The Financial Sector Regulation Act, 9 of 2017 FSR Act commenced on April 1, 2018, and overhauled the entire financial regulatory system in South Africa. In the six years since its enactment, the South African financial landscape has been besieged by high-profile matters of misconduct, for example, Steinhoff perpetrated fraud of approximately ZAR 250 million, whilst Tongaat Hulett made significant accounting irregularities in contravention of the Financial Markets Act, 19 of 2012. To add insult to injury, South Africa was grey-listed by the Financial Action Task Force for its failure to comply with international standards relating to money laundering and illicit financial flows.
These events have toughened the Prudential Authority PA and Financial Sector Conduct Authority's FSCA the Regulators resolve to enhance financial market integrity and the protection of financial customers. In its second 'FSCA Regulatory Actions Report' for the period 1 April 2023-31 March 2024 FSCA Enforcement Report 2024, the FSCA stated that it remains dedicated 'to combating misconduct decisively and visibly' and that given the dynamic nature of the financial landscape their 'enforcement processes continue to evolve although efficiency, fairness, and consistency remain paramount'.
The FSCA is clearly intent on ensuring that it acts as a decisive and effective enforcer by acting swiftly against wrongdoers. In doing so, it not only serves as a strong deterrent to misconduct but also ensures that South Africa's reputation as a sound and safe financial market is protected. The PA is similarly empowered to take regulatory action.
How do the Regulators supervise the financial services industry when it comes to enforcement? The Regulators have a vast array of enforcement instruments at their disposal in terms of the FSR Act and it is important for financial institutions to take note of the powers the PA and FSCA may employ to counteract misconduct. These include
Public warnings When unauthorised, harmful, suspicious or illegal activities are identified, the Regulators issue public warnings on their websites to alert the public of potential risks.
