A comparative statutory analysis of the collaboration and cooperation between the South African Reserve Bank and other financial regulatory bodies under the Financial Sector Regulation Act 9 of 2017

Abstract

The promotion, protection, maintenance and enhancement of financial stability and market integrity in South Africa relies on effective and adequate cooperation and collaboration arrangements between the South African Reserve Bank (SARB) and other financial role players, namely, the Financial Sector Conduct Authority (FSCA), the Prudential Authority (PA), the National Credit Regulator (NCR), the Financial Intelligence Centre (FIC), relevant Cabinet members, the Financial Sector Inter-Ministerial Council (FSIC), the Financial Sector Council of Regulators (FSCR), the Financial Stability Oversight Committee (FSOC) and the Financial Sector Contingency Forum (FSCF). The Financial Sector Regulation Act (FSR Act) provides a statutory regulatory framework to regulate cooperation and collaboration between the SARB and other financial role players to promote, protect, enhance and maintain financial stability and market integrity. Several mechanisms were established under the FSR Act to foster effective cooperation and collaboration between the SARB and other financial role players. These include the establishment of a statutory duty to cooperate and collaborate, the establishment of the duty to enter into Memorandums of Understanding (MOUs) regarding cooperation and collaboration arrangements and the establishment of forums to facilitate cooperation and collaboration. Cooperation and collaboration between the SARB and other financial role players are essential for promoting financial stability and enhancing financial integrity because they enable the coordination of regulatory functions, regular discussions, consultations, mutual assistance and sharing of information on matters of common interests. Effective and robust cooperation and collaboration between the SARB and other financial role players also ensure transparency of regulatory actions and prevent the duplication of tasks and blurred regulatory boundaries between the SARB and other financial role players. Cumbersome cooperation and collaboration between the SARB and other financial role players may also cause regulatory gaps which threaten financial stability and market integrity in South Africa. It is submitted that international cooperation and collaboration between the SARB and other central banks and cross-border financial role players are also essential for maintaining global financial stability and the integrity of financial markets. International cooperation and collaboration also create important relations between South Africa and other jurisdictions, which are essential for investor confidence and the investigation of cross-border market misconduct. To this effect, international best practices for cooperation and collaboration between central banks and other financial role players were established and standards were set for member states to follow. This thesis reveals that the regulation of cooperation and collaboration between the SARB and other financial role players under the FSR Act is inadequate and is not consistently enforced to promote, protect, enhance and maintain financial stability and market integrity in South Africa. This is due to the fact that there is a lack of measures to consistently enforce compliance with the statutory provisions relating to cooperation and collaboration between the SARB and other financial role players in South Africa. This thesis does a comparative analysis of the regulation of cooperation and collaboration between central banks and other financial role players in the United Kingdom (UK) and Australia to derive lessons that can be used to enhance the regulation of cooperation and collaboration between the SARB and other financial role players in South Africa. The researcher proposes a regulatory model that policymakers can use to ensure the effectiveness of the regulation of cooperation and collaboration between the SARB and other financial role players to promote, protect, enhance and maintain financial stability and market integrity in South Africa.