The Financial Sector Conduct Authority’s (FCSA) plans to transform the sector including bolstering SMEs. The FCSA recently published its draft strategy titled “Strategy for Supporting Financial Sector Transformation” for public comment. It discusses how transformation can be achieved in the sector.
The FSCA is responsible for licensing and supervising financial institutions, which include a large number of small and medium businesses. “For these SMEs, regulation and supervisory approaches can be a barrier to entry,” the document reads. “If not managed proportionately, such can cause the failure of a business through inappropriate compliance costs or the withdrawal of licences due to an inability to comply.”
The document says that the FSCA, through its Inclusive Business Model Support Unit (IBMSU), will conduct training and support workshops for SMEs and entrepreneurs in the financial sector. They will focus on issues of compliance, readiness for licensing, and support for regulatory examinations. They will also look at how to boost access to money and support for SMEs.
“The FSCA’s financial inclusion strategy considers how to improve access to financial services for SMEs, a historically under-served market in South Africa,” the FSCA said. “The work of other stakeholders involved in small business development is important in this regard, and the FSCA aims to ensure cooperation with such stakeholders so that efforts have maximum effect.”
The FSCA believes that licensing, and regulatory and supervisory requirements should not pose a barrier to entry for small financial institutions, particularly those owned by previously-disadvantaged individuals. “In support of transformation, the FSCA will develop regulatory and supervisory frameworks and instruments that allow for the proportional application of requirements, minimising undue barriers to entry and compliance burdens,” the authority said.
“The FSCA could also minimise regulatory barriers to entry for small, black-owned entities in the financial sector, and support small black businesses with suitably enabling regulatory compliance requirements.”The FSCA also announced that it would participate in the National Economic Development and Labour Council’s proposed Second National Financial Sector Summit.
The first summit, which was held in 2002, identified challenges at the time in the financial sector, which included difficulties of entry for black businesses and poor access to and use of financial products and services. The FSCA said that although there had been efforts to improve financial inclusion and customer outcomes, more needed to be done to transform the financial sector, especially for the historically disadvantaged. The draft strategy can be accessed on the authority’s website www.fsca.co.za