The Draft Financial Sector Laws Amendment Bill has been published for comment. The Bill proposes amendments to various acts including the Insolvency Act, the South African Reserve Bank Act, the Banks Act, the Mutual Banks Act, the Competition Act, the Financial Markets Act and the Insurance Act – with a view to strengthening the ability of the South African Reserve Bank to manage the orderly resolution or winding down of a failing financial institution with minimum disruption to the broader economy.

‘Financial Institution’ is defined in the Financial Sector Regulation Act to include: financial service providers, collective investment schemes, market infrastructures, insurers and pension funds.

Against the backdrop of recent distressed banks like VBS and African Bank, the proposed amendments also seek to ensure that depositors’ funds are protected in the event of a bank failure, with the establishment of a government-owned Corporation for Deposit Insurance. The Corporation is mandated to establish, maintain and administer a Deposit Insurance Fund to protect bank customer deposits in the event of a bank failure. The Corporation will be partly funded by deposit insurance premiums payable by banks as compulsory members of the Corporation.

Comments on the Bill can be sent to Jeannine Bednar-Giyose at by 7 November 2018. The National Treasury, the South African Reserve Bank and the Financial Sector Conduct Authority will be convening meetings and workshops with interested stakeholders.