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Fintech Unit and Innovation Hub in the Pipeline

November 29, 2018

National Treasury

A Fintech Unit and Innovation Hub is to be set up.

National treasury announced this during a briefing in parliament on Fintech and financial inclusion.

Treasury pointed out that an “Intergovernmental Fintech Working Group comprising representatives of NT, SARB, FSCA, FIC amongst others, is considering a coordinated and harmonized policy response to fintech and innovation in the South African financial sector”.

An inaugural workshop was held in April 2018 with specific focus on financial inclusion.

Treasury emphasised that outcomes from the workshop will feed into a final policy position.

Effective consumer protection oversight, consumer education for a digital age and the role of regulation were important policy considerations in ensuring that the benefits of fintech innovations were properly leveraged for sustainable financial inclusion.

Treasury also indicated that a Policy Lab, not yet defined, will consider the impact of innovation on the existing legislative and regulatory framework.

The Fintech strategy will also strive to create a balance between risk and innovation.

According to treasury, “this may require a blend of existing regulations subject to certain amendments, supplemented by new regulations where necessary”.

Treasury also stressed that Fintech should not be seen as a silver bullet for financial inclusion.

Meanwhile, treasury recently briefed parliament on the Draft Financial Matters Amendment Bill.

Comment was sought on the draft bill in August 2018.

Acts to be amended include the Insolvency Act, Military Pensions Act, Banks Act and the Auditing Profession Act.
The bill aims to amend:
• the Insolvency Act, 1936, so as to provide for a process when a creditor realizes his or her security in terms of a master agreement and for a power for the Master to deal with disputes of the preference by trustees;
• the Military Pensions Act, 1976, so as to provide for all categories of spouses and for life partners of members by amending, inserting and deleting certain definitions; and by providing for both genders throughout the Act and regulating the registration of a spouse to qualify for benefits upon the death of a member;
• the Banks Act, 1990, so as to regard certain state-owned companies as public companies for purposes of the application of the Banks Act; to determine prerequisites for these companies and their holding companies to qualify to apply for establishment as a bank; and to provide for inconsistencies between the Banks Act and certain other legislation with respect to state-owned companies;
• the Government Employees Pension Law, 1996, so as to insert and delete certain definitions; to replace the divorce debt approach with a pensionable service reduction approach to adjust the benefit of a member of the Government Employee Pension Fund following a pension interest assigned to a former spouse of the member as result of a decree of divorce or for the dissolution of a customary marriage; and to provide for a transitional measure; and
• the Auditing Profession Act, 2005, so as to strengthen the governance of the regulatory board; to strengthen the investigating and disciplinary processes; to provide for the power to subpoena persons with information required for an investigation or disciplinary process; and to provide for the sharing of information amongst the regulators of the auditing profession.
Treasury indicated that the process of revising the draft bill has been completed and the draft bill has been submitted to cabinet for approval to be tabled in parliament.

In a separate matter, Nedlac recently confirmed that the Financial Sector Summit will be held on 14 March 2019.

Nedlac also announced that the social partners had agreed to revise, and/or amend relevant legislations so that they are consistent with the objectives and goals of the transformation of the financial sector; review procurement laws such as the Public Finance Management Act,

Preferential Procurement Policy Framework Act, and the Municipal Finance Management Act in order to achieve transformation objectives; ensure that DFIs report on transformation to the Financial Sector Charter Council and to the BEE Commission and the need of clearly defining the roles of other regulatory bodies in supporting the council in driving transformation.