….article 17 July 2017…..
Last minute passage for ‘Twin Peaks’ Bill…
After nearly a year of debate and argument during its passage through Parliament and countless years of drafting beforehand, the Financial Sector Regulation (FSR) Bill now sits with the President for the second time for signature and enactment. Parliament feels that the reasons for its return by the President have been answered.
The Bill as now structured provides for a “twin peaks” model of financial regulation, with the one pillar being financial conduct managed by one authority‚ which will replace the Financial Services Board‚ and the other a prudential authority located in the Reserve Bank. The financial world has been deeply involved with the Bill’s drafting.
The DA and EFF both opposed the Bill on final vote as in their view the regulatory structure proposed in the Bill did not include the Office of the National Credit Regulator (NCR) under the aegis of National Treasury with those encompassed by the Bill. They said that this rendered the “twin peaks” system of regulation proposed as “toothless” and leaves the the credit industry outside of the ambit of the proposed legislation, which harming lower income groups since they will not be catered for.
This disagreement, voiced in final parliamentary meetings, should not be, allowed to hold up the Bill’s passage, the the majority in the Committee said.
Credit Bill drafted
Meanwhile, the Trade and Industry Portfolio Committee under Joan Fubbs is currently involved in drafting a new approach to debt relief for the poor covered by a new Bill to be tabled by Parliament with the assistance of the Department of Trade and Industry (DTI) under whom the NCR falls. Contributions to this Bill have already been made by National Treasury, say DTI
DA finance spokesman, David Maynier, Floyd Shivambu (EFF) and the Inkatha Freedom Front remained concerned on Bill’s failure to include the NCR, saying that for effective regulation of the entire financial industry all disciplines should fall under the supervision of the one financial sector conduct authority only. Maynier said this meant that the credit industry would continue therefore to fall under the old system despite DTI wishing to control aspects of credit in order to specifically focus on debt relief and controls aimed at unscrupulous credit providers.
The FSR Bill, now approved in the National Assembly, will overhaul the system of regulation of banks‚ insurance companies‚ retirement providers and other sectors of the industry and replaces existing legislation that divides subsequent regulation between the types of institutions supervised, rather than by the nature of the supervision
Bearing in mind that when the Bill was returned by the Presidency, the reasons given pertained to three areas which had to be dealt with by the NCOP. Firstly, the call was made by the President to further take regard of the protection of financial customers on matters that arose during the hearings on the transformation of the financial services sector.
Also raised was the issue of entering and inspecting premises subject to powers assigned in the recently passed Financial Intelligence Centre Amendment (FICA) Bill, now at last signed by the President but not yet implemented by Minister of Finance Malusi Gigaba.
Actions to be lawful and reasonable
Secondly, the Presidency asked that amendments to address issues in respect of financial conglomerates that arose in the public hearings and on the Insurance Bill and deal with those clauses in like manner on the issue of closing of bank accounts.
The NCOP did indeed propose and pass the alignment of powers given to similar powers granted under the amended FICA Bill and proposed that the new Financial Sector Conduct Authority with the responsibility to make conduct standards in respect of refusal, withdrawal or closure of a financial product or a financial service by a financial institution.
On the Insurance Bill issue, the NCOP at the same time endorsed that amendments made under that Bill that the right to administrative action that is lawful, reasonable and procedurally fair would apply to the FSR Bill.
This dealt with the issues raised by the Presidency but on another issue raised that regulatory powers should consider in their decision-making processes “the costs of implementation to businesses as well as the implications for financial inclusion of all South Africans”, the Committee agreed with this “non- Presidential” request for inclusion but could not implement such in terms of Parliamentary rules.
This being a Treasury Bill, it was therefore proposed that the Minister takes the matter into account and the Bill was returned as parliamentary recess occurred.
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