Financial Services Lawyers | south africa

The Financial Sector Regulation Act implemented the new “twin peaks” model of financial regulation in South Africa and provided for the establishment of two new regulators: (1) the Prudential Authority (an administrative arm of the SARB) and (2) the financial sector conduct authority (the FSCA). In addition to the dual regulators of the financial services industry, the twin peaks model also brought about sweeping changes to pre-existing financial services legislation including a new Insurance Act and the Conduct of Financial Institutions (COFI) Bill.

The latest estimates are the end of 2022 or early in 2023.

This will depend on the finalised bill once it is enacted. Our team is able to advise businesses on their obligations under the legislation and assist with license applications as required.

Financial services law governs the businesses and individuals who provide financial advice, manage investments, or operate collective investment schemes and funds in South Africa – principally through the Financial Advisory and Intermediary Services Act (FAIS), the Collective Investment Schemes Control Act (CISCA), and oversight by the Financial Sector Conduct Authority (FSCA). It covers licensing, conduct standards, and the ongoing obligations a licensed provider must meet.

Any person or business that gives financial advice or renders intermediary services in relation to defined financial products generally needs to be licensed as a Financial Services Provider (FSP) under FAIS, unless a specific exemption applies. FSP licences are categorised by the type of financial product covered, and each category carries its own fit and proper requirements for the licensee and its key individuals and representatives.

Collective investment schemes – including many private equity and venture capital fund structures – are regulated under CISCA, which sets requirements around the manager’s registration, the scheme’s governance, custody of assets, and investor disclosure and reporting. Fund managers establishing a new scheme need to structure both the legal documentation and the operational compliance framework to meet CISCA from the outset, since retrofitting compliance after investors are onboarded is far more disruptive.

South African private funds are commonly structured as en commandite partnerships (a partnership structure that limits certain partners’ liability and exposure) or bewind trusts (a trust structure where beneficiaries hold beneficial ownership of the fund’s assets, administered by a trustee). The right structure depends on tax treatment, investor preferences, governance requirements, and how the fund intends to make and exit investments.

Licensed FSPs have ongoing obligations that continue well beyond initial licensing – including maintaining fit and proper key individuals and representatives, complying with conduct and disclosure standards, submitting regular regulatory returns to the FSCA, and maintaining professional indemnity and fidelity cover where required.