1. National policy for the credit industry the long-term vision
Ingrid Goodspeed
SAFARI into the Credit Industry
15 February 2017

2. In recent decades the global financial system has changed dramatically
The assets of the world’s banking system are concentrated in the hands of a few institutions so large, complex, diversified, and interconnected that regulators dare not let them fail (systemically important financial institutions (SIFIs))
A large number of non-banks are carrying out bank-like activities outside safety nets, supervision and prudential requirements that apply to traditional banks (e.g., finance companies and other credit providers, money market funds)
Asset management industry has grown rapidly with assets under management in the hands of the largest firms
Increasing number of conglomerates across the financial sector with no single regulator to assess the risk of such groups
Growing incidence of complex and poorly-disclosed mainly retail investment and lending products
Inappropriate compensation practices with perverse incentives that reward short-term profits without regard for longer-term risks

3. The financial regulatory system has not kept pace with the changes in the financial system
Limitations, gaps and weaknesses in the supervision of financial institutions
Duplication and overlaps that allow financial institutions to pick and choose their own, generally less-strict, regulators (known as regulatory arbitrage)
Regulators unable to monitor, prevent or address the risk build-up in conglomerates or the system as a whole
No regulator protects the system as a whole – overall failure globally to monitor and address systemic risk
Home and host regulators operate in silos
Domestic regulators operate in silos

4. A predictable result of the 2007/08 financial crisis was an overhaul of the regulatory framework of the global financial system
Strengthen global financial stability
Mitigate systemic risk particularly of SIFIs
Co-ordinate supervision within and between countries to mitigate regulatory arbitrage and level playing fields
Ensure the reckless behaviour, irresponsible practices and misaligned incentives do not happen again
Improve the behaviour of financial institutions and ensure the fair treatment of consumers
Fixing benchmarks (LIBOR, EURIBOR, foreign exchange and commodity)
Mis-selling products to small business e.g., interest-rate swaps
Mis-selling products to consumers such as payment protection insurance and credit life insurance
Failure to take reasonable care to ensure the suitability of advice

5. The G20 financial reform agenda listed specific commitments on financial regulatory reform
G20 committed to seek an unprecedented level of cross-border consistency in their efforts on financial reform - a policy area seen as predominantly a national responsibility
Better capitalize banks and improve their liquidity
Enable the resolution of systemically important banks
Extend regulation and oversight to all systemically important financial institutions such as shadow banks
Address data gaps and consistency to enable an improved understanding of financial systems and better comparisons across jurisdictions
Make over-the-counter (OTC) derivatives markets safer
Converge accounting standards
Reduce misconduct risk

6. International financial sector architecture to seek and obtain collaborative solutions to global financial crisis
Sets the broad global economic and financial agenda
Undertakes the technical work and
coordinates agenda among member organisations
Set international standards and best practice
These do not constitute international legal obligations and are non-binding on national jurisdictions
Implement and enforce global standards and best practice 6

7. International financial sector architecture to seek and obtain collaborative solutions to global financial crisis
Principles for
effective insolvency and
creditor/debtor regimes
G20/OECD High-level principles on financial consumer protection
OECD Good practices on financial education and awareness relating to credit
Guidance to Supervisors on the setting of standards in the field of sales incentives and responsible lending 7

8. The South African credit market R 9.1 trillion as at end November 2016
Retail credit
Mortgages R1.1 trillion
Revolving credit R0.3 trillion
Other R0.4 trillion
SME credit
Retail R0.2 trillion
Corporate R0.4 trillion
Source: South African Reserve Bank, Strate

9. The South African credit market Who are the current policy makers?
National Treasury
Department of trade
and industry (dti)
Source: South African Reserve Bank, Strate

10. The South African credit market Who are the current regulators?
Reserve Bank
Bank Supervision
Department
National Credit
Regulator
Financial Services Board
Financial advisors and intermediaries
Treating customers fairly
Financial
Services
Board
Source: South African Reserve Bank, Strate

