Twin Peaks Bill Tabled in Parliament

National Treasury

The Financial Sector Regulation Bill has been tabled in parliament.

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

The twin peaks model will see the Financial Services Board overseeing market conduct while the Reserve Bank will take responsibility for prudential regulation.

The proposed legislation calls on the Reserve Bank to “promote and maintain financial stability within an agreed policy framework”.

The bill also wants a Council of Financial Regulators to be 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 bill will put a single regulatory system in place thereby significantly reducing the potential for regulatory arbitrage or forum shopping.

According to a statement issued by national treasury, the proposed legislation seeks to make the local financial sector safer by reducing potential threats to financial stability and ensuring that financial institutions treat their customers fairly.

The bill will be processed by the standing committee on finance.

Meanwhile, treasury has also called for comment on the timing of uniform taxation and annuitisation for retirement funds as provided for in the Taxation Laws Amendment Bill.

Government wants to press ahead with tax reforms pertaining to retirement funds.

The tax deduction benefit will be extended to provident fund members thereby harmonising the tax treatment of all contributions to retirement funds. The deduction will be limited to 27.5% of taxable income or R350 000 whichever is the lesser.

Treasury seeks input on two options outlined in the statement.

Comment is invited until 2 November 2015.

It can be emailed to retirement.reform@treasury.gov.za.

A raft of other finance bills has also been tabled in parliament.

Included are the:

•    Taxation Laws Amendment Bill
•    Tax Administration Laws Amendment Bill
•    Finance Bill
•    New Development Bank Special Appropriation Bill
•    Financial Intelligence Centre Amendment Bill

The Financial Intelligence Centre Amendment Bill intends enhancing South Africa’s AML and CFT regulatory regime by:

•    Providing for the implementation of the United Nations Security Council Resolutions relating to the freezing of assets;
•    Enhancing the supervisory powers of the FIC and extending its functions in relation to suspicious transactions;
•    Providing for the adoption of a risk-based approach to customer due diligence measures;
•    Introducing the concepts of beneficial ownership, on-going due diligence, and foreign and domestic prominent influential persons;
•    Enhancing the customer due diligence requirements;
•    Dissolving the Counter-Money Laundering Advisory Council; and
•    Improving certain administrative and enforcement mechanisms.

The bills will also be processed by the standing committee on finance.

Sabinet Cape Town Office

Related legislation: