Financial Sector Reform Developments since September 2004 Report by Government Elias Masilela: Acting Deputy Director General, National Treasury

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Financial Sector Reform Developmentssince
September 2004Report byGovernmentElias
Masilela Acting Deputy Director General,
National Treasury
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AIM OF UPDATE

• Not to provide a comprehensive review of all
  processes that have unfolded
• Since 2001 a lot has been achieved
• To provide the Portfolio Committee with a sense
  and framework for assessing progress
• Allow for an engagement, guidance and indication
  of policy expectations from Portfolio Committee

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INDICATORS OF SUCCESS

• Improving the functioning of the financial sector
  
• Focus on building savings culture
• Increase access to a broad range of financial
  services
• Development of a third-tier sub-sector
• Industry driven initiative
• Developmental investment
• Broad participation
• Preservation of the stability of the financial
  system remains paramount

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ASSESSMENT

• Too early to make a conclusive assessment of
  progress
• Intent is in the right direction
• Challenge will be the speed of arriving at the
  objective
• Success will depend on the extent of
  collaboration amongst social partners

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POLICY INTERVENTIONS

• 2001 to date
• Cooperatives Banks Bill
• Dedicated Banks Bill
• Apex Fund
• Pension fund reform discussion paper
• Consumer protection legislation (Financial
  Advisory and Intermediary Services Act
  Policyholder Protection Rules Security Services
  Act, Financial Intelligence Centre Act Financial
  Services Ombud Schemes Act, Collective investment
  Schemes Control Act, National Credit Bill).

• 2005 and beyond
• Deposit insurance
• Competition in banking proposals
• Generic access standards for banking, insurance
  and savings products
• RFT discussion paper
• Rewrite of Pension Fund Act, 1956

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PACE OF POLICY PROGRAMME

• We think this is a huge programme
• Pension surplus legislation took 2.5 years to
  negotiate
• UIF reform took about the same period
• Haste would lead to mistakes and threaten the
  credibility of proposed changes
• Appeal for patience to ensure a thorough output

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REGULATORY PHILOSOPHY

• In the past, emphasis had been on
• Stability
• Efficiency
• Institutional safety and soundness
• Going forward, emphasis will also be on Access
• Necessarily more complex objective function
• Reduce duality in the sector
• Avoid compulsion on industry (Industry led)
• Increase competition
• Reduce costs of services

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CHALLENGES

• Managing market perception and risk
• Protecting the credibility of financial sector
  policy
• Provide certainty to the market
• Swift and decisive decision-making
• Close collaboration amongst social partners
• Regulatory considerations
• Capacity and appropriateness
• Third tier financial institution
• Co-ordination across various initiatives