DA, EFF oppose Twin Peaks Bill

Cape Town – Opposition parties are concerned that the National Credit Regulator is not included in the amended version of the Twin Peaks Bill, and that this omission will leave consumers vulnerable to unscrupulous lending practices.

The draft legislation, which is officially known as the Financial Sector Regulation Bill, was considered in the National Assembly on Thursday, following lengthy deliberations during meetings of Parliament’s standing and select committees on finance.

It makes provision for a so-called Twin Peaks model of financial regulation. On the one hand the South Africa Reserve Bank will be responsible for regulating all financial institutions – banks, insurance houses and the asset management sector. 

On the other hand financial conduct will be governed by a new entity, called the Financial Sector Conduct Authority, which will replace the current Financial Services Board (FSB).

The Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) opposed the Bill, while the Inkatha Freedom Party (IFP) accepted it, but with reservations.

Thandi Tobias, ANC MP and a member of the standing committee on finance said in a declaration that the Bill has undergone welcome at changes when it was presented to the National Council of Provinces (NCOP).

“The Bill is now closely aligned with the Financial Intelligence Centre (FIC) legislation,” Tobias said.

READ: Treasury touts Twin Peaks Bill amid banking scandal 

Alf Lees, DA spokesperson on finance, said in his declaration that although it is positive that the Bill now deals with the constitutional concerns of warrantless searches, it is still flawed.

“The exclusion of the NCR means there will be a third body that runs parallel to this (the financial regulation of the Twin Peaks model), which means there’s a weak conduct authority for millions of South Africans who buy on credit.”

Lees ascribed the exclusion of the NCR to a “turf war” between the Department of Trade and Industry (DTI) and National Treasury – a war which National Treasury “lost”.

He was also worried about the cost of implementing the new legislation, which he believes will be passed on to consumers.

“This could also lead to job losses in the financial sector in the midst of a recession and these costs could act as inhibitors of financial inclusion,” Lees said.

READ: Chris Hattingh: Twin peaks; twin fallacies – a conservative R4.8bn yearly cost

The EFF also opposed the Bill on the basis of the exclusion of the NCR, which would leave people who apply for credit vulnerable.

The IFP’s Mkhuleko Hlengwa said in his declaration although his party supports the Bill a new process must be started to look at the inclusion of the NCR.

“We welcome the NCOP amendments, but we mustn’t pretend that the NCR matter is not an issue,” he said.

Yunus Carrim, ANC MP and chairperson of the standing committee on finance, said in his declaration that the final proposals pertaining to the Bill had come from consultations between the DTI and National Treasury.

“The NCR is working reasonably well and will regulate the market conduct of credit agreements, while the Financial Sector Conduct Authority will oversee other financial services.”

He stressed that the new legislation will make the financial system in South Africa more stable and protect consumers.