11. Current regulatory landscape for the financial sector
Source: A safer financial sector to serve South Africa better

12. Current regulatory landscape for the financial sector A simplified view

13. Prudential regulation Market Conduct regulation
Current regulatory landscape for the financial sector A functional and institutional view
Prudential regulation
Market Conduct regulation
South African Reserve Bank
Financial Services Board
Financial Services Board
National Credit Regulator
National Consumer Commission
Registrar of Banks (aka Office for Banks or Bank Supervision Department)
National Payment Systems Department
Registrars of Pension Funds, Friendly Societies, Long-Term Insurance, Short-Term Insurance, Securities Services, Collective Investment Schemes
Prudential Registrars to various degrees
Registrar of Financial Services Providers
National Credit Regulator
National Consumer Commission
Banks
Some non-banks such as insurance companies
Securities markets (rely on JSE and Strate )
Banks
Non-banks
Securities markets (relying on JSE and Strate )
Credit providers including banks and non-banks
Banks
Non-financial services firms

14. The regulatory framework provides sufficient certainty about the way rights and obligations will be interpreted and enforced?
Bring clarity including to regulators and regulated
Provide consistency and stability
Have generality and promote level playing fields
Ensure publicity - nothing is hidden
Demonstrate common sense
Sources: Mervyn King (2016) The end of alchemy
Stanford encyclopaedia of philosophy (2016) The rule of law

15. Department of trade and industry Current policy and recent ‘policy’ amendments
Post-2002 policy framework “Making credit markets work”
National Credit Act (34 of 2005) came into effect on 1 June 2007
National Credit Amendment Act with regulations came into effect on the 13 March 2015:
criteria for affordability assessments (14 September 2016)
powers of the NCR to investigate and National Consumer Tribunal (NCT) to adjudicate reckless lending
Notice on the Threshold required for credit provider registration on 11 May 2016
The review of limitations on fees and interest rates regulations, which provided for the capping of fees and interest rates came into effect on the 6 May 2016
Credit life insurance regulations commence 9 August 2017 and apply to credit agreements entered into on and after this date

16. Department of trade and industry Proposed policy - Credit Policy Review (October 2016)
Extend the powers of the NCR to conduct pro-active investigations and impose administrative fines on creditor providers who lend recklessly or are involved in other prohibited conduct
Resource the NCT to reduce backlogs
Treat reckless lending and other prohibited conduct as reportable irregularities and coordinate enforcement (IRBA SARS NCC NPA)
Empower NCR to negotiate settlement of consumer disputes to the ultimate benefit of the consumer
Empower the Minister of Trade and Industry to provide debt relief through regulations
Provide for the extinguishing of a debt after its written off (credit providers may not claim, credit bureau must remove adverse credit information)
Source: dti presentation to portfolio committee on trade and industry 18 October 2016

17. Department of trade and industry Proposed policy - Credit Policy Review (October 2016)
Empower NCR to provide guidelines to regulate repossession of collateralised property (including immovable property)
Give the NCR powers to declare credit agreements, including pawn transactions, reckless and unlawful
Declare directors of credit providers that habitually transgress the NCA as delinquent directors in terms of the Companies Act
Empower NSFAS to collect debt from former beneficiaries and their employers
Number of “technical amendments” including de-registering a credit provider for non-compliance “on several occasions”
Source: dti presentation to portfolio committee on trade and industry 18 October 2016

18. Access to financial services Combating financial crime
National Treasury’s reform proposals for a safer financial sector are in four priority areas
Financial Stability
Consumer protection
Access to financial services
Combating financial crime
Reserve Bank
macro- prudential (systemic stability)
micro- prudential (safety and soundness of institutions)
Financial Stability Oversight Committee
Regulators (Financial Services Board and National Credit Regulator)
Treating customer fairly
Fit and proper requirements
Ombud schemes
Financial literacy and capability
Financial sector code (through B- BEEE Act - mainly transformative)
Co-operative and dedicated banks, and Postbank
Microinsurance framework
International co- operation
Wealth creation
Enforcement agencies (FIC FSB)
Investigate and prosecute abuses
Money laundering
Insider trading
Market manipulation
Front running
Work with international partners
It is vital to ensure coordination and information sharing between regulators
particularly in the face of an event that threatens systemic stability
Source: “A safer financial sector to serve South Africa better” policy document is available at

