Financial Sector Regulation Act in Effect

National Treasury

The Financial Sector Regulation Act has come into effect.

National treasury published the commencement notice in Government Gazette 41549.

The act was assented to in August 2017.

The act aims to put a twin peaks model of financial sector regulation in place in South Africa.

The twin peaks model will see the Financial Sector Conduct Authority overseeing market conduct while the Prudential Authority will take responsibility for prudential regulation.

The act also wants a Council of Financial Regulators set up to ensure cooperation between the twin peaks regulators and other financial sector-related regulators.

A Financial Services Tribunal is also on the cards to deal with appeals.

The act will put a single regulatory system in place thereby significantly reducing the potential for regulatory arbitrage or forum shopping.

The act will also set up a Financial Stability Oversight Committee, the Financial Sector Inter-Ministerial Council, the Financial Sector Information Register and the Ombud Council.

It provides for powers to gather information and to conduct supervisory on-site inspections and investigations.

Section 1, chapter 7 (sections 97 to 110), section 288, section 301 (4), section 304 and schedule 1 come into effect on the date of publication.

Other provisions come into force on different dates.

Meanwhile, treasury also published regulations in terms of sections 61(4), 288 and 304 of the act.

They set down the transitional processes to set up the Financial Sector Conduct Authority and the Financial Services Tribunal.

The regulations also outline the appointment processes for the commissioner and deputy commissioners of the Financial Sector Conduct Authority.

The regulations came into effect on the date of publication.

In a separate matter, treasury has published detail on a conversion of an allocation in respect of an indirect conditional allocation and the conversion of an indirect allocation to a direct allocation for the KwaZulu-Natal and Limpopo provinces.

Treasury has also published the Draft Foreign Member Funds Framework for comment.

In a statement, treasury pointed out that the proposed framework aims to create a “favourable regulatory environment that will facilitate the flow of foreign capital through South Africa and thereby make it seamless and attractive for foreign funds to be managed and invested into the rest of the continent and beyond through South Africa.”

Comment on the draft framework is invited until 30 April 2018.

Sabinet Cape Town Office

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