The goal of the implementation plan is that it should maximise the regulatory effect while minimising disruption in the market. Chapter 9 of the Framework focuses on the implementation plan of the framework into the market.
The implementation plan is that of a phased plan bringing the framework into the market in the following phases:
This phase will focus on finalising the FSR Bill by adjusting existing laws into the new organisational arrangements of the Reserve Bank, PA and FSCA. This is how it will be applied in practice:
- The FSB will be dissolved and replaced by the FSCA
- The FSCA and PA will be arranged according to their respective mandates
- The FSCA and PA will be the licensing authorities relating to the existing legislation. The existing Registrar will therefore be replaced by these respective authorities. Example:
- Licensing of banks and insurers under the Banks Act and Insurance Acts will shift from the Registrar of Banks and Registrar of Insurance to the Prudential Authority.
- For other legislation, responsibility of licensing and authorisation will shift to the FSCA.
- Entities already licensed do not need to apply for a new license in phase 1. The administration of such licenses will merely be shifted to either the PA or FSCA.
- New licences will be issued under sectoral law by the respective authority. There will be a consultation process and no new license will be issued unless both authorities agree that the licence may be granted.
- The post-licensing powers of authorities will be separated from the licensing process. This means that – once a financial institution is licensed, both authorities will have control over that institution, irrespective of which authority issues or administers the license.
The second phase of the implementation process will focus on revising components of sectoral laws. The existing conduct and market provision in current sector laws will be repealed and replaced with comprehensive conduct legislation, e.g the Conduct of Financial Institutions (CoFI) Act.
The main aspect of the new market conduct legislation will be aimed at ensuring that the new FSCA has the complete legal basis to meet its mandated responsibilities – including the full implementation of the TCF framework.
From a licensing perspective, all financial institutions will have to obtain a license from the FSCA. An additional license from the PA will also have to be obtained if the financial institution falls under prudential supervision.
The FSCA license will authorise financial institutions to perform within specific categories, for specified categories of customer.
The new framework is intended to impact the industry in a positive manner. Consumers require affirmation that the new framework will ensure products and services are sold in a more transparent manner. Consumers also have an appetite for financial institutions with accountability should they as the consumer suffer unfair treatment.
This chapter of the framework is to give the Industry an idea of how the framework will be implemented. TCF principles are again the epicentre of the new framework as it focuses on how to have a smooth transition so that consumers are not negatively affected. FSPs must ensure that they understand their role in the industry as well as who their targeted consumers are.
The full implementation of the TCF framework will also be done amidst all of the framework implementation phases. TCF and accountability should therefore become and remain the core of your business.