19. National Treasury’s 15 Principles that guide implementation of the reform proposals
Principle 1: Financial service providers must be appropriately licensed or regulated.
Principle 2: There should be a transparent approach to regulation and supervision.
Principle 3: The quality of supervision must be sufficiently intense, intrusive and effective.
Principle 4: Policy and legislation are set by government and the legislature, providing the operational framework for regulators.
Principle 5a: Regulators must operate objectively with integrity and be operationally independent, but must also be accountable for their actions and performance.
Principle 5b: Governance arrangements for regulators and standard-setters must be reviewed, so that boards perform only governance functions

20. National Treasury’s 15 Principles that guide implementation of the reform proposals
Principle 6: Regulations should be of universal applicability and comprehensive in scope in order to reduce regulatory arbitrage.
Principle 7: The legislative framework should allow for a lead regulator for every financial institution that is regulated by a multiple set of financial regulators.
Principle 8: Relevant ministers must ensure that the legislation they administer promotes coordination and reduces the scope for regulatory arbitrage.
Principle 9: The regulatory framework must include responsibility for macroprudential supervision.
Principle 10: Special mechanisms are needed to deal with systemically important financial institutions (SIFIs).

21. National Treasury’s 15 Principles that guide implementation of the reform proposals
Principle 11: Market conduct oversight must be sufficiently strong to complement prudential regulation
Principle 12: Financial integrity oversight should be effective to promote confidence in the system.
Principle 13: Regulators should be appropriately funded to enable them to function effectively.
Principle 14: Financial regulators require emergency-type powers to deal with a systemic financial crisis, requiring strong and overriding legislative powers.
Principle 15: Reflect international standards set by the BIS IAIS and IOSCO taking into account local conditions

22. Proposed twin peaks regulatory framework gives equal weight to prudential and market conduct regulation (hence twin peaks)
Prudential
Market conduct
Reserve Bank leads on
Macro-prudential (systemic stability)
Micro-prudential (Prudential Authority)
Responsible for:
Prudential regulation of banking and insurance
Assessing and responding to financial stability risks
Crisis planning
Financial Services Board to be converted into the Financial Sector Conduct Authority (FSCA)
Works closely with National Credit Regulator
Market conduct regulation of all aspects of financial services, including banking, insurance, advisory services
Financial literacy
Financial Sector Regulation Bill
Financial Stability is delegated to the SARB within agreed policy framework
Promote financial stability and assess and respond to financial stability risks
Crisis management and resolution
Inter-agency co-ordination of financial stability issues
Financial Services Tribunal and Enforcement
Regulators will have clear internal policies and procedures for enforcement, enhanced transparency and accountability with a strong appeal mechanism through the Tribunal

23. Financial Sector Regulation Bill Implementation of the twin peaks system
First stage
Establish the regulators and
Set up a uniform system and standards, with existing financial sector activity-based laws (for example on insurance and banking) remaining in place
The second stage will streamline the current activity-based legislation (banking, insurance, credit, pensions, etc.) into consolidated legislation, to reduce the scope for regulatory arbitrage.

24. Financial Sector Regulation Bill Stage one: financial sector laws and the responsible authority
Pension Funds Act, 1956 (Act No. 24 of 1956)
Financial Sector Conduct Authority
Friendly Societies Act, 1956 (Act No. 25 of 1956)
Banks Act, 1990 (Act No. 94 of 1990)
Prudential Authority
Financial Supervision of the Road Accident Fund Act, 1993 (Act No. 8 of 1993)
Mutual Banks Act, 1993 (Act No. 124 of 1993)
Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002)
Collective Investment Schemes Control Act, 2002 (Act No. 45 of 2002)
Co-operative Banks Act, 2007 (Act No. 40 of 2007)
Financial Markets Act, 2012 (Act No. 19 of 2012)
Credit Rating Services Act, 2012 (Act No. 24 of 2012)
The Long-term Insurance Act (Act No. 52 of 1998) and the Short-term Insurance Act (Act No. 53 of 1998), so far as they relate to matters within
(a) the Prudential Authority
(b) the Financial Sector Conduct Authority
A regulatory instrument made by the Prudential Authority
A regulatory instrument made by the Financial Sector Conduct Authority
A joint standard, so far as it relates to matters within the objectives of—

