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Financial Sector Laws Amendment Act Signed

February 1, 2022

The Presidency

President Ramaphosa has signed the Financial Sector Laws Amendment Act.

Parliament passed the Financial Sector Laws Amendment Bill and sent it for assent in December 2021.

The bill was tabled in parliament in August 2020.

Cabinet approved the bill in June 2020 for tabling in parliament.

In its statement, cabinet pointed out that the bill proposes to designate the Reserve Bank (SARB) as the Resolution Authority and strengthens the SARB’s regulatory tools designed to ensure stability of the financial system.

In an earlier statement, national treasury indicated that the bill is “part of the Twin Peaks reform of the financial regulatory system applicable to the financial sector”.

The proposed legislation also aims to introduce South Africa’s first comprehensive deposit insurance scheme that will ensure that depositors are paid their funds when a bank fails.

Some of the acts to be amended include the Insolvency Act, the South African Reserve Bank Act, the Banks Act, the Mutual Banks Act, the Competition Act, the Financial Markets Act, the Insurance Act and the Financial Sector Regulation Act.

Amendments are proposed to the Insolvency Act to clarify that the provisions of the Financial Sector Regulation Act of 2017 apply to the liquidation or sequestration of the estate of a designated institution; to exclude dispositions made in case of resolution from the application of the Insolvency Act and to clarify and refine the application of certain provisions of the Insolvency Act.

Proposed amendments to the Competition Act of 1998 aim to exclude transactions in relation to resolution from the application of certain provisions; and to provide for consultation with the Competition Commission in relation to certain transactions.

Proposed amendments to the Financial Sector Regulation Act of 2017 aim to provide for the establishment of a framework for the resolution of designated institutions to ensure that the impact or potential impact of a failure of a designated institution on financial stability is managed appropriately; to designate the Reserve Bank as the resolution authority; to establish a deposit insurance scheme, including a Corporation for Deposit Insurance and a Deposit Insurance Fund; to provide for co-ordination, co-operation, collaboration and consultation between the Corporation for Deposit Insurance and other entities in relation to financial stability and the functions of those entities; to make provision for designated institutions in connection with resolution matters; to further provide for information required to assess a levy; to effect consequential and technical amendments to certain provisions and to accordingly amend the long title and the Arrangement of Sections.

The act will come into effect on a date still to be determined.

Different dates may be determined for different provisions.