Money matters are very sensitive. It’s important for governments to establish commissions and agencies that seek to protect both businesses and regular people alike from unfair practices when it comes to finances. In South Africa, that duty is given to the FSCA.
Over the last couple of years, more and more South Africans are being drawn to investing in various financial instruments. Aside from stocks, they are also becoming more interested in forex trading, cryptocurrencies, commodities, and much more. As this is the case, the call for a governing body on finances is a must.
Now back to the FSCA. A lot of South African investors and businesses have probably heard about this agency, but they’ve yet to fully grasp exactly what it is and what it aims to do. Here’s a glimpse at the FSCA, its short history, its future endeavors, and many other things.
What Is The FSCA, And What Does It Do?
The FSCA stands for the Financial Sector Conduct Authority. The agency has been around since 2018, and it has led the financial sector’s standards and practices since being established. For any regulatory standards and practices you may have seen over the last couple of years, it’s the FSCA that has spearheaded the project.
The internal structure of the FSCA is as follows: a commissioner and deputy commissioners are in charge and will serve as the executive committee of the agency. The committee itself includes members from the recently abolished FSB executive committee, which includes the chairperson of the former FSB board Abel Sithole and National Treasury’s Katherine Gibson.
As per the FSCA’s website, it is the “market conduct regulator of financial institutions, that provide financial products and financial services, financial institutions that are licensed in terms of a financial sector law, including banks, insurers, retirement funds, and administrators, and market infrastructures.”
To put it simply, the FSCA is the leader when it comes to matters involved within the financial sector. This includes but is not limited to banking practices, stock market regulation, broker surveillance, and a lot of other things that can protect both consumers and businesses.
Over the last couple of years, the FSCA has been tasked with regulating and supervising market conduct in the financial sector. This includes regulating FSCA forex brokers in South Africa as well. Furthermore, it has also enhanced the efficiency and integrity of the financial market in a bid to protect customers and to promote fair treatment.
Basically, it helps level the playing field when it comes to investments.
Since launching, the FSCA has been following a mandate that it hopes to focus on for the first three years after being stated.
- Enhance the efficiency and integrity of the financial markets – What this means is that the FSCA is helping support the stability of the financial sector in South Africa. During a crucial time like the previous pandemic, it’s very important for businesses to gain such support.
- Promote fair customer treatment by financial institutions – This refers to the FSCA’s drive to protect customers from poor practices in the financial sector. This involves banks, financial institutions, and more. It also involves the regulation of brokers, too.
- Provide financial education and promote financial literacy – At a time where more people are being interested in investing, it’s important that the FSCA strives to provide the right education to guide people towards better investing. Of course, this also involves education to have better financial wealth.
- Assist in maintaining financial stability – Financial stability refers not just to the overall state of the sector in South Africa, it also refers to the financial stability of the people in the country as well.
Furthermore, the FSCA also extends its jurisdiction with help from the FSR act. That being said, the agency is also tasked with overseeing the regulation of financial products and services. These include services related to credit, and of course, the buying and selling of foreign exchange.
As compared to the now abolished FSB, the FSCA’s goals are more complex. Whereas the FSB had a compliance-driven model for its objective, the FSCAs are a lot different. Its model is focused on a “proactive, preemptive, risk-based, and outcomes-focused” approach to guiding the financial sector.
The FSCA In Previous Years
Since being established, the FSCA has done well in helping lessen the risks faced by people when it comes to the financial markets. It has been sending out warnings and mandates against exchanges or financial institutions that have been sketchy with their practices.
For instance, the FSCA has recently warned people against Cash FX. As per the agency, Cash FX does not have any license when it comes to giving financial advice. It also doesn’t have the authority to provide any services in terms of the Financial Advisory and Intermediary Services Act.
The agency has also stated that the website of Cash FX tries to make it look like it is a legitimate forex trading platform. However, the FSCA also states that Cash FX only seems to trade on behalf of clients through a practice that’s called copy trading.
The agency has been very diligent when it comes to warning people against any potential scams or sketchy platforms that try to attract more investors. With so many outlets for its announcements, it’s good that the FSCA is indeed able to warn people before they make any major investments.
Another area that the FSCA is focusing on as of late is banking practices. As per the agency, they want to ensure that banking institutions are being as fair as possible when it comes to their practices. Moreover, they are also looking to create a standard for banking practices in the future as well.
The standards will focus on the protection of the consumers, of course.
The FSCA is one of the best additions to South Africa’s finance sector. More people need guidance when it comes to investments, but it’s not just that. The agency’s drive to create a fair and safe playing field for businesses and customers alike will benefit the country in the long run as well.