Too Big To Regulate: Who Guards The Giants? Inside South Africa's SIFI Rulebook

Building on our earlier publication discussing the designation of systemically important financial institutions ("SIFIs") in South Africa, this article outlines the roles of regulators and public bodies (the "Guards") in relation to SIFIs. The Guards carry out their roles pursuant to the "Twin Peaks" framework established by the Financial Sector Regulation Act, 2017, which separates regulation into two complementary roles: prudential supervision and market conduct oversight. Each Guard's role is discussed in more detail below:

National Treasury

National Treasury (Treasury) sets the overall policy and legislative framework governing SIFIs. Its role is strategic rather than supervisory. For instance, while not responsible for day‑to‑day regulation, Treasury determines the process for SIFI designation, establishes applicable dispute‑resolution mechanisms and coordinates the roles of other Guards. Importantly, Treasury also represents South Africa in international standard‑setting forums and leads structural reforms, including the establishment of the Twin Peaks model.

South African Reserve Bank ("SARB") and Prudential Authority ("PA")

The SARB and the PA share the prudential role under the Twin Peaks model. The former, as the macro-prudential authority, is responsible for safeguarding overall financial stability, coordinating crisis management for distressed SIFIs and working closely with Treasury on SIFI-related policy and systemic risk mitigation. The latter, as micro-prudential authority housed with the SARB, is responsible for licensing and ongoing supervision of SIFIs, as well as imposing on SIFIs certain prudential requirements (i.e., capital, liquidity, risk management and governance).

Financial Sector Conduct Authority ("FSCA")

The FSCA undertakes the role of a market conduct regulator under the Twin Peaks model. Its objective, as set out in the Financial Sector Regulation Act, is three-fold:

• enhance efficiency and integrity of financial markets
• (ii) protect financial customers by ensuring they are treated fairly and educating them to make sound financial decisions, and
• (iii) maintain financial stability.

The FSCA also sets and enforces conduct standards, supervises business practices and acts against any misconduct by financial institutions.

Financial Intelligence Centre ("FIC")

The FIC is South Africa's anti‑money laundering ("AML") and counter‑terrorist financing ("CTF") intelligence unit. It administers customer due diligence, beneficial ownership, record‑keeping, suspicious and unusual transaction reporting, targeted financial sanctions screening, and risk‑based AML/CFT supervision across accountable institutions, including SIFIs.

National Credit Regulator ("NCR") and National Consumer Tribunal ("NCT")

The NCR oversees and enforces the National Credit Act by, among others, registering credit providers and debt counsellors, educating consumers and investigating any related misconduct. In this regard, the NCT functions as an independent adjudicative body that hears and imposes penalties in relation to cases brought by the NCR or any other financial market participant.

Payments Oversight: SARB and Industry Bodies

Under South Africa's national payment system framework, the SARB is responsible for the overall safety, efficiency and integrity of the payment system. It sets standards for clearing and settlement, and may designate and supervise systemically important payment systems. In performing scheme management and related operational functions, the SARB is supported by designated industry bodies, such as the Payments Association. In this regard, SIFIs operating in the payments sector are all subject to licensing, risk management and settlement assurance requirements designed to contain systemic risk arising from payment disruptions.

Other bodies

In addition to the main Guards discussed above, there is also:

1. the Competition Commission which promotes and maintains competition across the economy, including the financial sector;
2. the South African Revenue Services which administers tax and customs laws, ensuring compliance with direct and indirect taxes applicable to SIFIs;

• the Takeover Regulation Panel which ensures that SIFIs carry out takeover transactions in a fair and transparent manner for all stakeholders; and

1. the Ombud for Financial Services Providers who ensure that each financial customer can have access to effective, independent, fair and affordable alternative dispute resolution processes for complaints related to their interactions with SIFIs.

Understanding the interplay between the roles

The Twin Peaks model relies on structured coordination between the Guards to ensure coherent oversight of SIFIs. In short, Treasury sets policy and laws; the SARB safeguards system‑wide stability and leads crisis management; the PA and FSCA supervise firm‑level prudential and conduct risks, respectively; and the FIC provides cross‑cutting financial intelligence and supports enforcement across the system. Together, these roles, coordinated through formal mechanisms, underpin a proportional approach to the "too‑big‑to‑ignore" challenge in South Africa's financial system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.