nottheaverageactuary

Actuarial news and views from Cape Town and beyond

SA: Twin Peaks Regulation

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• The choice a country makes in adopting any regulatory model will depend primarily on analysing the existing industry structure, consumer protection, as well as the the nature of the relevant financial markets
• Twin Peaks can be described as an approach to regulation where there is a separation of regulatory functions between two regulators.
• The bill proposes the establishment of two regulators
– a prudential authority (housed within the Reserve Bank), which will focus on safety and soundness of financial institutions, and
-a market conduct authority (formerly the Financial Services Board), which will focus on business conduct and consumer protection
• Prudential regulation will be more concerned with financial institutions’ solvency and liquidity. The market conduct regulator will look at banks and insurers and the design and price of their products.
• The Netherlands and Australia are perceived to have benefited from a twin-peaks structure, having been less badly affected by the global financial crisis than countries where a centralised regulatory authority responded too slowly.

Related articles:
1. Twin peaks regulation deserves a fair chance
http://www.bdlive.co.za/businesstimes/2014/09/21/twin-peaks-regulation-deserves-a-fair-chance

2.Regulation shrinks retirement fund sector
http://www.bdlive.co.za/business/financial/2014/09/19/regulation-shrinks-retirement-fund-sector

3. Banks brace themselves for twin-peaks model
http://www.financialmail.co.za/business/2013/02/26/banks-brace-themselves-for-twin-peaks-model

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