By virtue of the Financial Sector Regulations Act, 9 of 2017 (FSRA), and the financial sector laws, the Prudential Authority (PA) has full access to statutory returns and all relevant information from the regulated entities, their controlling companies and subsidiaries, including internal management information. The PA schedules structured meetings with the regulated entities’ boards, the chairperson of the boards, the chief executive officer and other senior members of management and auditors (external and internal). The information gathered through prudential meetings and off-site supervision form the basis of further regular interaction and discussions with the appropriate risk managers of the regulated entities. These quantitative and qualitative analyses form an intrinsic part of the supervisory programme for each regulated entity and is also used to assess compliance with relevant legislation.
PA’s enforcement activities
The PA favours cooperation from and voluntary compliance by PA regulated institutions and will, as far as possible, afford troubled institutions with sufficient opportunity to rectify internal weaknesses. The PA regularly liaises and corresponds with PA regulated institutions in a transparent manner to resolve prudential issues with boards and management of the institutions it supervises.
The PA is, however, empowered to take enforcement action against PA regulated institutions and individuals within such institutions with the ultimate aim to protect, amongst others, the interests of depositors, members and policyholders.
The unwillingness or inability from certain regulated institutions to cooperate may necessitate the PA to take effective enforcement action to safeguard the interests of beneficiaries, including action against unlicensed institutions from conducting business in South Africa.
The PA has the necessary statutory powers in respect of PA regulated institutions to protect beneficiaries which include the power to:
· impose conditions or issue directives requiring specific actions or prohibiting certain actions;
· conduct of formal investigations;
· make debarment orders ;
· accept written undertakings which becomes enforceable upon acceptance;
· enter into a leniency agreements;
· vary license conditions;
· Institute civil, disciplinary, administrative or criminal action;
· remove individuals from their positions or from holding senior roles and
· impose appropriate administrative penalties
Where areas of concern are identified, whether through on-site or off-site supervision, through inspections, or information provided by the media or by the public in general, more serious matters are referred to the Sanctions and Enforcement Committee to advise and recommend to the Chief Executive Officer of the PA whether any sanction or enforcement actions are required. For purposes of efficiency and practicality, the Sanctions and Enforcement Committee is established as an internal committee of the PA in lieu of an administrative action committee that may be established in terms of Section 87 of the FSRA.
Throughout the action procedures, every effort is made to ensure that all actions taken are lawful, reasonable and procedurally fair.
Review of decisions taken by the PA
A person aggrieved by a decision taken by the PA may apply to the Financial Services Tribunal for a re-consideration of the decision. Note that neither an application for a reconsideration of a decision by the PA, nor the proceedings on the application, suspends the decision of the PA unless it is specifically ordered by the Tribunal.
The Tribunal may dismiss the application, set the decision aside and remit the matter to the PA for further consideration or, in certain instances, set the decision aside and substitute the decision with that of the Tribunal.