More and more people in South Africa are working towards better financial literacy. Aside from establishing businesses and small ventures, people in the country are also looking towards the direction of investing in financial instruments to help secure their futures.
As more people are becoming interested, the time for regulation is nigh.
Over the last couple of years, South Africans have taken more interest in financial instruments such as forex, stocks, commodities, and even cryptocurrencies.
As this is the new trend nowadays, the government has put the FSCA at the forefront of regulation and protection of investors.
Surprisingly, not a lot of people are well aware of the FSCA and what they do. However, it’s vital for investors to understand the agency and why they are game-changers in the financial world. Here’s a quick guide on the FSCA and why they are so important for investors, brokers, and companies alike.
What Is The FSCA?
Previously, it was the Financial Services Board that regulated and watched over the finance sector in South Africa. However, it was replaced in 2017 with the Financial Services Conduct Authority or what’s better called the FSCA. Since then, it has been leading the financial sector.
The launch of the FSCA was spearheaded by Finance Minister Nhlanha Nene. At launch, he said that the FSCA is a dynamic, innovative, and smart system.
Furthermore, he adds that the agency aims to “streamline our approach to financial regulation, to clearly define roles and responsibilities, and to create flexibility.”
The national government has also dictated what the FSCA is supposed to do. As per the national government, the mandate of the agency is to “enhance the efficiency and integrity of financial markets; promote fair customer treatment by financial institutions; provide financial education and promote financial literacy; and assist in maintaining financial stability.”
To put it simply, without the FSCA, regulation within the finance sector in South Africa can be a nightmare to deal with. However, the FSCA’s goals run deeper than that. The agency does have various benefits that affect not just consumers, but also companies and brokers too.
What Does The FSCA Do?
From a broad perspective, the FSCA regulates the finance sector. However, it runs deeper than that. To best understand what it is supposed to do, it’s best to list down each of the objectives of the agency and what it means for those affected or involved.
- Customer protection – as per the FSCA, hopes to protect customers by encouraging financial institutions to treat clients fairly. These institutions include exchanges, forex brokers in South Africa, and many others. This gives investors and customers a chance at financial gain with minimal risks.
- Promote financial literacy – part of the drive to protect customers is to make them more financially literate. In this light, the FSCA has been organizing financial education programs for people. This has helped many understand how the stock market works, as well as how to have better personal financial health.
- Financial market stability – the FSCA is also for the companies, just as it is for the people. The FSCA continues to support financial institutions through projects and drives that transform the sector. Overall, this aspect of the FSCA hopes to promote not just the stability of the finance sector, but also to promote its growth as well.
- Enhancing businesses – the FSCA also took it upon itself to enhance businesses in South Africa. What this means is that the agency also looked into new ways of improving businesses. This includes incorporating new and better business practices and using disruptive technologies as well.
- Dynamic growth – it should be a given that since launching in 2017, the FSCA has been dynamic with regards to how it helps the customers and financial institutions. This drive to rapidly evolve is important as the financial sector can be unpredictable especially during unforeseen events like the pandemic just recently.
As you can see, the FSCA has a lot on its plate. However, this is all for the benefit of customers and financial institutions. In times when financial instability can make investing hard and uncertain, the FSCA’s projects and oversight can be a big help for all those involved.
When it launched in 2018, the FSCA had six priority focus areas which were all targeted to have been completed by 2021. Those focus areas include building a new organization, creating a transformed financial sector, creating a robust regulatory framework, strengthening financial markets, and exploring new ways of doing business.
So far, the FSCA has been diligent on its goals. This year marks the third year since the agency launched and what that means is that the FSCA should have done a lot on the six priority focus areas. So far, many believe that the FSCA has indeed achieved its short-term goals but this is just the beginning.
FSCA In The Future
In light of its recent successes, there’s no doubt that the FSCA is here to stay. Moving forward, people are expecting more from the FSCA. Although its goals have differed since launching, the primary objective remains the same – transforming South Africa’s financial sector.
Currently, the agency has expressed its concern about poor customer outcomes in the banking sector. These include questionable transparency when it comes to bank charges, as well as unauthorized debit orders on customers. These are just the main problems the FSCA wants to address.
Since last year, the FSCA has been working on creating a standard for banking. So far, it’s yet to announce any major changes to the banking industry but it’s very likely that we’ll begin seeing some mandates or suggestions by the end of the year at the very least.
Aside from this, the FSCA also has its eyes on putting regulations on the emerging cryptocurrency industry which in itself is growing larger and larger as well.
The FSCA is one of the game-changers in South Africa’s finance sector. It’s good seeing exactly how the agency has changed South Africa’s finance landscape. Moving forward, investors and financial institutions should be excited about how the sector will become better regulated in the future.