Understanding FSCA Powers Under the Financial Sector Regulation Act

The Financial Sector Conduct Authority (“FSCA”) plays a critical role in regulating South Africa's financial services industry. Created under the Financial Sector Regulation Act 9 of 2017 (“FSRA”), the FSCA is responsible for supervising market conduct to ensure fair treatment of financial customers and the integrity of the financial system. At Barter McKellar, we assist financial service providers (“FSPs”), fintech businesses and compliance officers in understanding and managing their obligations under FSCA oversight. This article outlines the key powers the FSCA exercises under the FSRA and what it means for your business.

1. Supervisory and Licensing Powers

The FSCA is empowered to supervise the conduct of financial institutions, including authorised FSPs under the FAIS Act, insurers, banks and retirement funds. It may issue, suspend or revoke licences based on compliance with legislative requirements.

Key licensing powers include:

• Granting authorisation to FSPs under section 8 of the FAIS Act.

• Reviewing "fit and proper" status of key individuals.

• Imposing licence conditions or restrictions.

• Refusing or cancelling licences for non-compliance.

Businesses must ensure robust internal compliance procedures and proper documentation to avoid enforcement action or delays in licence approvals.

2. Rule-Making Authority

The FSCA has the power to issue conduct standards that are binding across the financial sector. These rules apply to different categories of institutions and products and are aimed at promoting fair customer outcomes.

Examples include:

• Conduct Standard 1 of 2020 (General Code of Conduct for Authorised FSPs).

• Product-specific conduct standards in the insurance, investment, and pension sectors.

Businesses must stay current with FSCA-issued conduct standards to avoid unintentional breaches that may lead to sanctions.

3. Investigative and Enforcement Powers

The FSCA can initiate investigations into suspected contraventions of financial sector laws. It may:

• Summon individuals for questioning.

• Demand documentation or electronic evidence.

• Conduct inspections and on-site visits.

• Impose administrative penalties.

• Refer matters to the Financial Services Tribunal or the National Prosecuting Authority.

Institutions under investigation must act swiftly, cooperate fully and seek legal advice immediately to manage regulatory risk and protect reputation.

4. Powers of Intervention and Protection

The FSCA has proactive powers to intervene when it identifies risks to the public or financial system. These include:

• Issuing directives to halt unlawful practices.

• Suspending marketing or sale of harmful financial products.

• Publicly warning consumers against unlicensed operators.

FSPs must take product governance seriously and assess consumer risk exposure in every offering.

5. Supervisory Co-operation and Information Sharing

Under the FSRA, the FSCA can share information with other regulators, such as the Prudential Authority, the SARB, and foreign regulators. It also cooperates with the Financial Intelligence Centre on anti-money laundering matters.

Entities should be aware that non-compliance may result in cross-agency scrutiny or international reputational damage.

Conclusion

Understanding the full range of the FSCA's powers under the Financial Sector Regulation Act is vital for any institution operating in South Africa's financial services landscape. At Barter McKellar, we guide our clients through FSCA compliance, enforcement responses, and licensing matters with clarity and strategy.

Need Help With FSCA Compliance or Licensing? Get in touch with our financial regulatory team for tailored legal support.