LEGAL ISSUES Two heads are better than one: Assessing South Africa’s ‘twin-peaks’ financial regulation model Professor Patrick Osode he Financial Sector Regulation One problem identified by Professor head of the National Treasury) is Act (FSRA) was signed into law Osode relates to a section of vested with the power to remove in August 2017. This event saw the FSRA that requires the PA to the FSCA Commissioner from office. T South Africa joining a short list of support sustainable competition in Given that the Minster is a political countries that have switched to a ‘twin the provision of financial products appointee, the way is left open for peaks’ model of financial regulation. and related services. According to political interference. Professor The ‘twin peaks’ model involves Professor Osode, this clearly leaves Osode argues that international best regulatory jurisdiction over financial space for the PA to undertake its practice and the academic literature services players (banks, insurance mandate of promoting competition draw on the need for financial sector companies, pensions administrators without the consent, support and/ regulatory agency heads, such and so on) now being exercised by or collaboration of the Competition as the FSCA Commissioner, to be immune from political interference two separate, independent agencies: Commission, something which the Prudential Authority (PA), part of would clearly be desirable given the and manipulation. As the FSRA the administrative structure of the importance of alignment and synergy already makes the FSCA accountable South African Reserve Bank, and the between competition promotion to Parliament, vesting the power Financial Sector Conduct Authority initiatives as well as the very real both to appoint and remove the (FSCA), a reincarnation of the former prospect of regulatory turf protection. FSCA Commissioner in the Finance Financial Services Board. Another problem for Professor Minister in order to further secure UFH researcher Professor Patrick Osode relates to the role and accountability to the government of Osode’s study of the ‘twin peaks’ model powers allocated to the Minister of the day is problematic. Depending resulted in an article published in the Finance to hire and fire the PA’s Chief on how it is configured, and although Interdisciplinary Journal of Economics Executive Officer as this raises the accountability to Parliament and Business Law. The article seeks to possibility of political interference in alone could occasionally result in understand the rationale behind the the functioning of the PA itself. For the FSCA’s paralysis because of adoption of the ‘twin peaks’ model Professor Osode, this represents deadlocks, Parliamentary oversight by South Africa and then assesses its a failure, on the part of lawmakers, would protect the FSCA from being fitness for the purposes intended by to ensure the PA’s immunity from ‘captured’ by powerful political and those responsible for its adoption in political interference and is a design private interests. this country. In the article, Professor flaw in the South African ‘twin peaks’ Important in the FSRA is that one of Osode comes to the conclusion that, model. the few mandates given to the FSCA is although the design of the model is The potential for political interference the responsibility to promote financial fundamentally sound, some aspects is also highlighted in the fact that inclusion, something which is clearly are flawed. the Finance Minister (as political very important in a country such as South Africa where divides between 61 | University of Fort Hare