The government has taken the first step towards strengthening the financial services regulatory environment following the 2008 global financial crisis, and has invited public comment on its draft Financial Sector Regulation Bill.
The Treasury said on Wednesday that this was the first in a series of bills that would give effect to the cabinet’s decision to implement a so-called Twin Peaks model of financial regulation to make the financial sector safer and serve South Africa better.
Written comments should be submitted by February 7.
Implementation of the Twin Peaks reforms will be a multi-year project, with a two-phase process. The bill covers the first phase, which is to establish two regulatory authorities:
- A prudential authority in the Reserve Bank. This will be responsible for the oversight of the safety and soundness of banks, insurers and financial conglomerates.
- A market conduct authority to protect customers and to improve the way financial service providers do business.
The latter would “also be responsible for ensuring the integrity and efficiency of financial markets and promoting effective financial consumer education”.
In addition, the bill gives the Reserve Bank primary responsibility to oversee financial stability.
The bill follows two policy papers that respond to lessons learnt in the global financial crisis: “A Safer Financial Sector to Serve South Africa Better”, released with the 2011 Budget, and “A Roadmap for Implementing Twin Peaks Reforms”, released by the Treasury on February 1.