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Financial Sector Regulation Act, 2017 (Act No. 9 of 2017)

Chapter 10 : Enforcement

Part 2 : Directives by financial sector regulators

144. Directives by Financial Sector Conduct Authority

 

(1) The Financial Sector Conduct Authority may issue to a financial institution a written directive requiring the financial institution to take action specified in the directive if—
(a) the financial institution is conducting its business in a way that poses a material risk to the efficiency and integrity of financial markets;
(b) the financial institution’s treatment of its financial customers is such that the institution will not be able to comply with its obligations in relation to the fair treatment of financial customers;
(c) the financial institution is providing financial education in a manner that is not in accordance with relevant conduct standards;
(d) the financial institution or a key person, representative or contractor of the financial institution—
(i) has contravened or is likely to contravene a financial sector law for which the Financial Sector Conduct Authority is the responsible authority;
(ii) has not complied with an enforceable undertaking accepted by the Financial Sector Conduct Authority;
(iii) is involved or is likely to be involved in financial crime; or
(iv) is causing or contributing to instability in the financial system, or is likely to do so.

 

(2) The Financial Sector Conduct Authority may issue to a key person, a representative or a contractor of a financial institution (in this section, a "directed person") a written directive requiring the directed person to take action specified in the directive if the financial institution or the directed person—
(a) has contravened or is likely to contravene a financial sector law for which the Financial Sector Conduct Authority is the responsible authority;
(b) has not complied with an enforceable undertaking accepted by the Financial Sector Conduct Authority;
(c) is involved or is likely to be involved in financial crime; or
(d) is causing or contributing to instability in the financial system, or is likely to do so.

 

(3) A directive in terms of subsection (1) or (2) must be aimed at achieving the objective of the Financial Sector Conduct Authority set out in section 57 and—
(a) stopping the financial institution or the directed person from contravening applicable financial sector laws, or reducing the risk of such contraventions;
(b) ensuring that the financial institution or the directed person complies with the enforceable undertaking that was accepted by the Financial Sector Conduct Authority;
(c) stopping the financial institution or the directed person from being involved in financial crime, and reducing the risk that it may be so involved;
(d) reducing the risk that a systemic event may occur; or
(e) remedying the effects of a contravention of a financial sector law or the person’s involvement in financial crime.

 

(4) The Financial Sector Conduct Authority may not issue a directive on the basis set out in subsection (1)(d)(iv) unless it has been directed in terms of section 18 to do so or with the concurrence of the Reserve Bank.

 

(5) Action that may be specified in a directive in terms of subsection (1) includes the following:
(a) The financial institution ceasing offering or providing a specific financial product or financial service;
(b) the financial institution modifying a specific financial product or financial service or the terms on which it is provided;
(c) removing a person from a specified position or function in or in relation to the financial institution;
(d) the financial institution not paying a specified bonus or performance payment; and
(e) the financial institution remedying the effects of a contravention of a financial sector law.

 

(6) The Financial Sector Conduct Authority may not issue a directive in terms of subsection (5)(a) or (b) to a systemically important financial institution without the concurrence of the Prudential Authority.

 

(7) Action that may be specified in a directive in terms of subsection (2) must be aimed at achieving the objective of the Financial Sector Conduct Authority and ensuring that the key person, representative or contractor performs its function in compliance with the applicable financial sector laws.

 

(8) In addition to its powers to issue regulator’s directives, if a person is engaging, or is proposing to engage, in conduct that contravenes a financial sector law for which the Financial Sector Conduct Authority is the responsible authority, the Financial Sector Conduct Authority may issue a written directive to the person requiring the person to cease engaging, or not to engage, in the conduct.