The government published a policy paper in February 2011 entitled “A safer financial sector to serve South Africa better. The paper took into account lessons learnt from the 2008 global financial crisis, assessed the structure and characteristics of South Africa's financial sector for gaps and weaknesses, and set out proposals to reform the regulatory system for the financial sector. One of the outcomes of the paper was the establishment of the Twin Peaks system for regulating the financial sector.
As the name suggests, the framework includes two primary financial regulators (peaks). The Financial Sector Regulation (FSR) Bill lays the legislative basis for the coming Twin Peaks system of regulating the financial sector. The Twin Peaks system is designed to make the financial sector safer, and to better protect consumers of financial services in South Africa. It aims to ensure better outcomes for financial consumers, the financial sector and the wider economy, by ensuring that customers are treated fairly, that their funds are protected against the risk of institutions failing, and by reducing the risk of using taxpayer funds to address any systemic failures of financial institutions.
A Twin Peaks system also represents a decisive shift away from a fragmented regulatory approach, minimising regulatory arbitrage or forum shopping. It focuses on implementing a more streamlined system of licensing, supervision, enforcement, customer complaints (including ombuds), appeal mechanism (tribunal) and customer advice and education across the financial sector.
The Twin Peaks reform process is to be implemented in two phases
The FSCA and PA will be created. The FSCA will be a stand-alone market conduct authority, while the PA will be an authority established within the Reserve Bank. The FSB and the Bank Supervision Department will cease to exist.
The second phase of the reform process is necessarily more far-reaching. In this phase, the legal frameworks for prudential and market conduct regulation will be developed, harmonised and strengthened, including through in some instances repealing industry-specific legislation (especially for market conduct) and introducing new legislation and licensing procedures where necessary.
The Banking Association South Africa in its role to “facilitate the enablement of a conducive banking environment through robust engagement with government and relevant stakeholders” has through comments and interaction with government influenced a number of Acts crafted to assist the consumer in their various interactions with financial institutions - http://www.banking.org.za/what-we-do/treating-customers-fairly/regulatory-framework and http://www.banking.org.za/consumer-information/legislation