FSCA Publishes 2023 Regulation Plan to Boost Financial Sector

Financial Sector Conduct Authority (FSCA) in South Africa published its 2023 Regulation Plan, outlining the regulator's plan for regulating the financial sector from April 1, 2023 to March 31, 2026.

The plan includes information on the FSCA's priorities, projects, and timelines for the next three years, as well as updates on projects from the previous year. The document also discusses the FSCA's approach to prioritization and the factors that inform its decision-making.

Key Points:

• The plan includes updates on projects from the previous year, such as establishing a framework for the regulation of benchmark administrators, giving effect to amendments to Joint Standard of 2022, developing a framework pertaining to recovery plans for market infrastructures, and developing a reporting and public disclosure framework in relation to short sales.

• The plan is organized into different sections based on the type of regulation, including cross-sector/cutting projects, financial markets projects, collective investment schemes, insurance, financial advice and intermediary services (FAIS), co-operative financial institutions, section 13B (Pension Fund Benefit) administrators, and pension/retirement funds.

• The plan includes information on the FSCA's approach to prioritization and the factors that inform its decision-making. The FSCA's approach to prioritization is based on a number of factors, including the FSCA's mandate, the impact of the regulation on consumers and the financial sector, the level of risk associated with the activity or product being regulated, and the FSCA's capacity to regulate effectively.

• The plan includes information on the FSCA's priorities and specific projects to be worked on over the next three years. Priorities include addressing conduct risks, promoting financial inclusion, enhancing market conduct supervision, and improving the effectiveness of the regulatory framework. Specific projects includes developing a regulatory framework for crypto assets, reviewing the regulatory framework for credit rating agencies, and developing a regulatory framework for crowdfunding.

Specific Sections:

Financial Markets Projects

• The FSCA will continue to support National Treasury in finalizing the review of the Financial Markets Act, which will contribute to shaping the future of financial markets regulation resulting in improved integrity and efficiency in the financial markets context.

• The FSCA will continue to work on the development of a regulatory framework for central clearing in South Africa, which was subject to delays but will be progressed according to the schedule proposed in the Plan.

Financial Advice and Intermediary Services

• The FSCA will continue to work on implementing the Retail Distribution Review (RDR), which aims to improve customer outcomes in the retail distribution of financial products and services.

• The FSCA will continue to work on implementing the Conduct Standard for Banks, which sets out requirements for banks in relation to the fair treatment of customers, including in respect of product design, sales, and post-sale service.

Crypto Assets

• The FSCA will continue to work on developing a regulatory framework for crypto assets, which will include requirements for the registration of crypto asset service providers and the regulation of crypto asset trading platforms.

• The FSCA will continue to monitor developments in the crypto asset space and engage with international standard-setting bodies to ensure that the regulatory framework for crypto assets is aligned with international best practice.

​The publication of the Regulation Plan will continue to support transparency surrounding how the FSCA carries out ongoing legislative review and development of the regulatory framework, and also to assist the industry to prepare for upcoming publications and legislative changes.