Twin peaks : The South African model of financial regulation

Abstract

The Global Financial Crisis that unfolded between 2007 and 2009 was an eye opener for the need for stronger financial regulation. The Crisis highlighted the need for a well- regulated financial services sector, and specifically, the importance of risk management on a global scale. This forced countries all over the world to assess their respective financial regulation models. South-Africa was no exception.

Previously, South-Africa did not give priority to market conduct regulation and operated in an institutional framework that regarded banks, insurers and capital markets as separate classes. In view of this, when South Africa opted for a new model of financial regulation, it decided that the Twin Peaks model was best suited for the country since the model demanded, amongst others, a regulator that gives top priority to market conduct and consumer protection.

The different models of financial regulation are examined in this dissertation with particular focus on the Twin Peaks model of financial regulation. In addition, the dissertation considers the various components of the South-Africa Twin Peaks model. A comparison study of the Twin Peaks model of financial regulation that was adopted by the United Kingdom and the main components of that model is also interrogated herein. The purpose of this dissertation is to determine whether the Twin Peaks model is the appropriate model for South Africa and whether any guidance can be taken from the United Kingdom.