The Financial Sector Regulation Act (FSRA) of 2017 in South Africa is a key piece of legislation that establishes a system of financial regulation, with the aim of preserving and enhancing financial stability, improving market conduct, and protecting financial customers. It also creates the Prudential Authority (PA) and the Financial Sector Conduct Authority (FSCA), which are responsible for regulating and supervising financial institutions and financial products. 

The purpose and key objectives of FSRA include:

• Financial Stability - mandates the South African Reserve Bank (SARB) to protect and enhance financial stability, including managing systemic events and coordinating efforts with other stakeholders. 
• Regulatory Framework - establishes the PA and FSCA as the primary regulators, with the PA focused on prudential regulation (safety and soundness of financial institutions) and the FSCA focused on market conduct regulation (fair treatment of customers). 
• Market Conduct Improvement - aims to enhance market conduct and protect financial customers by ensuring fair treatment and providing financial education. 
• Coordination and Collaboration - promotes collaboration and cooperation among regulators (including the SARB, PA, FSCA, National Credit Regulator, and Financial Intelligence Centre) to ensure consistent regulation and supervision. 
• Regulatory Instruments - allows for the creation of regulatory instruments, including prudential standards, conduct standards, and joint standards, to govern the financial sector. 
• Financial System Council of Regulators - establishes a council to facilitate coordination and collaboration among regulators. 

The FSRA implements the Twin Peaks model, separating prudential and market conduct regulation, defined as:

• Prudential Authority (PA): Located within the SARB, the PA regulates banks, insurers, and other financial institutions to ensure their financial stability and soundness. 
• Financial Sector Conduct Authority (FSCA): A separate entity responsible for overseeing market conduct and consumer protection in the financial sector. 

FSRA and the South African Reserve Bank

The South African Reserve Bank (SARB) is mandated to maintain and enhance financial stability in the country, by:

• Acting as the Resolution Authority, responsible for managing the resolution procedures of designated institutions (banks and non-bank systemically important financial institutions) in the event of failure;
• regulating and supervising various financial institutions, including banks, insurers, and market infrastructures;
• ensuring the safety and soundness of the national payment system, which is the backbone of South Africa's financial system; and
• working with other financial sector regulators and stakeholders to ensure a coordinated and effective regulatory framework. 

Code of Conduct

The FSRA establishes a framework for regulating the financial sector, including a code of conduct for financial services providers. This code aims to protect financial customers by promoting fair treatment and ensuring integrity in financial markets. 

Key aspects of the FSRA code of conduct:

• Fair Treatment - Financial services providers are expected to treat customers fairly, honestly, and with due diligence. 
• Customer Protection - The code aims to protect customers by promoting financial education and literacy. 
• Market Integrity - promotes fair, efficient, and transparent financial markets. 
• Financial Stability - contributes to maintaining financial stability by regulating and supervising financial institutions. 
• Enforcement - FSCA has the power to enforce the code of conduct through directives, enforceable undertakings, and court orders. 

Specific requirements and expectations from financial service providers include:

• Transparency - Financial institutions are required to be transparent in their dealings with customers. 
• Competence - Providers must have the necessary skills and knowledge to provide financial advice and services. 
• Due Care and Diligence - Providers must exercise due care and diligence in their interactions with customers. 
• Honesty and Integrity - Providers must act honestly and with integrity in their dealings with customers. 
• Conflicts of Interest - Providers must manage and disclose potential conflicts of interest. 
• Risk Management - Providers must implement robust risk management systems. 

In essence, the FSRA code of conduct is designed to ensure that financial services are delivered in a fair, honest, and transparent manner, ultimately contributing to a more stable and customer-centric financial sector. 

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