At the heart of financial regulatory matter: searching for certainty, clarity and consistency
The SAIFM’s annual regulatory summit has been dedicated to providing industry participants with an annual event where certainty, clarity and consistency about regulatory developments and initiatives could be obtained, while at the same time providing the regulatory authorities with a platform where new developments could be articulated and communicated to financial market professionals.
The 5th Regulatory Summit will again focus on regulatory developments, especially against the background of the Financial Sector Regulation Act, 2017, in operation since 1 April 2018, which provides for the mechanisms and responsibilities to address systemic risks to the financial sector. The stability of the financial system is the responsibility of the SA Reserve Bank. The current conjuncture or risk assessment will be discussed together with an update on the policy instruments, resolution and deposit insurance developments that have evolved from the global emphasis on financial stability after the global financial crisis in 2008.
The wholesale financial markets, which prior to the financial crisis were not a focus of financial regulators, have become increasingly subject to regulatory scrutiny. Instruments that impacted most on systemic risk during the financial crisis such as asset-backed commercial paper and collateralised debt obligations among others, were globally targeted for regulatory intervention. In South Africa, regulations under the Financial Markets Act, 2012 that provides for the regulation of the OTC derivatives markets came into operation on 1 February 2018 and require for example the licensing of OTC derivatives traders, trade reporting and central clearing. The financial markets are currently under review by regulators and new developments in this regard will be touched upon.
The impact of the prudential regulatory regime on the insurance sector will be evaluated in addition to the effect the change of regulators may have on the sector. While the FSCA (previously FSB) was responsible for both the prudential and market conduct regulation of the insurance sector, the new Prudential Authority, which will be a separate legal entity operating within the administration of the SA Reserve Bank, is now responsible for the prudential regulation of the insurance sector.
The Protection of Personal Information (POPI) Act, one of the most disruptive changes in the field of compliance, is expected towards the end of 2018. The Act aims to regulate the collection, processing, storing and sharing of customers’ personal information. What would be the impact on South Africa’s banks and other financial institutions and how could customers’ personal information be used without contravening the POPI Act. Institutions that deal with European countries and possibly process data of EU citizens may have to comply with both the General Data Protection Regulation (GDPR) effective 25 May 2018 and the POPI Act. An informative panel discussion will be held to evaluate the implications and propose the solutions to the challenges faced with regard to these regulatory developments.
A new Determination of Fit and Proper Requirements for financial services providers under the FAIS Act was published on 15 December 2017 by way of Board Notice 194 of 2017. Standards regarding personal characteristics of honesty, integrity and good standing, standards relating to experience and qualifications, operational ability, financial soundness and continuous professional development form part of the new Determination. The impact of the new Determination of Fit and Proper Standards on financial services providers and the professionalisation of the financial sector will be discussed.
Last but not least, the issue of how poor corporate culture can lead to poor conduct and whether regulators can do anything about it and if so, what, will be covered. Some of the worst cases of misconduct in the financial sector can be traced back to poor culture. This could lead to lack of trust and confidence in financial institutions which in turn could impact the financial system negatively.