As feared, levies and fees will be imposed on prudential activities once the Prudential Authority (PA) assumes responsibility for regulating collective investment schemes (CISs) and retirement funds.
This update was among several discussed at the FSCA’s 2025 annual Industry Conference held last week.
The transition is part of the shift into phase two of the Twin Peaks model.
To recap, the shift of prudential regulation for CISs and retirement funds to the PA is rooted in the Financial Sector Regulation Act (FSRA). This legislation established a Twin Peaks regulatory framework, introducing two primary regulators: the PA, which ensures the stability of financial institutions, and the FSCA, focused on market conduct and consumer protection.
Initially, the prudential oversight of entities such as banks and insurers was assigned to the PA, while the FSCA continued the market conduct oversight of CISs and retirement funds. However, the FSRA envisioned that prudential regulation of these entities would eventually transition to the PA. To manage this transition, transitional arrangements temporarily assigned the PA’s regulatory responsibilities for CISs, retirement funds, and friendly societies to the FSCA.
Originally set to conclude on 31 March 2024, these arrangements were extended.
On 22 March 2024, the Minister of Finance extended the transitional period until 31 March 2026 for retirement funds, CISs, and friendly societies, and until 31 March 2027 for medical schemes. This extension was formalised through a determination issued under sections 291 and 292 of the FSRA, published in the Government Gazette on 26 March 2024. It specifies that the FSCA will continue exercising the PA’s powers and duties related to CISs, retirement funds, and friendly societies during this extended period.
A working group, comprising members from both the FSCA and the PA, was formed to develop and refine these transition roadmaps. Reporting on the progress, Bonisile Ntutela (pictured), the divisional head of the policy, statistics, and industry support department at the South African Reserve Bank (SARB), informed delegates that this “significant, very important project” has been under way since about 2020, in collaboration with the Reserve Bank and the FSCA.
Ntutela explained that due to the scale of the task, it was divided into six workstreams, each managed by subject matter experts.
“And what we found is that it has given the SMEs enough time to unpack and be able to go into the level of detail that we need to according to the different workstreams,” she said.
Workstreams one and two
Ntutela said workstreams one and two focus on regulatory and supervisory frameworks. This involves the PA and the FSCA determining how to divide regulatory and supervisory responsibilities between them, from both a prudential and market conduct perspective.
She noted that work has already begun at both the primary legislation level and the level of regulatory instruments.
“And part of that work has also entailed that we do an international scan just to look at other jurisdictions that are also within a Twin Peaks model, just so that we can see how those models are actually working, and what we can leverage off of those within our own Twin Peaks model,” said Ntutela.
The work is ongoing.
Workstream three
Workstream three focuses on organisational design and capacity. Both the PA and FSCA are affected, but Ntutela said that from the PA’s perspective, the scale of the project required a full review of its Target Operating Model.
“We want to maintain the effectiveness and efficiency of regulation and supervision within how our model and practices are run. And of course, capacity-wise, we also are anticipating that our numbers will grow over the next couple of years,” she said.
This work is also ongoing.
Workstream four
Workstream four focuses on transforming the PA’s systems, technologies, and business processes.
“Just so that we make sure that, for instance, the mechanisms of how we are meant to collect, analyse, report, the prudential data that we need to receive from CIS and retirement funds, is running smoothly and it is configured within our IT infrastructure,” Ntutela explained.
Workstream five
Ntutela described workstream five as one of the most critical streams: change management and communication.
“Now I know industry is sitting there thinking, well, you’ve hardly communicated much to us, and that is because a lot of the work has been internal,” she said.
She said that the PA has spent the past few years laying the groundwork and refining its implementation plan.
“There has been a lot of engagements internally and, of course, with the National Treasury as well. And what is important here is that we take everyone along. So, industry should be expecting to see some communication later on this year, especially as our implementation plan starts being kicked off at a later stage,” she added.
Workstream six
The final workstream focuses on the PA’s funding model.
“And so again, industry is probably thinking, oh, here we go again. We will now be charged by yet another authority. Unfortunately, that will be the case,” Ntutela said.
She said that the PA will undertake prudential activities for which it will need to charge levies and fees.
“What we also need is to then incorporate within our own budgeting process – which again is a process that we’ve already kicked off – is how we will then be allocating our portion of the levies as well as the fees that we will be charging from a prudential aspect to industry, so that we make sure that it is still fairly allocated between ourselves and the FSCA,” she said.
Ntutela added that the process is largely on track.
“We believe that 1 April 2026 [we] should be good to go, and yes, there will be more engagements as time goes on throughout 2025 going into 2026.”
Alignment and transition
Panelist Eugene du Toit, the head of the regulatory frameworks department at the FSCA, said the transition affects all areas of the FSCA.
“We’ve already started to identify potential developments that might have interest from a PA perspective.”
He explained that the exercise aims to address conduct and prudential aspects.
“And, surprisingly, there’s a lot of those themes that straddle both conduct and prudential. And we’ve already went that route of converting some of what would have been our conduct standards to joint standards, and I think you’ll be seeing much more of that in the future.”
He noted that one of the key priorities is to avoid duplication and ensure proper alignment.
“On the legislative side, we are trying to streamline the approach so that there’s no duplication in law, etc, but also from the supervisory and licensing side.”
He said the FSCA and PA have been discussing how to align their approaches.
“It’s similar to how we do on the banks and the insurer side, etc.”
But he noted, like all siblings, there have been disagreements.
“So, there have been fights, but we’ve always been able to resolve it as well. So, it’s a healthy debate rather than a fight.”
Du Toit stated that these discussions are ongoing. However, he underscored the importance of reaching a point where the FSCA and the PA can begin communicating what is happening.
“We’ve wanted to issue something. What we really want is to get to a stage where we can give you tangible information that sets the expectations of what is coming, so that you’re also aware and can start engaging on this issue,” said Du Toit.
