Explainer: who will be doing what under South Africa’s new ‘Twin Peaks’ model

by Dr. Andrew D. Schmulow

The Conversation, (2018), published electronically.

South Africa has started implementing a new regulatory regime for the financial sector. Known as Twin Peaks, the approach was first adopted in Australia in 1998. South Africa has become the eighth country to adopt the model.

Under Twin Peaks two regulators are established. One is charged with maintaining the stability of the financial system – called prudential regulation; the other is responsible for market conduct and consumer protection – what the South African authorities have neatly abbreviated to calling the “good conduct” peak.

The new approach is designed to address weaknesses in the other models commonly used to regulate banks and the financial services sector. Prior to adopting Twin Peaks South Africa used the sectoral model – that regulated banks separately from other financial firms like insurers. That model’s been replaced because it didn’t address the fact that institutions from different sectors often merge. This is particularly true of banks and insurers (so-called bancassurance).

This article first appeared in The Conversation. Also published at BizCommunity and Middle East North Africa Financial Network, Inc. (MENAFN).