25. (Financial Stability)
Financial Sector Regulation Bill Implementation of the twin peaks system
Phase 1: FSR Bill
NPS
Act
SARB
(Financial Stability)
Prudential
Authority
NCR
FSCA
Friendly Societies
Act
Financial Markets Act
Financial Advisory and Intermediary Services Act
Long-term
Insurance
Act
Short-term
Insurance
Act
Banks
Act
Mutual Banks
Act
NCA
Pension Funds
Act
Collective Investment Services Act
Credit Rating
Services Act
Ombuds
Schemes
Act
Cooperative Banks
Act
Phase 2:
Overarching
Prudential
Law ???
Financial Markets Act
Conduct of Financial Institutions (CoFI) Act
NCA 25

26. Financial Sector Regulation Bill Progress to promulgation
February 2011: Publication of National Treasury policy titled “A safer financial sector to serve South Africa better”
27 October 2015: The Minister of Finance introduced the Financial Sector Regulation Bill to the National Assembly
13 November 2015 to 30 November 2016: Finance Standing Committee deliberations and adoption
6 December 2016: Bill passed by National Assembly and transmitted to the National Council of Provinces for concurrence
Outstanding:
Adoption by National Council of Provinces
Presidential signature

27. Financial Sector Regulation Bill Purpose
The purpose of the Act is to promote a financial system that works in the interests of financial customers, and supports balanced and sustainable economic growth in the Republic, by establishing a supervisory and regulatory framework that promotes:
financial stability
the safety and soundness of financial institutions
the fair treatment and protection of financial customers
the efficiency and integrity of the financial system
the prevention of financial crime
financial inclusion
transformation of the financial sector
confidence in the financial system

28. Financial Sector Regulation Bill Structure of the Bill
Chapter 1: Interpretation, object and administration Chapter 2: Financial Stability Chapter 3: Prudential Authority Chapter 4: Financial Sector Conduct Authority Chapter 5: Co-operation and collaboration Chapter 6: Administrative actions Chapter 7: Regulatory instruments Chapter 8: Licensing Chapter 9: Information gathering, supervisory on-site inspections and investigations Chapter 10: Enforcement Chapter 11: Significant owners Chapter 12: Financial conglomerates Chapter 13: Administrative penalties Chapter 14: Ombuds Chapter 15: Financial services tribunal Chapter 16: Fees, levies and finances Chapter 17: Miscellaneous
Schedules
1 Financial Sector Laws
2 Responsible authorities
3 Documents to be published in the register
4 Laws repealed or amended

29. Financial Sector Regulation Bill Chapter 2: Financial stability
The Reserve Bank has primary responsibility for promoting and enhancing financial stability
The Reserve Bank must
Monitor the financial system for risks, weaknesses or developments that may harm financial stability
Determine the threat posed to financial stability
Initiate actions to mitigate or remedy including advising the financial sector regulators, the National Credit Regulator, the Financial Intelligence Centre and any organ of state, of tools to use and measures to take to mitigate those risks
The Governor of the Reserve Bank is empowered to determine, after consultation with the Minister of Finance, that an event is a systemic event
The Financial Stability Oversight Committee (FSOC) is established to support the Reserve Bank in performing these functions
The Financial Stability Oversight Committee will be assisted by the Financial Sector Contingency Forum

30. Financial Sector Regulation Bill Chapter 2: Financial stability
The Financial Stability Oversight Committee will be assisted by the Financial Sector Contingency Forum, comprised of relevant industry bodies, the financial sector regulators, the National Credit Regulator, and other relevant organs of state and any other entities or bodies determined by the chairperson of the Forum
A duty is placed on the financial sector regulators, the National Credit Regulator and the Financial Intelligence Centre to:
co-operate and collaborate with the Reserve Bank, and with each other, to maintain, protect and enhance financial stability,
provide assistance and information to the Reserve Bank and the Financial Stability Oversight Committee in the performance of the functions of those bodies with respect to financial stability
promptly report to the Reserve Bank any matter of which the regulator becomes aware that poses or may pose a risk to financial stability
gather information from or about financial institutions that concerns financial stability
The regulators are mandated to enter into MOUs with the Reserve Bank specifying how they will co-operate, collaborate with, and provide assistance

