The FSCA has published its Regulatory Plan for the next three years (from 2022 to 2025) to support transparency and help the industry to prepare for legislative changes
To support the Financial Sector Conduct Authority (FSCA) in managing and navigating how it conducts legislative reviews and develops the regulatory framework, it has introduced its Regulatory Plan for 2022 to 2025. The plan is intended to support transparency and assist the industry in preparing for publications and legislative changes.
The Regulatory Plan focuses on three broad areas:
- conduct - the development of a holistic, cross-sector, robust and customer-based regulatory framework, which will be given effect by the Conduct of Financial Institutions Bill (COFI Bill). The aim of this approach is to ensure a smooth and effective transition to the COFI Bill without delay. Various principles were considered in designing this framework, which include harmonizing requirements across the financial sector; less reliance on rule-based requirements; and increased use of interpretation instruments such as Guidance Notices. This process will be used to advance existing draft legislation.
- financial markets – an increased focus on regulatory framework projects for high priority financial markets. A critical priority for the FSCA is to implement the Joint Roadmap for Development of a Regulatory Framework for Central Clearing in South Africa (published in February 2022). The FSCA has indicated that it intends to finalise various documents to finetune its focus, which will include a holistic framework to regulate the provision of benchmarks; the reporting and disclosure framework relating to short term sales; the Conduct Standard for Exchanges to adequately address the consequences of market fragmentation resulting from competition between exchanges; and a Joint Standard focusing on recovery plans for market infrastructures.
- broad scope of cross-cutting sector developments and themes – the FSCA will be focusing on various documents, which include:
- Joint Standard on culture and governance;
- Joint Standard on information technology governance and risk management. The FSCA and Prudential Authority (PA) are in the final stages of refining the Joint Standard following public consultation. It is expected that the Joint Standard will be submitted to National Treasury for submission to Parliament by the end of 2022/beginning of 2023;
- Joint Standard on cyber security and cyber resilience requirements. The second version of this Joint Standard is expected to be issued for public consultation in due course;
- Conduct Standard relating to industry practices and treatment of lost accounts and unclaimed assets. In the retirement sector alone, unclaimed assets amounted to ZAR 47.3 billion in 2021. The FSCA intends to develop policy proposals relating to the treatment of lost accounts and unclaimed assets, ultimately culminating in legislative interventions through a Conduct Standard. It is intended that the policy framework for this legislation will be developed in 2022 and 2023, with formal draft legislative proposals being published in the first quarter of 2024 and finalised in mid-2025.
While the plan is being drafted over a three-year period, the intention is to review it at least annually to ensure that it is kept up to date in the ever-changing environment.
The FSCA has acknowledged that stakeholder engagement and consultation is critical and has called on the industry to participate in the process of regulatory change through constructive stakeholder engagement.
The pensions team at Webber Wentzel will be engaging with industry organisations throughout the engagement period.
Written by Nicci van Vuuren, Senior Associate at Webber Wentzel