Deputy Speaker, the Financial Services Laws General Amendment Bill being debated in this House today addresses urgent technical and regulatory issues in a number of our financial sector laws.
The proposed amendments are required in order to update existing legislation, to close regulatory gaps in existing statutes, and, importantly, to provide for increased enforcement capabilities for the Financial Services Board in terms of the laws that they administer.
Some high-profile cases of abuse, such as the protracted Fidentia matter, have highlighted the need for tighter financial sector laws, better enforcement capability and improved co-ordination between various regulators and statutory bodies in the financial sector. National Treasury has commenced a process whereby gaps in legislation are identified so that co-ordination between regulators can be improved.
While this work is ongoing, there are a number of important interventions that can and must be made now in order to provide consumers with increased peace of mind and protection.
In terms of the Bill before the House, it is an accepted principle of financial regulation that supervisors need the power to take action against those who are not compliant with the law. The Bill proposes the establishment of an enforcement committee, building on the model ratified by this House when passing the Securities Services Act in 2004.
The registrars at the FSB will be able to refer matters to the enforcement committee and that committee will have the ability to impose administrative sanctions and grant compensation orders to those identified who have suffered loss. In order to protect the fundamental rights of access to court enshrined in our Constitution, a party aggrieved with the decision of the enforcement committee retains the right to take the matter to court.
The establishment of this enforcement mechanism is a major step forward in the architecture of our regulatory system, but is not the only improvement proposed in the operation of the Financial Services Board. As members of this House are no doubt aware, the FSB has an independent appeal board which hears appeals against decisions made by the respective registrars at the FSB.
Since the establishment of the appeal board, the regulatory scope of the FSB has been significantly extended by the passing of legislation such as the Financial Advisory and Intermediary Services Act, which brought some 14 000 intermediaries into the net. This inevitably has meant that the number of appeals against decisions of the various registrars has increased.
This accordingly implies that the structure of the appeal board needs to be reviewed so that matters referred to it are heard timeously. The Bill therefore proposes a restructured appeal board which will be sufficiently resourced to deal expeditiously with matters placed before it, by being able to hear a number of appeals concurrently.
I would now like to turn to some of the other key proposals contained in the Bill, which seek to reinforce the principle of consumer protection embedded in our financial sector laws. Firstly, in terms of the Pension Funds Act, the Bill establishes beneficiary funds which will be entitled to receive benefits following the death of a member. In the past these moneys often went into trusts not under the supervision of the FSB where little oversight was possible. In future, widows and orphans entitled to such moneys will be afforded the protection of the Registrar of Pension Funds and the Pension Funds Adjudicator.
Secondly, with respect to the National Payment System Act, the Bill proposes the inclusion of nonbank clearing system participants who are currently outside the supervision of the SA Reserve Bank. This enabling provision in the Bill is a step towards improved competition in banking, and the regularisation of the affairs of the Post Bank under the watchful eye of the SA Reserve Bank.
Thirdly, with respect to the Financial Advisory and Intermediary Services Act, the Bill proposes the tightening of a number of provisions dealing with the suspension and withdrawal of a financial services provider's licence, the "naming and shaming" of wrongdoers, and stronger provisions regarding inspections and on-site compliance visits by the regulator.
I would like to convey my special thanks to the Portfolio Committee on Finance, under the steady hand of Mr Nhlanhla Nene. The committee consistently provides an insightful review of legislation placed before it for consideration.
Deputy Speaker, I hereby request that the House pass the Financial Services Laws General Amendment Bill, 2008. I thank you. [Applause.]