31. Financial Sector Regulation Bill Chapter 3: Prudential authority
The Bill establishes the new Prudential Authority
The Prudential Authority’s objective is to—
promote and enhance the safety and soundness of financial institutions that provide financial products
promote and enhance the safety and soundness of market infrastructures; and
assist in maintaining financial stability

32. Financial Sector Regulation Bill Chapter 3: Financial Sector Conduct Authority
The Bill establishes the new Financial Sector Conduct Authority
The Financial Sector Conduct Authority’s objective is to
enhance and support the efficiency and integrity of the financial system
protect financial customers by promoting that financial institutions treat financial customers fairly; and providing financial customers and potential financial customers with financial education programs, and otherwise promoting financial literacy
assist in maintaining financial stability.

33. Financial Sector Regulation Bill Chapter 5: Co-operation and collaboration
The Bill places obligations of co-operation and collaboration on the financial sector regulators, the National Credit Regulator, the Financial Intelligence Centre and the Reserve Bank to
Generally assist and support each other
Share relevant information
Adopt consistent regulatory strategies and policy positions
Co-ordinate actions in terms of financial sector laws, the National Credit Act and the Financial Intelligence Centre Act, including in relation to standards, licensing, on-site inspections, investigations, enforcement, recovery and resolution, statutory reporting and data collection from financial institutions
Establish and use common or shared databases and other facilities

34. Financial Sector Regulation Bill Chapter 5: Co-operation and collaboration
The financial sector regulators, the National Credit Regulator, the Financial Intelligence Centre and the Reserve Bank must enter into one or more MOUs addressing how they will fulfil their obligations to co-operate and collaborate
A Financial System Council of Regulators is established, to facilitate consultation, co-operation and consistency of action
A Financial Sector Inter-ministerial Council is established to facilitate co-operation, collaboration and discussion between Cabinet members administering legislation relevant to the regulation and supervision of the financial sector

35. Financial Sector Regulation Bill Chapter 6: Administrative actions
The Bill permits the financial sector regulators to adopt administrative action procedures and set out how administrative actions will be taken in terms of financial sector laws
Financial sector regulators may each establish an administrative action committee, to consider and make recommendations to the regulator on administrative actions that are referred to it by the regulator
The reconsideration of decisions by the financial sector regulators in specified circumstances is provided for
Decisions relating to standards, licensing, on-site inspections, investigations, enforcement, recovery and resolution, statutory reporting and data collection

36. An aside: Promotion of Administrative Justice Act, 2000 (PAJA)
PAJA gives form and detail to the fundamental principle of just administrative action enshrined in section 33 of the Constitution of the Republic of South Africa, 1996, which require that decisions must be lawful, reasonable and procedurally fair
Administrative actions are decisions by administrators (including regulators), taken in the course of their official duties which might have a negative effect on a person’s rights
A draft Code of Good Administrative Conduct was published for comment in January 2017 by the Department of Justice and Constitutional Development in terms of PAJA

37. Financial Sector Regulation Bill Chapter 8: Licensing
Phase 1:
Licensing requirements remain set by the relevant sectorial law
Regardless of what authority issues the licence financial sector regulators can apply their regulatory, supervisory and enforcement powers on all financial institutions
There must be concurrence of financial sector regulators on licensing matters (issue, vary, suspend, revoke, granting an exemption)
There will be more significant changes to licensing process as prudential and conduct frameworks develop
Phase 2 of Twin Peaks process will require more significant changes to licensing process

38. Financial Sector Regulation Bill Chapter 9: Information, inspection and investigations
The Bill enables the regulators to gather information, and carry out supervisory on-site inspections and investigations
Inspections refer to on-site visits undertaken in the normal course of supervisory functions. Investigations are undertaken when contraventions of law suspected
These are vital tools for the supervision and enforcement of the financial sector laws by the financial sector regulators

