A Comparative Analysis of the Design and Implementation of the Twin Peaks Model of Financial Regulation in South Africa and Australia
DOI:
https://doi.org/10.17159/1727-3781/2024/v27i0a17256Keywords:
Twin Peaks, financial regulation, prudential authority, consumer protectionAbstract
Abstract
In response to the 2007-2009 global financial crisis, South Africa, like most other countries, embarked on a journey of financial regulatory reform. This transformation has seen the country shift away from a silo approach, where various sectoral regulators supervise different financial institutions, towards the Twin Peaks model of financial regulation. The term “Twin Peaks” refers to the separation of regulatory functions between two independent regulators. For instance, one regulatory agency is responsible for the supervision of the safety and soundness of financial institutions, and the other is focussed on the regulation of business conduct. The Twin Peaks model is designed to provide the benefits and efficiencies of an integrated approach while simultaneously addressing inherent conflicts between the objectives of the safety and soundness of the financial system and consumer protection. The Financial Sector Regulation Act provides for the Twin Peaks model in South Africa. This Act positions South Africa as one of the first developing countries to adopt the model. On the other hand, Australia is the pioneer of the model since it implemented it in 1998. Its implementation in Australia, much as in South Africa, involved the separation of regulators for prudential soundness on the one hand and market conduct and consumer protection on the other. In this article, the authors provide a comparative analysis of the design and implementation of the Twin Peaks model in Australia and South Africa. They argue that while there are minor differences between the design and implementation of this model in Australia and South Africa, the model was customised and implemented to align with the specific needs of each country
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Literature
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Legislation
Australia
Australian Prudential Regulation Authority Act 50 of 1998
Australian Securities and Investment Commission Act 51 of 2001
Reserve Bank Act 4 of 1959
South Africa
Constitution of the Republic of South Africa Act, 1996
Banks Act 94 of 1990
Financial Intelligence Centre Act 38 of 2001
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Long-Term Insurance Act 52 of 1998
National Credit Act 34 of 2005
Short-Term Insurance Act 53 of 1998
South African Reserve Bank Act 90 of 1989
United Kingdom
Financial Services and Markets Act 2000
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