Just like any other country, South Africa hosts its very own financial regulator. However, it can be said that the institution is quite new. It was first established in 1991, which is quite young in terms of financial institution standards.
The reason for the establishment was quite natural. The South African economy was on the rise and somebody needed to be present to actually regulate it. This is the case with pretty much every regulator in the world. However, South Africa had another serious goal to achieve. Their financial regulator needed to be a perfect example for other African states. And needless to say, they were able to achieve this goal. We are going to glance over several aspects of this regulator and determine how they were able to set an example. The name of this institution is FSB (Financial Services Board), but now they have changed their name to FSCA (Financial Services Conduct Authority), let’s find out the ins and outs of FSCA and see how they were able to set a standard for other African states.
The start of it all
As already mentioned the institution was first created in 1991 by the name of FSB, and in some cases, people still refer to it with that name. In all honesty, it is no surprise as the name has been changed for a little less than a year. The need to create such an institution was quite common with other countries as well. The government couldn’t handle to pressure the Ministry of Finance with the task of regulating everyone, therefore they had to make an independent body to do the heavy lifting.
But what does the regulator do? Well, pretty much any Financial Service Provider including the best South African Forex brokers listed here are obligated to report and answer to the FSCA’s laws. Also, any company that is considered to be a Insurer, capital market, Investment company or a retirement fund, falls under the direct jurisdiction of the FSCA. Their main obligation is to keep their operations transparent and fair, adhere to the anti-money-laundering laws and pay attention to their customers. This means that the FSCA is sort of like a guarantee to the customers of these companies, that if something were to happen they will back this customer in the dispute to help resolve the issue. Naturally, the institution will not be biased, should the customer-proven wrong, they will impose the proposed fines on them instead of the company. But it needs to be said that the regulator has no limit as to how much fines it can issue for a violation of its laws.
The technical aspects
One of the best features that the FSCA has is their obligation to provide financial education to the general population. Well, not the whole population, but to the ones that have voiced their interest in investments and financial activities. This means that the resources they feature on their website will be done by the best experts present in the country. This is an amazing addition from a regulator’s side. As of today, no other Financial regulator has this feature, and in all honesty, they can learn from the FSCA.
What is the FSCA trying to accomplish with this? Well, first of all, they are trying to filter out the complaints that may be coming their way in the future. If the customer knows what they can dispute and what they can not, it will prevent them from spamming the regulator. This means that the FSCA will be able to maximize its effectiveness, by only working on the most relevant of dispute cases.
FX brokers beware
As already mentioned. The FSCA is tasked with regulating the Forex brokers currently operating in the country. Pretty much every Forex broker you find in South Africa will happily display their license on their front page, but please make sure to double-check it with the regulator. First, search the license number or name of the company on the FSCA website, and after that, contact the regulator directly to make sure that the license has not been revoked and the regulator hasn’t simply forgotten to remove the company from the list.
One thing you will need to know is the collateral damage that can be compensated by the FSCA. This means that if the Forex broker is regulated by the FSCA, but it still turns out to be a scam, the investor will be eligible for a compensation of a specified amount. This is because the regulator is directly responsible for having only trustworthy companies under its jurisdiction. The compensation is basically like an “I’m sorry” from the regulator for not doing their job properly. So far the operations have been smooth, and every FX broker that has an FSCA license has turned out to be legit.
What’s so special about the FSCA
As already mentioned, the FSCA is quite the industry standard when it comes to financial regulators. They are tasked to filter out the financial companies and only recommend the ones they deem reliable. They also warn the public about potential shady companies and compensate them in case they are mistaken about a specific provider.
But, what makes the FSCA so great is their addition of Financial education. Needless to say, no regulator has tried adding this feature to their platform, the FSCA is the first.
Thanks to this addition, they have inspired several African states to develop their own Financial regulators by essentially copying FSCA. There is no shame in copying a good Financial regulator, as long as it is safe, nobody will dispute copyright or anything.