39. Financial Sector Regulation Bill Chapter 10: Enforcement
The Bill provides important enforcement mechanisms for the financial sector regulators:
issue guidance notices and interpretation rulings
Issue directives in order to ensure compliance and to prevent or stop non- compliance with the financial sector laws.
enter into enforceable undertakings with a licensed financial institution, in terms of which the financial institution voluntarily agrees to comply with the terms of the undertaking
issue administrative penalties
enter into leniency agreements in exchange for that person’s co-operation in an investigation or proceedings.
issue debarment orders
apply to court for orders to ensure compliance with financial sector laws

40. Financial Sector Regulation Bill Chapter 11: Significant owners
The Bill provides for the declaration of a significant owner of a financial institution by a responsible authority
Financial sector regulators are empowered to make standards and issue directives in relation to significant owners.

41. Financial Sector Regulation Bill Chapter 12: Financial conglomerates
The Bill provides a framework for the supervision of financial conglomerates
The Prudential Authority, after consulting the Financial Sector Conduct Authority, may designate members of a group of companies a financial conglomerate
The Prudential Authority may require the holding company of a financial conglomerate to be licensed and non-operating.
The Prudential Authority may make prudential standards for financial conglomerates
The Prudential Authority may issue directives to the holding company of a financial conglomerate
The holding company of a financial conglomerate may not acquire or dispose of a material asset as defined in prudential standards made for this section without the approval of the Prudential Authority, and may not acquire or dispose of any other asset without having notified the Prudential Authority.

42. An aside – significant owners and financial conglomerates

43. Financial Sector Regulation Bill Chapter 13: Administrative penalties
The Bill allows financial sector regulators to impose administrative penalties taking into consideration
The nature, duration, seriousness and extent of the contravention;
Any loss or damage suffered by any person as a result of the conduct
The extent of any financial or commercial benefit arising from the conduct
whether the person has previously contravened a financial sector law
the effect of the conduct on the financial system and financial stability
the effect of the proposed penalty on financial stability
the extent to which the conduct was deliberate or reckless
The responsible authority that makes an administrative penalty order must publish it

44. Financial Sector Regulation Bill Chapter 14: Ombuds
A fundamental component of an effective consumer protection framework is appropriate consumer recourse mechanisms
Customers should have access to affordable, effective and independent mechanisms to address complaints, resolve disputes, and secure a fair outcome when broader consumer protection frameworks have failed
Internal complaint resolution by individual financial institutions
Alternative dispute resolution provided by financial sector ombud schemes
Court process
Appeal mechanism of each ombud scheme

45. Financial Sector Regulation Bill Chapter 14: Ombuds
The Bill established the Ombud Council to assist in ensuring that financial customers have access to, and are able to use, affordable, effective, independent and fair alternative dispute resolution processes for complaints against financial institutions
The Minister of Finance must appoint a Chief Ombud responsible for the day-to-day management and administration of the Ombud Council
The Ombud Council recognises industry ombud schemes subject to a significant number of relevant financial institutions being members and it being satisfied with the rules of the scheme
The Ombud Council may make rules for ombuds and ombud schemes, issue directives, impose administrative penalties

46. Financial Sector Regulation Bill Chapter 15: Financial Services Tribunal
A Financial Services Tribunal is established and mandated, on application by aggrieved persons, to judicially review decisions taken by the financial sector regulators, the Ombud Council, and other designated decision-makers
Members of the Tribunal are appointed by the Minister of Finance and must be independent
Panels are constituted to review each application
An order by the Tribunal has legal force and may be enforced as if it were issued in civil proceedings in the division of the High Court
Decisions of the Tribunal will be made public

47. Financial Sector Regulation Bill Chapter 17: Miscellaneous
The Bill deals with certain miscellaneous matters
Information sharing by the financial sector regulators
Reporting by auditors or actuaries to the financial sector regulators who become aware of a matter that has or is likely to have adverse effects on the financial condition of a financial institution
Establishing the Financial Sector Information Register, managed by the National Treasury, to provide financial institutions, financial customers and the general public with reliable access to accurate and up to date information relating to financial sector laws, regulatory instruments and their implementation
Empowering the Minister of Finance to make regulations and guidelines in terms of the Bill

