Twin peaks Bill: Effect on SA's financial sector

South Africa's financial sector is at a crossroads as the country's Parliament recently passed the Financial Sector Regulation Bill, paving the way for the implementation of the Twin Peaks regulatory system. The new legislation has stirred controversy and raised concerns about its potential impact on the financial services industry, particularly the insurance sector. At a media briefing in Johannesburg, the Freedom Market Foundation criticized the bill, highlighting the potentially damaging consequences it could have. In an exclusive interview with CNBC Africa, Professor Robert Vivian, a renowned expert in Finance and Insurance from the University of Witwatersrand, expressed his reservations about the bill's efficacy and the significant costs associated with its enforcement. Vivian emphasized that the estimated cost of implementing the Twin Peaks system would amount to 4.8 billion rand, a substantial financial burden with unclear benefits. He questioned the rationale behind the new regulatory framework and suggested that maintaining the existing system, which employs a single regulator per market, would be a more practical approach. Vivian argued that the current regulatory structure, which combines prudential regulation and market conduct oversight, has been effective for over a century and should not be dismantled in favor of the Twin Peaks model. He contended that the proposed system could exacerbate regulatory uncertainty and potentially lead to increased corruption, as it lacks well-defined laws and relies heavily on administrative directives. Despite mounting opposition to the Twin Peaks bill, Vivian acknowledged that its passage was imminent, with the President expected to sign it into law. Looking ahead, he emphasized the need to closely monitor the implementation of the new regulatory framework and assess its impact on the financial sector. As stakeholders brace for the changes that lie ahead, the debate over the Twin Peaks system continues to divide opinions within the industry, with concerns lingering over its effectiveness and potential repercussions for South Africa's financial stability.