FSCA extends period for exemption for all independent intermediaries authorised by insurers to collect premiums directly from restrictive remuneration provisions
The FSCA releases draft strategy for supporting transformation in the financial sector
Développement en droit 2 mars 2022 2 mars 2022
Assurance et réassurance
On 28 February 2022, the Financial Sector Conduct Authority (FSCA) issued for public comment its draft strategy called ‘FSCA Strategy for Supporting Financial Sector Transformation.'
The primary aims of the draft strategy is to adopt a two phased approach for promoting financial transformation, namely:
- Phase I: In terms of which the FSCA outlines its approach to promoting financial sector transformation limited to the existing policy framework, including the Financial Sector Regulation Act 9 of 2017 (FSR Act) and the Financial Sector Code (FS Code) for Broad-Based Black Economic Empowerment issued in terms of the Broad-Based Black Economic Empowerment Act, 2003.
- Phase II: In terms of which the FSCA seeks to outline an approach for the FSCA to promote transformation under the future Conduct of Financial Institutions Act (once promulgated).
In respect of Phase I, the FSCA seeks to achieve the following objectives:
- Engaging with financial institutions on existing transformation plans and level of compliance: The purpose of such engagement will be to assess current levels of transformation within the financial sector and evaluate the maturity of transformation plans that institutions may have in place to improve their achievement of targets under the FS Code over time.
- Improving availability and quality of transformation data, especially in relation to ownership: Effective policy making and supervision necessitates reliable data. The FSCA will therefore support the Financial Sector Transformation Council (FSTC) in data collection, by enhancing and not duplicating data collection by the FSTC. Moreover, the FSCA will undertake a data collection and clean-up exercise to strengthen and improve the information it holds regarding the ownership of licensed financial institutions. This is likely to be a multi-year project and will continue in Phase II.
- Build strong co-operative relationships with the FSTC and the B-BBEE Commission: The FSCA will strengthen its engagements with the FSTC and the B-BBEE Commission, to improve coordination of efforts aimed at promoting transformation of the financial sector, within respective mandates. The FSCA has already entered into a Memorandum of Understanding with the FSTC that addresses coordination of processes, the sharing of information, and other matters of common interest.
- Developing a collaborative approach to transformation of the financial sector with the Prudential Authority: Whilst the Prudential Authority is already enabled through the Insurance Act 18 of 2017 to set requirements on insurance companies in relation to transformation, as insurers are also regulated by the FSCA, it is important that both the Prudential Authority and FSCA are aligned in engaging with (amongst others) insurers on transformation requirements.
- Supporting initiatives of the National Economic Development and Labour Council (NEDLAC) and FSTC related to financial sector transformation: A second Financial Sector Summit is proposed to be convened to bring together stakeholders to identify current challenges and discuss how best to address these challenges. The FSCA, as a key stakeholder in the transformation of the financial sector, will participate in the second Financial Sector Summit, and in other initiatives undertaken at NEDLAC related to financial sector transformation. The FSCA has also engaged in the process of revising the FS Code, coordinated through the FSTC.
- Supporting small businesses in the financial sector: The FSCA is responsible for licensing and supervising financial institutions, which include a large number of small businesses operating in the financial sector. For such small business, regulation and supervisory approaches can be a barrier to entry, and if not managed proportionately, such can cause the failure of a business through inappropriate compliance costs or the withdrawal of licenses due to an inability to comply. To support these businesses, the FSCA through its Inclusive Business Model Support Unit (IBMSU) will conduct training and support workshops for small businesses and entrepreneurs in the financial sector, focused on issues of compliance, readiness for licensing, and support for regulatory examinations.
The draft strategy delineates that the Regulatory Policy Division of the FSCA, through its Market, Customer and Inclusion Research department, will be responsible for overseeing the implementation of the FSCA’s approach to transformation.
In addition, an annual implementation plan will be developed, setting out the activities to be undertaken by different FSCA departments and divisions in each financial year, aligned to the approach, which plan will be updated annually to cater for changes in the sector.
Stakeholders are invited to provide comments on draft strategy, which feedback will inform the finalisation and implementation of the strategy.
Comments on the draft strategy may be sent to firstname.lastname@example.org by no later than 29 April 2022.
For a copy of:
- The Draft Strategy, please click here.
- The comments template to the Draft Strategy, please click here.
- The FSCA’s press release relating to the Draft Strategy, please click here.