48. Financial Sector Regulation Bill and the National Credit Act
SARB (macro-prudential) will regulate credit providers for stability
The Prudential Authority will regulate credit providers for safety and soundness on a risk-based basis
The NCR and FSCA will regulate credit providers for conduct but in different ways and with a different focus; the FSCA and NCR should complement and support each other
NCR is the sole regulator of the credit agreement itself, i.e. the features of the product
The FSCA can regulate credit providers that provide credit agreements, on a risk-based basis, especially in relation to the culture of such providers to complement what is provided for under the NCA
FSCA can set standards for financial services provided in relation to credit agreements to provide for a system-wide approach to conduct, provided that these support regulatory requirements set by the NCR under the NCA

49. Financial Sector Regulation Bill and the National Credit Act
Definitions
Credit agreement is as defined in Section 1 of the NCA
Financial product (2(1)(g)) includes a credit agreement except for purposes of chapter 4 (FSCA) and section 106 (conduct standards)
Financial services includes services related to the provision of credit including debt collection services but excluding debt counsellor, PDA, ADRA
Section 58(2) the FSCA may
regulate and supervise credit providers in respect of the financial services they provide
notwithstanding section 2(1)(g), regulate and supervise the credit provider’s conduct in relation to the provision of credit under a credit agreement in respect of those matters referred to in section 108

50. Financial Sector Regulation Bill and the National Credit Act
Section 108
Fit and proper person requirements
Governance
The appointment, duties, responsibilities, remuneration, reward, incentive schemes ,the suspension and dismissal of members of governing bodies and their substructures and key persons
The operation of, and operational requirements for, financial institutions
Financial management including accounting, actuarial and auditing requirements
Risk management and internal control requirements
Control functions and their outsourcing
Record-keeping and data management
Reporting to a financial sector regulator
Outsourcing amalgamation, merger, acquisition, disposal and dissolution
Recovery, resolution and business continuity
Requirements for identifying and managing conflicts of interest
Requirements for the safekeeping of assets

51. An aside: proposed regulatory framework for consumer protection: Treating customers fairly roadmap (2011)
Customers are confident they are dealing with firms where treating customers fairly is central to the corporate culture
Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly
Customers are provided with clear information and kept appropriately informed before, during and after point of sale
Where advice is given, it is suitable and takes account of customer circumstances
Products perform as firms have led customers to expect, and service is of an acceptable standard and as they have been led to expect
Customers do not face unreasonable post-sale barriers imposed by firms to change product, switch providers, submit a claim or make a complaint
Source: Treating customers fairly roadmap 2011 available at fsb.co.za

52. An aside: proposed regulatory framework for consumer protection: TCF complaints management (October 2014)
Consistent regulatory definitions of “complaint” and related terms
Standards and requirements for firms to implement internal complaints management processes, including record keeping, monitoring and analysis
Requirements for TCF-aligned categorisation of complaints (complaints related to product design, information provided, advice, product performance, customer services, product accessibility changes or switches)
Requirements in relation to the engagement between firms and Ombud schemes
Requirements for reporting complaints information to the regulator
Requirements for public reporting of complaints information.

53. What is impact of national policy on credit providers?
At least 2 policymakers
dti
National Treasury
At least 4 regulators / supervisors
The Reserve Bank (financial stability)
The Prudential Authority (safety and soundness)
The Financial Sector Conduct Authority (market conduct)
The NCR (market conduct)
Costs of compliance
Regulatory reporting
Fees and levies
Capital requirements

54. Final thoughts: What about a self-regulatory code of conduct for the credit industry?
Purpose of code
declaration of business principles applicable to operations
a substantive effort at self-regulation
Benefits
Firms accept responsibility for their activities
Improved corporate behaviour
Deflect criticism
Reduce demand for regulation
Dangers
Undermine the position of the regulators
Limited enforcement

55. National policy for the credit industry the long-term vision
SAFARI into the Credit Industry
15 February 2017