Abstract
Financial regulation in South Africa changes constantly. In the quest to find the ideal regulatory framework for optimal consumer protection, rules change all the time and international trends have an important influence on lawmakers nationally. The Financial Sector Regulation Bill, also known as the "Twin Peaks" Bill, is the latest invention from the table of the legislature, and some expect this Bill to have far-reaching consequences for the financial services industry. The question is, of course, whether the current dispensation will change so quickly and so dramatically that it will literally be the end of the world as we know it or whether there will be a gradual shift in emphasis away from the so-called silo regulatory approach to an approach that distinguishes between prudential regulation on the one hand and market conduct regulation on the other. A further question is whether insurance as a financial service will change dramatically in the light of the expected twin peak dispensation. The purpose of this paper is to discuss the implications of the FSR Bill for the insurance industry. Instead of analysing the Bill feature for feature, the method that will be used in this enquiry is to identify trends and issues from 2014 and to discuss whether the Twin Peaks model, once implemented, can successfully eradicate similar problems in future. The impact of Twin Peaks will of course have to be tested, but at this point in time it may be very useful to take an educated guess by using recent cases as examples. Recent cases before the courts, the Enforcement Committee and the FAIS Ombud will be discussed not only as examples of the most prevalent issues of the past year or so, but also as examples of how consumer issues and systemic risks are currently being dealt with and how this may change with the implementation of the FSR Bill.
 
Highlights
The delicate balance between over-regulating and under-regulating is a matter that will not be settled in our time
It is thought that the enhanced oversight of ombud schemes envisaged by the FSR Bill has the potential to adddress some of the challenges in insurance market conduct
Oversight by the new FSOS Council, it seems that nothing much will change on this front with the introduction of the FSR Bill
Summary
The delicate balance between over-regulating and under-regulating is a matter that will not be settled in our time. One of the many functions of the prudential authority will be to undertake administrative and enforcement action as per chapters 12 and 13 of the FSR Bill, and "administrative action" has the meaning defined in section 1 of the Promotion of Administrative Justice Act.. There are further obligations on financial sector regulators to put in place and maintain effective arrangements for taking administrative actions that are consistent with the FSR Bill, the Promotion of Administrative Justice Act, and the requirements of the other financial sector laws, which arrangements must include the adoption of administrative action procedures, and may include the establishment of an administrative action committee and other measures.. This statute defines "administrative action" as meaning any decision taken, or any failure to take a decision, by "(a) an organ of state, when – (i) exercising a power in terms of the Constitution or a provincial constitution; or (ii) exercising a public power or performing a public function in terms of any legislation; or (b) a natural or juristic person, other than an organ of state, when exercising a public power or performing a public function in terms of an empowering provision, which adversely affects the rights of any person and which has a direct, external legal effect". 59 Clause 147(b) of the FSR Bill
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