The Twin Peaks model for financial sector regulation was proposed as a means to reform the regulatory and supervisory system in so far as it related to financial institutions. In June 2011, Cabinet approved the move towards the model which resulted in the drafting of the Financial Sector Regulation (FSR) Act.
On 21 August 2017 the FSR Act was signed into law. The passing of the FSR Act is the culmination of collaboration on financial sector reform by the South African Reserve Bank (SARB), National Treasury and the Financial Services Board and marks an important milestone on the journey towards a safer and fairer financial system that is able to serve all citizens.
The FSR Act gave effect to three important changes to the regulation of our financial sector. First, it gave the SARB an explicit mandate to maintain and enhance financial stability. Second, it created a prudential regulator, the Prudential Authority (PA). The PA is responsible for regulating banks, insurers, cooperative financial institutions, financial conglomerates and certain market infrastructures. Third, the FSR Act established what is called a market conduct regulator, which is located outside of the SARB.
The PA is a juristic person operating within the administration of the SARB and consists of the following four departments: the Financial Conglomerate Supervision Department; the Banking, Insurance and FMI Supervision Department; the Risk Support Department; and the Policy, Statistics and Industry Support Department.