The independent regulatory authority of South Africa, FCSA, also known as the Financial Sector Conduct Authority (FSCA) oversees the conduct of financial institutions and market participants.
Structure of FSCA
FSCA functions independently from the South African Reserve Bank, and a board consisting of a chairman, deputy chairperson and other members governs it. FSCA is also responsible for strategic decision-making and ensuring the organisation’s effectiveness.
Role of FSCA
The FSCA board is primarily responsible for promoting and maintaining a fair and transparent financial sector in the country. With the primary objective of protecting financial customers and enhancing their confidence in the financial market, FSCA regulates and supervises different financial institutions. This includes banks, insurers, pension funds, collective investment schemes, market infrastructure, etc.
Regulations of FSCA
The FSCA is authorised to develop and enforce regulations governing the conduct of financial institutions and market participants. The key regulations that FSCA has enforced are listed below:
Financial Advisory and Intermediary Services (FAIS) Act
The act regulates the licensing and conduct of financial advisors, intermediaries and representatives to ensure they act in the client’s best interest.
Collective Investment Schemes Control Act
The act governs the establishment, management and marketing of collective investment schemes like unit trusts and ensures investor protection and market integrity.
The act oversees insurance companies’ and intermediaries’ regulation and ensures solvency, fair treatment of policyholders, and proper market conduct.
Market Abuse Control Regulations
These regulations aim to prevent and detect insider trading, market manipulation, and other forms of market abuse, ensuring fair and efficient capital markets.
Conduct of Financial Institutions (COFI) Bill: This upcoming legislation will introduce a comprehensive regulatory framework for the conduct of financial institutions, covering areas such as product suitability, disclosure requirements, and complaints handling.
The authority continuously monitors the financial sector, investigates potential misconduct, and takes appropriate enforcement actions to maintain a stable and ethical financial environment in South Africa.