Twin Peaks Model Flashcards
(13 cards)
When was the Twin Peaks model implemented in South Africa and under which act?
August 2017, under the Financial Sector Regulation Act (FSR Act).
What are the three changes brought by the FSR Act?
1) Gave SARB a mandate to maintain financial stability
2) Created Prudential Authority (PA)
3) Established Financial Sector Conduct Authority (FSCA).
What is the aim of the Twin Peaks model?
To separate prudential and conduct regulation to avoid conflicts of interest, ensure regulatory focus, and improve accountability.
Which two regulators were introduced under the Twin Peaks model?
Prudential Authority and Financial Sector Conduct Authority.
What is the role of the Prudential Authority?
Ensuring the safety and soundness of financial institutions, including monitoring capital adequacy, risk management, and liquidity.
What is the focus of conduct regulation?
Consumer protection, market integrity, transparency, and fair treatment of customers.
How does the Twin Peaks model affect banking law in South Africa?
Leads to tailored laws for prudential and market conduct regulation, enhancing supervision and oversight.
How does the model improve adaptability?
Allows regulators to adjust approaches for new challenges like technology, cyber threats, and global market changes.
List two advantages of the Twin Peaks model.
Improved financial stability and enhanced consumer protection.
How does Twin Peaks streamline the regulatory framework?
By consolidating regulation under SARB and FSCA, improving coordination and efficiency.
What are some drawbacks of the Twin Peaks model?
Complexity, fragmentation, overlap, coordination challenges, increased costs, and possible lack of holistic regulation.
What coordination challenges exist in the Twin Peaks model?
Differences in regulatory priorities may hinder cooperation and effective responses during crises.
What are the cost implications of Twin Peaks?
High setup and maintenance costs for dual regulators, and increased compliance costs possibly passed to consumers.
