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The regulatory regime applicable to banks

The following primary statutes and regulations govern the banking industry:

  1. the Banks Act 94 of 1990 (Banks Act) and regulations published in terms thereof, providing for the regulation and supervision of the taking of deposits from the public;
  2. the South African Reserve Bank Act 90 of 1989, specifically regulating the SARB and the monetary system;
  3. the Financial Sector Regulation Act 9 of 2017 (FSRA), establishing a system of financial regulation by establishing the Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA), conferring powers on these entities to preserve and enhance financial stability in the RSA by conferring powers on the SARB, regulating and supervising financial product providers and financial services providers, improving market conduct in order to protect financial customers and providing for co-ordination, co-operation, collaboration and consultation among the SARB, the PA, the FSCA, the National Credit Regulator, the Financial Intelligence Centre and other organs of state in relation to financial stability and the functions of these entities;
  4. the National Payment Systems Act 78 of 1998 (NPS Act), providing for the management, administration, operation, regulation and supervision of payment, clearing and settlement systems in South Africa;
  5. the Inspection of Financial Institutions Act 80 of 1998, providing for the inspection of the affairs of financial institutions (such as banks) and of unregistered entities conducting the business of financial institutions;
  6. the Currency and Exchanges Act 9 of 1933 (Currency Act), regulating legal tender, currency, exchanges and banking. Exchange control regulations issued in terms of the Currency Act impose controls that regulate the expatriation of capital from South Africa;
  7. the Financial Intelligence Centre Act 38 of 2001 (FICA), establishing a Financial Intelligence Centre and a Money Laundering Advisory Council to combat money-laundering activities and the financing of terrorist and related activities, and imposing certain duties on institutions and other persons who might be used for such;
  8. the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS), regulating the rendering of certain financial advisory and intermediary services to clients;
  9. the Electronic Communications and Transactions Act 25 of 2002, providing for the facilitation and regulation of electronic communications and transactions;
  10. the Prevention of Organised Crime Act 121 of 1998, introducing measures to combat organised crime, money laundering and criminal gang activities, and prohibiting certain activities relating to racketeering activities;
  11. the Home Loan and Mortgage Disclosure Act 63 of 2000, promoting fair lending practices, which requires disclosure by financial institutions of information regarding the provision of home loans;
  12. the Mutual Banks Act 124 of 1993 (Mutual Banks Act), providing for the regulation and supervision of the activities of mutual banks;
  13. the Co-operative Banks Act 40 of 2007, providing for the regulation and supervision of cooperative banks. The legislation acknowledges member-based financial services cooperatives as a separate tier of the official banking sector;
  14. the National Credit Act 34 of 2005 (NCA) regulating consumer credit and improved standards of consumer information. It also:
    • prohibits certain unfair credit and credit-marketing practices and reckless credit granting;
    • provides for debt reorganisation in cases of over-indebtedness;
    • regulates credit information; and
    • provides for the registration of credit bureaux, credit providers and debt-counselling services;
  15. the Consumer Protection Act 68 of 2008 (CPA), protecting certain fundamental consumer rights, and applying to the provision of banking services to consumers, unless exempted, except to the extent that any such service constitutes advice or intermediary services regulated by FAIS, or is regulated in terms of the Long-term Insurance Act of 1988 or the Short-term Insurance Act of 1988 (the provisions of which have been largely superseded by the Insurance Act 18 of 2017);
  16. the Financial Markets Act 19 of 2012 (FMA), providing for, inter alia, the regulation of financial markets and the custody and administration of securities, and prohibiting insider trading;
  17. the Financial Institutions (Protection of Funds) Act 28 of 2001, providing for and consolidating the laws relating to the investment, safe custody and administration of funds and trust property by financial institutions; and
  18. the Protection of Personal Information Act 4 of 2013 (POPI), which will, once fully effective, regulate the minimum threshold requirements for the lawful processing of personal information, and which will be in harmony with international standards.

The following regulatory authorities are responsible for overseeing banks:

  1. the SARB, as the central bank, and more particularly the Registrar of Banks (Registrar), who is an officer of the SARB, are primarily responsible for overseeing banks. The SARB, in terms of the NPS Act, also recognises the Payment Association of South Africa as a payment system management body with the object of organising, managing and regulating the participation of its members (i.e., banks) in the payment system;
  2. the PA, the objective is which is to:
    • promote and enhance the safety and soundness of financial institutions that provide financial products and securities services;
    • promote and enhance the safety and soundness of market infrastructures;
    • protect financial customers against the risk that those financial institutions may fail to meet their obligations; and
    • assist in maintaining financial stability;
  3. the FSCA (previously known as the Financial Services Board (FSB)), established in terms of the FSRA, the objective of which is to:
    • enhance and support the efficiency and integrity of financial markets;
    • protect financial customers by promoting fair treatment of financial customers by financial institutions; providing financial customers and potential financial customers with financial education programmes; and otherwise promoting financial literacy and the ability of financial customers and potential financial customers to make sound financial decisions; and
    • to assist in maintaining financial stability;
  4. the Financial Intelligence Centre, which monitors and provides banks with guidance as accountable institutions regarding the performance of their duties and their compliance with FICA;
  5. the National Credit Regulator (NCR), established in terms of the NCA, whose responsibilities include the registration of credit providers, and monitoring the consumer credit market and industry to ensure prohibited conduct is prevented, or detected and prosecuted;
  6. the National Consumer Commission, established in terms of the CPA, whose responsibilities include enforcement of the CPA; and
  7. the Information Regulator, which is to be established once POPI becomes effective. Its responsibilities will include monitoring and enforcing compliance with the provisions of the POPI.