The Financial Services Board (FSB) was the government of
South Africa
South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. It is bounded to the south by of coastline that stretch along the South Atlantic and Indian Oceans; to the north by the neighbouring coun ...
's
financial regulatory agency responsible for the non-banking financial services industry in South Africa from 1990 to 2018. It was an independent body which had a mandate to supervise and regulate the non-bank financial services industry in the public interest. This included the regulation of the biggest
stock exchange in Africa the
Johannesburg Stock Exchange. From 1 April 2018 the FSB was split into prudential and market conduct regulators.
History
The FSB was established in 1991 based on recommendations by the Van der Horst Committee to create an independent body to supervise and regulate the non-banking financial services industry. A number of additional acts later expanded and increased the role of the FSB. These included;
In September 2004, the Financial Advisory and Intermediary Services Act (FAIS) expanded the mandate of the FSB to include aspects of market conduct in the banking industry.
Financial Intelligence Centre Act (2001) and subsequent amendments have added responsibilities to the FSB to combat
money laundering
Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdicti ...
.
Responsibilities and functions
The FSB's stated vision was "to promote and maintain a sound financial investment environment in South Africa"
It was responsible for all non-bank
financial intermediaries, which included;
*
Capital Markets
* Collective Investment Schemes
* Financial Services Providers
*
Insurers
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
* Re-insurers, short and long-term
* Lloyd's correspondents
* Other credit agents
* Nominee companies
* Retirement funds
*
Friendly Societies
* Funerals
It was given responsibility for ensuring that the regulated entities complied with the relevant legislation as well as capital adequacy requirements to promote financial soundness of these entities, whereby the investing community would be protected.
It was given enforcement powers to deal with breaches through the enforcement committee. The Committee could impose unlimited penalties, compensation orders and cost orders. Such orders were enforceable on the same basis as a judgment of the
Supreme Court of South Africa
The Supreme Court of South Africa was a superior court of law in South Africa from 1910 to 1997. It was made up of various provincial and local divisions with jurisdiction over specific geographical areas, and an Appellate Division which was th ...
.
It also ran a customer complaints service and a separate appeals board could be approached by anybody aggrieved by a decision of the FSB or its executive officers. The appeals board was an independent tribunal, whose members were neither employees of the FSB nor active participants in the financial services industry. Its chairman and the members were appointed by the
Minister of Finance
A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation.
A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...
.
International
FSB was a member of
International Organization of Securities Commissions
The International Organization of Securities Commissions (IOSCO) is an association of organizations that regulate the world's securities and futures markets. Members are typically primary securities and/or futures regulators in a national jurisdi ...
(IOSCO) and is a signatory of the IOSCO multilateral MoUs.
The FSB participated in the activities of African regulatory bodies, particularly those in the
Southern African Development Community (SADC) region. It had long standing close relations with Committee Of Insurance, Securities And Non-Banking Financial Authorities (CISNA), part of the SADC directorate.
Structure
The FSB's board oversaw its operations through various committees. The board also appointed the FSB executive officer who presided over the day-to-day running of the FSB. Besides those committees, the FSB also provided funding for the ‘Office of the FAIS Ombud’ and the ‘Office of the PFA’ on the basis of approved budgets. The Offices were part of the same regulatory framework within which the FSB operated, but functioned independently of the FSB, as their sole mandate was to dispose of complaints lodged by consumers of financial services in terms of their respective Acts.
The Executive Officer was also the Registrar of Non-banking Financial Institutions. There were four Deputy Executive Officers responsible for supervision of the various industries, namely Financial Advisory and Intermediary Services, Retirement Funds and Friendly Societies, and Insurance and Investment Institutions.
Failures and mismanagement
The FSB was unable to prevent a number of significant scandals and disasters in South Africa's pension funds industry. It was also accused of favouritism and overcharging for legal and administrative services.
Some of its interactions with financial service providers have been described as harsh and bizarre, which led to criticism from the press as well as the financial services industry. In a report released in March 2019, the
Public Protector
The Public Protector in South Africa is one of six independent state institutions set up by the country's Constitution to support and defend democracy.
According to Section 181 of the Constitution:
* These institutions are independent, and subje ...
,
Busisiwe Mkhwebane
Busisiwe Mkhwebane is a South African advocate, prosecutor and ombudsman, who has served as the 4th Public Protector of South Africa from 2016 to 2022.
Early life and education
Mkhwebane was born in Bethal in the then Transvaal province (now ...
, castigated the FSB's officials for a variety of failures spanning more than a decade. The FSCA, successor to the FSB, countered however that the report was "riddled with inaccuracies".
Reorganization into Prudential Authority and Financial Sector Conduct Authority
On 21 August 2017 the Financial Sector Regulation Act (FSR Act) was signed into law.
Among other changes. the FSR Act created a prudential regulator, the
Prudential Authority (PA) and a market conduct regulator, the
Financial Sector Conduct Authority
The Financial Sector Conduct Authority (FSCA) is a financial institutions market conduct regulator and a successor agency to the Financial Services Board (South Africa) in South Africa
South Africa, officially the Republic of South Africa ...
(FSCA).
* The PA is responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates and certain market infrastructures.
* FSCA was given the mandate of market conduct regulator of financial institutions that provide financial products and financial services, and financial institutions that are licensed in terms of a financial sector law, including banks, insurers, retirement funds and administrators, and market infrastructures.
On April 1, 2018, the PA assumed the FSB's responsibilities for non bank financial institution prudential supervision and the FSB's responsibilities for market conduct were assumed by FSCA
See also
*
Economy of South Africa
The Economy of South Africa is the third largest in Africa and the most industrialized, technologically advanced, and diversified economy in Africa overall. South Africa is an upper-middle-income economy, one of only eight such countries in Africa ...
*
South African Reserve Bank
The South African Reserve Bank (SARB) is the central bank of South Africa. It was established in 1921 after Parliament passed an act, the "Currency and Bank Act of 10 August 1920", as a direct result of the abnormal monetary and financial condi ...
*
Financial Sector Conduct Authority (South Africa)
The Financial Sector Conduct Authority (FSCA) is a financial institutions market conduct regulator and a successor agency to the Financial Services Board (South Africa) in South Africa
South Africa, officially the Republic of South Africa ...
*
Prudential Authority
*
Securities Commission
References
External links
Official site
{{authority control
South Africa
South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. It is bounded to the south by of coastline that stretch along the South Atlantic and Indian Oceans; to the north by the neighbouring coun ...
Finance in South Africa
Government agencies of South Africa