of the former FSB Executive Committee, the Chairperson of the former FSB Board, Mr Abel Sithole, and a National Treasury appointee, Ms Katherine Gibson.

The Committee will perform all the functions of the FSCA Executive as described in the FSRA, while Mr Sithole will be caretaking as the FSCA Commissioner, until the new Commissioner is appointed. The Committee has commenced its work and its members will stay on in an advisory capacity for a period of three months after the Commissioner has been appointed.

This process will ensure a seamless transition to the FSCA. During the course of the coming twelve months there will be gradual changes within the organisation, such as a new functional organisation design that is better aligned to the FSCA’s new mandate than the current sectorial structure. The FSCA will also undertake up-skilling of current staff and recruitment of new skills and expertise to address the expanded mandate.

The commencement of the FSCA is a significant milestone on the path to ensuring that “our vibrant financial sector drives improved outcomes for all South Africans” says FSCA. The entity look forward to its new mandate and is committed to executing it in the best way possible.”