Cabinet approval and public consultation
Cabinet approved the Bill for tabling in Parliament towards the end of February 2012. The Bill was released for public comment in March 2012 and the commentary period was extended to 2 May 2012. A range of financial services stakeholders, interested and affected parties were consulted by Government during information session held as part of the consultative process on the Bill. These include, the ETHICORE client The Banking Association South Africa, the Association of Savings and Investments South Africa, the South African Insurance Association, the Institute of Retirement Funds and the Congress of South African Trade Unions.
Objectives of the Bill
According to a statement released by the National Treasury on 27 September 2012 upon tabling of the Bill in Parliament, the Bill address the urgency of issues contained in eleven financial sector laws, including legislative gaps highlighted after the 2008 financial crisis and to align these laws with the new Companies Act (2008) and other legislation.
The Bill seeks to:
- Close gaps identified by the Financial Sector Assessment Program conducted by the IMF and World Bank regarding South Africa’s adherence to international standards for financial regulation;
- Align financial sector legislation with the new Companies Act, 2008;
- Eliminate overlaps caused by the Consumer Protection Act, 2008; Companies Act, 2008; and Competition Commission Act, 2009; and
- Make the Financial Services Board (“FSB”) the lead regulator where there is concurrent jurisdiction.
Changes to the original Bill
National Treasury has also pointed out in its statement that the Bill contains new amendments that were not present in the original version of the Bill. According to National Treasury, these changes are reflective comments received during the consultation process and the 33 written submissions received and include:
New amendments to the Financial Services Board (FSB) Act:-
- Limitation of liability of the regulator if it exercises the powers conferred upon it in terms of statute provided those powers were exercised in good faith (‘bona fide’).
- Empowers the Minister to prescribe a code of engagement, consultation and communication for the FSB.
- Appropriately clarifies the interaction between financial and non-financial legislation.
- Defers some of the emergency powers to legislation next year that will lay the basis for implementing the “Twin Peaks” regulatory reform.
- Provides for exemptions and directives to be tabled by the FSB.
- Ensures that information received by the FSB is treated confidentially.
New amendments to the Pension Funds Act:
- Provides for whistle-blowing protection for board members, valuators, principal/deputy officers, and employees who disclose material information to the Registrar.
- Requires a fund board member to attain skills and training as prescribed by the Registrar, within a certain period.
- Extends personal liability to employers in respect of non-payment of pension contributions to a fund.
- Provides protection for board members from joint and several liabilities if they act independently and honestly in exercising their fiduciary obligations.
- Requires pension funds to notify the Registrar of their intention to submit an application to register prior to commencing the business of a pension fund.
The Bill has now been referred to Parliament’s National Assembly Standing Committee on Finance as a proposed Section 75 Bill in terms of the Constitution. This meaning that it does not affect the Provinces, but must be referred to the National Council of Provinces. ETHICORE will publish further information on the forthcoming Parliamentary process on the Bill. Should you have any enquiries and/or regarding the content of this post or the forthcoming Parliamentary process, kindly do not hesitate to contact us.
The following documents on the Bill released by Parliament and the National Treasury are available for below: