Twin Peaks – the Big Bang of SA’s financial industry

by Dr. Andrew D. Schmulow

News24, (2018), published electronically.

ON April 1, a new regulatory model called Twin Peaks was implemented in South Africa. This will have a dramatic impact on the country’s future financial regulatory landscape.

Many companies may not be aware that this model will have authority over every South African firm or business that offers a financial product or service. The good news for consumers is that this will potentially create one of the most progressive and extensive consumer protection regimes in the world.

The Twin Peaks model, which was first adopted in Australia two decades ago, was so named because of the two peak regulatory authorities it creates.

One peak, termed the “system stability” regulator, is charged solely with creating and enforcing prudential regulations, designed to prevent a financial crisis. During the global financial crisis, the strength of Australia’s financial system was attributed to this regulatory model. The second peak is responsible for deterring misconduct and protecting consumers of financial products and services.

Consequently, this model creates clear and unequivocal goals that are separated between the two peaks. This is a core feature of Twin Peaks: a model that recognizes that the two peaks can have contradictory goals, and then creates the peaks as separate, but equal.