Financial Services Providers win or lose with investments and/or expenditure, depending on the culture of the country at a time. South Africa’s FSPs who render investment services might not be as busy as those giving loans, for example. Wherever it is busy, the backup services and risk management will increase or be monitored constantly.
When regulated as a financial services provider, The Financial Advisory and Intermediary Services Act 37/2002 (FAIS) requires a certain level of record keeping. These requirements can also be found in Board Notices passed in respect of the Act. Risk management is also regulated by the FAIS Act, especially when it comes to investments e.g. if a client reached a certain age, losing money on risky investments is not beneficial to the client.
Financial Services Providers are accountable institutions in terms of the Financial Intelligence Centre Act 38/2001 (FIC Act) and are required to screen and risk rate clients for each transaction.
The market is big as there are many Financial Services Providers that need to comply with these requirements and should one not comply, there can be significant consequences in terms of a specific act. The Financial Intelligence Centre Act 38/2001 (FIC Act) issue fines of R100 million.
There are many companies that provide data back-up and risk management services but they are mostly separated
There will be more stringent requirements in future with the implementation of the CoFI Act (Conduct of Financial Institutions Act) and the FIC Act Amendment Bill. Fintechs will have more business opportunity when this legislation comes into force.
Durban, South Africa