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Financial Sector Laws Bill to be Tabled Soon

June 18, 2020

National Treasury

The Draft Financial Sector Laws Amendment Bill will be tabled in parliament soon.

National treasury published the draft bill’s explanatory summary in Government Gazette 43441.

In a recent statement, treasury indicated that the draft bill is “part of the Twin Peaks reform of the financial regulatory system applicable to the financial sector”.

Cabinet approved the draft bill last week for tabling in parliament.

In its statement, cabinet pointed out that the draft 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.

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 and the Insurance Act.

New sections on the cost of resolution of designated institutions, preference in terms of covered deposits, flac instruments and regulatory capital are proposed to be inserted into the Insolvency Act.

In terms of the Financial Sector Regulation Act, it is proposed that detail on the envisaged resolution framework for banks, the designation of the SARB as the resolution authority and the setting up of a deposit insurance scheme be added to the long title.

Meanwhile, in Gazette 43442, treasury confirmed that draft amendments to the Financial Sector Regulation Act’s Regulations have been tabled in parliament for 30 days.

The Draft Disaster Management Tax Relief Administration Bill is also heading for parliament.

The South African Revenue Service published the proposed legislation’s explanatory summary in Gazette 43443.

The draft bill provides the necessary legislative amendments required to implement the further tax measures aimed at combating the COVID-19 pandemic.

The tax adjustments are made due to the national state of disaster and the potential negative impacts of COVID-19 on the economy.

The draft bill will be tabled in parliament on 24 June 2020.