There has been considerable media attention over the last few weeks on account closures by banks. Although there are no statutory requirements in this regard (the Banks Act, 1990 for example, is silent on the issue of account closures), it is not the case that a bank has an unfettered discretion regarding account closures. An … Continue reading
In recognition of the increase in the adoption of digital channels by financial consumers, in late 2021 the FSCA published a Digital Banking Research Report on the state of digital banking activities in South Africa. The term “digital banking” refers to the digitisation of traditional banking services in order to more efficiently deliver financial services … Continue reading
The Financial Services Tribunal held, in May 2021, that a manager of a foreign collective investment scheme is not to be made subject to the limitations applied to a manager in terms of the Collective Investment Schemes Act of 2002 (CISCA), where an application is made to the Financial Sector Conduct Authority (FSCA) for permission … Continue reading
The Tribunal has determined that the employer in the recent decision in the matter of Oasis Group Holdings (Pty) Limited v Mansoor and Others, is liable for the costs of the fund member in opposing the application on the High Court scale. The costs order comes in the wake of the Tribunal having repeatedly dealt … Continue reading
The increase in documentation fraud which has adversely impacted financial institutions operating within the trade finance space is an unwanted development that blockchain technology can mitigate. The types of lending most frequently seen in the trade financing space, including letters of credit, revolving credit facilities as well as guarantees have proven susceptible to fraud. An … Continue reading
On 17 March 2021, the Financial Services Tribunal confirmed that failure to timeously submit an actuarial valuation can result in the imposition of administrative penalties on a pension fund. The Financial Sector Conduct Authority (“FSCA”) may take into consideration the number of days that the pension fund was late in submitting the actuarial valuation when … Continue reading
What are Green bonds? Green bonds (also referred to as Climate Bonds) are like typical bonds but their distinguishing feature is that the proceeds of the bond are ring-fenced and exclusively allocated to support “green projects” aimed at mitigating climate change and promoting energy efficiency, pollution prevention, sustainable agriculture, clean transport, and the cultivation of … Continue reading
In March 2021, the Supreme Court of Appeal (SCA) handed down judgment with two important findings regarding a bank’s obligations to a third party, namely: a bank is not entitled to set-off the customer’s debts to the bank against amounts reflecting to the credit of a customer, if the bank knows that a third party … Continue reading
Climate change is no longer a future threat. The associated risks have already had a devastating impact on the financial sector. Financial institutions are financially exposed to the physical risks associated with more frequent severe weather events, as well as the transition risks associated with the changes necessary to achieve a low-carbon economy. Mortgage, commercial … Continue reading
In order to attract new forms of capital, Lloyd’s of London applied for and has had regulatory approval to set up a protected cell company known as London Bridge Risk. The idea is to make it easier for investment in the Lloyd’s market with a more transparent and efficient capital management process. It provides access … Continue reading
On 20 November 2020, the Financial Sector Conduct Authority issued a draft Declaration of Crypto Assets as a Financial Product under the Financial Advisory and Intermediary Services Act 2002 (FAIS Act). The Declaration will be made in terms paragraph (h) of the definition of ‘financial product’ in the FAIS Act, which provides that a financial … Continue reading
Financial services providers (FSPs) registered under the Financial Advisory and Intermediary Services Act 2002 fall within the ambit of ‘accountable institutions’ under the Financial Intelligence Centre Act 2001. As accountable institutions, these FSPs are obliged to comply with the FIC Act and are subject to oversight by the FSCA. The FSCA has recently investigated compliance with … Continue reading
When the Financial Sector Regulation Act (FSRA) was introduced in 2018, the FSCA was tasked with regulating and supervising the way banks conduct themselves in relation to the provision of financial products and services to customers. In fulfilment of this mandate, the FSCA has published a conduct standard for banks. The conduct standard is supported … Continue reading
During a virtual meeting held on 10 June 2020, Cabinet approved the Financial Sector Laws Amendment Bill of 2020, for submission to Parliament. In the first step to formalising a resolution process for financially distressed banks, the Bill proposes to designate the SARB as the Resolution Authority, and enhances the SARB’s regulatory tools for discharging … Continue reading
Economists and business leaders have welcomed the South African Reserve Bank’s (SARB) decision to cut the repo rate by a further 50 basis points (bps) to 3.75% on 21 May 2020. This has resulted in a reduction of the prime rate quoted by our commercial banks from 7.75 % to 7.25 %. This is the … Continue reading
On 20 May 2020, the Financial Sector Conduct Authority (FSCA) published a draft Conduct Standard for Exchanges and a draft Directive for Exchanges. Conduct Standard for Securities Exchanges The main objective of the proposed conduct standard is to introduce requirements for the conduct of securities exchanges in response to increased competition in the South African … Continue reading
In a further initiative to combat the economic fallout of the COVID-19 pandemic, the state, in collaboration with the banking sector and the South African Reserve Bank (SARB) has announced a R100 billion loan scheme to assist ailing small and medium-sized businesses (SMMEs). On 12 May 2020 National Treasury, the SARB and the Banking Association … Continue reading
By Lolo Mhaga, Aviva Hoekstra and Nicole Goate on Posted in Banking
In his address on 21 April 2020, President Cyril Ramaphosa announced that government will be approaching international finance institutions such as the International Monetary Fund, the World Bank, the BRICS New Development Bank and the African Development Bank to help fund the R500 billion COVID-19 economic relief package that will be provided by government. International … Continue reading
South Africa has supported the G20’s efforts to reduce the risk posed by over-the-counter (OTC) derivatives, and has put in place a regulatory framework for the licensing of OTC providers that originate, issue, sell or make a market in OTC derivatives. The Financial Markets Act 2002 prescribes criteria for the authorisation of OTC derivative providers. … Continue reading
Exchanging bank notes and coins are increasingly seen as risky business, as noted by Thomson Reuters in an article on the rise of digital money transactions. The COVID-19 pandemic may speed up the global move towards digital-only payments. Apart from the more widespread use of payment apps, electronic funds transfers and cryptocurrencies, the idea of … Continue reading
As South African businesses suffer the impact of the COVID-19 pandemic and national lockdown, small businesses can apply for debt relief from most of the major South African banks and several state programmes. The Department of Small Business has announced multiple interventions to assist small businesses. In addition to tax subsidies and incentives for compliant … Continue reading
The COVID-19 pandemic affects borrowers and lenders and their financing arrangements. The most significant clause to consider is the Material Adverse Effect (MAE) clause – this clause broadly captures unpredictable and unforeseen events or circumstances that would otherwise be difficult to incorporate into the agreement specifically. Read our article on the impacts of COVID-19 on … Continue reading
How does the COVID-19 pandemic affect borrowers and lenders and their financing arrangements? A Material Adverse Effect (MAE) clause is included in most finance agreements. It is a catch-all concept to capture unpredictable and unforeseen events or circumstances that would otherwise be difficult to incorporate into the agreement specifically. Broadly, a MAE clause covers a … Continue reading
The history of manipulation and scandals surrounding interbank offered rates (IBORs), for example LIBOR and JIBAR, has led to the shift toward Risk-Free Rates (RFRs), a shift which is primarily market led and remains uncertain. The transition to RFR’s rests on the fact that rates such as LIBOR are forward-looking interest rates, calculated using estimates … Continue reading