Understanding Key Regulatory Shifts: South Africa’s Financial Sector in Transition

South Africa’s financial services industry has experienced a wave of regulatory and compliance reforms in 2024, with further changes expected in 2025. Professionals in roles such as financial advising, insurance, or compliance with the Financial Intelligence Centre Act (FICA) must stay updated to maintain compliance and adapt to the changing regulatory landscape.

Adapting to the Two-Pot Retirement System

One of the most notable legislative updates in 2024 was the introduction of the two-pot retirement system. This framework has reshaped retirement planning strategies, requiring financial advisers to account for the long-term effects of pre-retirement withdrawals. Guiding clients through these decisions has become more critical than ever, particularly as the risk of complaints tied to underperforming investments continues to rise. Protecting one’s practice through diligent advice and strategic planning is essential in this new environment.

Revisiting Funeral Insurance Regulations

The funeral insurance industry is set for a regulatory overhaul, with reviews and stakeholder consultations scheduled for early 2025. Long-standing issues, including debates surrounding the definition of “group”, have prompted discussions about the broader impacts on both service providers and consumers. The upcoming workshops aim to address these challenges and implement improvements to strengthen the sector.

Progress and Pitfalls in FICA Compliance

Compliance with FICA remains a mixed bag across the financial services industry. While significant strides have been made in onboarding new clients, managing existing client relationships still requires attention. Practical hurdles, such as conducting sanctions screenings in remote areas before onboarding, highlight the need for updated guidance from the Financial Intelligence Centre.

At the same time, consumer frustration with repeated requests for identification and documentation has added pressure on financial service providers to balance compliance with a smooth customer experience. Outside the financial sector, many high-value goods dealers still fail to meet their FICA obligations, exposing themselves to potential penalties and risks.

Strengthening Cybersecurity and IT Governance

Cybersecurity has emerged as a critical focus, driven by new Joint Standards. Joint Standard 1 of 2023, addressing IT Governance and Risk Management, became effective in late 2023, while Joint Standard 2 of 2024 on Cybersecurity and Cyber Resilience is set to come into effect by mid-2025. These measures aim to equip financial institutions with the tools to recover swiftly from cyber incidents while ensuring data integrity. Though immunity from threats is unrealistic, these frameworks provide a structured approach to mitigating risks and ensuring business continuity.

Looking Ahead

The pace of regulatory evolution in South Africa’s financial sector shows no signs of slowing. Staying informed and proactively adapting to these changes—from the two-pot retirement system to FICA compliance and cybersecurity standards—will be essential for maintaining competitiveness and upholding best practices in 2025 and beyond.

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Ruan de Jonge

Compliance Officer & Content Developer