Speaking to International Adviser, Leanne Jackson, a market conduct strategy adviser at the FSB, said the regulator was planning to implement the reforms, aimed at overhauling South Africa’s financial services sector, at the beginning of next year.
She added that the Pretoria-based watchdog will first consult on “draft regulatory measures incorporating these proposals” in September 2016 before introducing them in January.
“The January 2017 date refers to the targeted effective date when the measures will be promulgated. We have clarified in our various communications that, where necessary, transition measures will also be provided for to enable necessary process and system changes over an adequate period of time,” she said.
Delays
The announcement comes as a shock as last month the FSB confirmed to IA that the regulation has been shelved until sometime next year, citing that the Financial Sector Regulation (FSR) Bill along with the Insurance Bill was still awaiting parliamentary approval.
“I heard last week that RDR has been put on the back burner pending changes to the whole financial regulatory structure (twin peaks) and that we would not see any changes until much later.”
The two bills are now scheduled to be approved by parliament in September.
The Financial Sector Regulation (FSR) Bill, published in October 2015, sets out how the current commission system in South Africa will be replaced with a fee-based model similar to the UK.
The final draft of the FSR included 14 proposals known as the ‘first phase’ of RDR and was initially scheduled for July 2016.
Derek Smorenburg, founder of the South African Independent Financial Advisors Association (Saifaa), said he was surprised at the deadline date as the last he had heard the RDR legislation was being pushed back as a result of changes to the FSB’s regulatory structure.
“I heard last week that RDR has been put on the back burner pending changes to the whole financial regulatory structure (twin peaks) and that we would not see any changes until much later,” he told IA.
He added the deadline is likely to be a “bit tight”, expecting the reforms the come into effect in the first quarter of 2017 instead.
‘Twin Peaks’ restructure
Once the FSR comes into force, the FSB faces a ‘twin peaks’ restructure which will see it split into the Financial Sector Conduct Authority (FSCA) – a move that closely mirrors the UK Financial Services Authority’s (FSA) transformation into the Financial Conduct Authority (FCA) in 2012.
The UK rebrand followed the introduction of the Financial Service Act.
Like the FCA, the FSB also plans to shift all of its prudential work on to the Prudential Authority at the country’s Reserve Bank.
