Twin Peaks Legislation in the Pipeline

National Treasury

National treasury has reiterated that legislation designed to introduce the twin peaks approach to financial regulation in South Africa should be introduced in parliament in 2013.

This was revealed in a statement issued following a recent meeting between the finance minister, Pravin Gordhan, and senior executives in the banking industry.

The meeting looked at the role of banks in South Africa’s society, in particular, the role that they could play in meeting the country’s socio-economic challenges.

Treasury added that the move to a twin peaks approach to financial regulation will result in the setting up of a “dedicated market conduct regulator”.

“This regulator will take steps to ensure transparency in banking fee structures, competitive banking conditions and work towards a single approach to treating customers fairly that spans across the entire financial sector, including banks”.

During the meeting, participants drew attention to the rapid rise in unsecured lending in South Africa, both by banks and by retailers.

The meeting agreed that banks could do more to ensure that lending took place in a responsible manner.

Treasury announced that more interaction with financial and non-financial institutions on the issue of unsecured lending will take place. The South African Reserve Bank’s bank supervision department is responsible for monitoring this.

In terms of a working relationship between the financial sector and government, the finance minister will coordinate all attempts to remove any blockages that may currently exist.

This would help, in particular, to free up capital to assist South Africa’s infrastructure build programme.

The financial sector could also help to provide necessary skills to aid in the implementation of the programme.

Banks reported that their profitability was up and confirmed that big business has built up large cash balances.

“This provided opportunities going forward to unlock money for investment in emerging economies”.

Sabinet Cape Town Office

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