Chapter 2

Question 1

What is the objective of Phase 1 of Twin Peaks?

Answer 1

-Financial stability
- Consumer protection & market conduct
- Inclusion
- Combating Financial crime

Question 2

What does the Financial Sector Regulation Act do?

Answer 2

It is the foundation of the twin peaks and has the power to enforce the FSCA & PA

Question 3

What are the support structures of the regulatory environment?

Answer 3

1. Financial System Council of Regulators: Facilitates co-operation and collaboration between institutions. It’s members are the director-general of the Treasury, CEO of NCR, Director of FIC.
2. Financial Stability Oversight committee(FSOC): Facilitates co-operation and collaboration between the financial sector regulators and the reserve bank. Comprises of the SARB, FSCA and National Treasury.
3. Ombud Council: Oversees all ombud schemes. Ensured the accessibility and use of the ombud Council system and determines which ombud is responsible for a complaint.

Question 4

What does the phase 2 of Twin peaks do?

Answer 4

It deals with conduct of financial institutions. It harmonises legislative Acts(Banks, insurance and FSR) and implement the COFI Bill.

Question 5

What is the objective of COFI?

Answer 5

• To support the FSCA and to establish a consistent regulatory framework for how institutions need to conduct themselves.
• Customer outcomes should be the main focus and supervisors should be empowered to monitor and respond to poor conduct

Question 6

What is TCF?

Answer 6

TCF ensures that customers are treated fairly by financial institutions by how they govern themselves.

Question 7

What are the 6 TCF outcomes?

Answer 7

1. Fair treatment of customers is central to the firm’s culture.
2. Products and services offered by the retail market must be targeted accordingly and designed to meet customer needs.
3. Clear information must be given to clients, they must be kept appropriately informed before, during and after sale.
4. Advice must be suitable and client’s current circumstance must be taken into account.
5. Products must perform as customers have been led to expect, firm’s service must be of an acceptable standard.
6. There must be no post-sale barriers to change or switch products, submit a claim or make a complaint.

Question 8

What is the objective of Retail Distribution Review (RDR)

Answer 8

• Delivery of suitable products and advice to customers.
• Enable customers to understand and compare cost of advice and other services.
  Enhance professionalism in financial advice and intermediary services
• Enable customers and distributors to benefit from fair competition for quality advice and intermediary services
• Support sustainable business models.

Question 9

What is the aim of the FSCA

Answer 9

• Enhance efficiency and integrity of financial markets.
• Promote fair treatment of customers.
• Provide financial education and promote financial literacy
• Assist in maintaining financial stability

Question 10

What does the Prudential Authority do?

Answer 10

Promotes safety and soundness

Question 11

What are the 4 authority departments?

Answer 11

1. Banking, insurance, market infrastructure and co-operative financial institutions supervision department.
2. Financial conglomerate supervision department
3. Risk support department
4. Policy, statistics and industry support department

Question 12

What does the National Credit Regulator(NCR) do?

Answer 12

Regulates the SA credit industry.

• Promotes fair and non-discriminatory market place.
• provides regulation for customer credit and improved standards of consumer information
• promotes BEE and ownership within the credit industry
• prohibits unfair credit and credit-marketing practices
• promotes responsible credit granting and prohibits reckless credit granting
• provides for debt re-organisation in cases of over-indebtedness
• provides for registration of credit bureaus, credit providers and debt counselling services

Question 13

What does the Council for Medical Schemes do?

Answer 13

Regulates supervision of private health financing through medical schemes

Question 14

What is SARS?

Answer 14

The South African Revenue Services is responsible for tax legislation.

It also regulates the aspects of retirement funds, tax on investment including investment policies, tax on payable and tax arrangements of the product provider.

It is responsible for collecting tax and allocating funds

Question 15

What does the Financial Intelligence Center do?

Answer 15

It is the central point for matters relating to money laundering in SA

• It gathers, analysis and distribute financial intelligence
• identifies proceeds of crime and combats money laundering as well as financing of terrorism
• protects the integrity of the South African financial system
• develops and provides financial intelligence laws enforcement and other local and international agencies supporting the investigation and prosecution of criminal activities

Question 16

What does FICA require financial institutions to do?

Answer 16

Report all information regarding money laundering activities to FIC, where it is handed over to appropriate authorities

Question 17

What does the Financial Services Ombud Scheme do?

Answer 17

Ensures that customers have access to effective, independent, fair and affordable dispute resolution processes

Question 18

What are the financial institutions Ombud schemes?

Answer 18

1. Ombudsman for Long-term insurance
2. Ombudsman for short-term insurance
3. Ombudsman for FSPs(FAIS Ombud)
4. Ombudsman for Banking Services
5. Pension Funds Adjudicator
6. Council of Medical Schemes Registrar

Question 19

What are Industry bodies

Answer 19

Also known as Trade bodies

Focus on matters arising in a particular sub-sector and represents the interest of the sub-sector at government and sector level

Question 20

What are the different industry bodies?

Answer 20

1. Banking Association of South Africa
2. Association for Savings and Investment South Africa(ASISA)
3. South African Insurance Association
4. Board of Healthcare Funders
5. Institute of Retirement Fund(IRF)

Question 21

What are professional bodies?

Answer 21

They set ethics and qualification levels for various sectors

Question 22

What are the different professional bodies?

Answer 22

Institute of Bankers in South Africa, Financial Planning Institute, The South African Institute of Financial Markets and the Insurance Institute of South Africa

Question 23

What is the Institute of Bankers and The Financial Planning Institute?

Answer 23

1. Institute of Bankers:
   - Professional body within the banking sector
   - provides professional and ethical development platform
   - enhance sector skills
   - create professional banker designations
   - recognising the diversity of careers
   - partnering with international bodies
2. The FPI:
   - Body designated to the profession of financial planning
   - To become a member the planner must comply with institute’s code of ethics and practice standards, be found acceptable by ethical standards committee, have required qualification for particular membership level and have successfully completed a board exam, have completed a period of practical experience, meet CPD credits each year

Question 24

What are the main objectives of the FSR Act & the Twin peaks approach?

Answer 24

1. Financial stability
2. Consumer protection & market conduct
3. Inclusion
4. Combating of financial crime

The FSR Act creates the main foundation for twin peaks approach & grants the FSCA & the Prudential Authority powers to enforce appropriate regulation