The Standing Committee on Finance, Financial Sector Regulation Bill, B34 of 2015
Nomonde Nyembe, AttorneyAyabonga Nase, Candidate Attorney
Content of PresentationCentre for
Applied Legal Studies
Supporting Documentation
Purpose of the presentation
Sources of HRtsobligation
JohannesburgPrinciples
Suggested changes to language
Centre for Applied Legal Studies
Basic Services, Business and Human Rights, Environmental Justice, Gender, and Rule of Law
Research
AdvocacyStrategic Litigation
Supporting documentation
• Johannesburg Principles dated November 2011
• CALS’ Submission to the National Treasury on the Draft Bill dated March 2015
• Equator Principles
Purpose of the presentation (1)
• Financial Institutions have rights and obligations in respect of the human rights of others
• Financial Institutions’ responsibilities: – respect (negative obligation i.e. don’t violate HRts)– promote and fulfil (positive obligation i.e. actually realise HRts)
– protect (positive obligation i.e. not let other people violate HRts)
Purpose of the presentation (2)
• Why should FIs advance HRt principles?– Reasons for FIs
• non-‐compliance with HRts is financially highly risky• failure to comply puts FIs at risk liability
– Reasons for the state• FIs can impede the state’s attempt to realise human rights
– Reasons for everyone else• Provide the finance for banks• Experience the adverse human rights impact
Sources for HRts obligations of FIs (1)
• International Instruments (voluntary)– Equator Principles– UN Guiding Principles – UNPRI
• Regional Instruments – Protocol of the
Amendment to the Statute of the African Court of Justice
– Resolution on Illicit Capital Flight
Sources for HRts obligations of FIs (2)
• Reparation for Apartheid (TRC Comments)• Constitution• Companies Act• Regulation 28 of the Pension Fund Regulations• Investment Act• Mineral and Petroleum Resources Development Act
Johannesburg Principles• Prepared by HR practitioners in banks and academia in
2011• Provide for practices that can be incorporated into
bank protocol to prevent human rights violations:– Pre-‐contractual assessment
• Due Diligence• Contract preparation• Community engagement
– During the progression of the contract• Oversight (e.g. staggared lending)
– Post-‐contractual• Liability• Grievance mechanism
Amendments to Preamble“To establish a system of financial regulation by establishing the Prudential Authority and the Financial Sector Conduct Authority, and conferring powers on these entities; to align the Financial Sector with the Constitution; to preserve and enhance financial stability in the Republic by conferring powers on the Reserve Bank; to establish the Financial Stability Oversight Committee; to regulate and supervise financial product providers and financial services providers; to improve market conduct in order to protect financial customers; to provide for co-‐ordination, co-‐operation, collaboration and consultation among the Reserve Bank, the Prudential Authority, the Financial Sector Conduct Authority, the National Credit Regulator and other organs of state in relation to financial stability and the functions of these entities; to establish the Financial System Council of Regulators and the Financial Sector Inter-‐Ministerial Council; to provide for making regulatory instruments, including prudential standards, conduct standards and joint standards; to make provision for the licensing of financial institutions; to make comprehensive provision for powers to gather information and to conduct supervisory on-‐site inspections and investigations…”
Objective and Administration of Act (s7)
The object of this Act is to achieve a stable financial system that works in the interests of financial customers and that supports balanced and sustainable economic growth in the Republic, by establishing, in conjunction with the specific financial sector laws, a regulatory and supervisory framework that promotes—(a) constitutionalism and compliance with the Bill of Rights as provided for in the Constitution;(b) financial stability; (c) the safety and soundness of financial institutions; (d) the fair treatment and protection of financial customers; (e) the efficiency and integrity of the financial system; (f) the prevention of financial crime; (g) financial inclusion; and (h) confidence in the financial system.
Suggested new clause in Chapter 7
“Financial Institutions must comply with the Constitution and the rights set out in the Bill of Rights in all regulated activities.”
Establishment of FSO Comm (s20)(1) A committee called the Financial Stability Oversight Committee is hereby established. (2) The primary objectives of the Financial Stability Oversight Committee are to—(a) support the Reserve Bank when the Reserve Bank performs its functions in relation to financial stability;(b) facilitate co-‐operation and collaboration between, and co-‐ordination of action among, the financial sector regulators and the Reserve Bank in respect of matters relating to financial stability; and(c) Ensure compliance with the Constitution and Bill of Rights
Monitoring by the Reserve Bank (s12)The Reserve Bank must—(a) monitor and keep under review—
(i) the strengths and weaknesses of the financial system; and(ii) any risks to financial stability including human rights violations, and the nature and extent of those risks, including risks that systemic events will occur and any other risks contemplated in matters raised by members of the Financial Stability Oversight Committee or reported to the Reserve Bank by a financial sector regulator;
(b) take steps to mitigate risks to financial stability and constitutional non-‐compliance, including advising the financial sector regulators, and any other organ of state, of the steps to take to mitigate those risks; (c) regularly assess the observance of principles in the Republic developed by international standard setting bodies for market infrastructures, and report its findings to the financial sector regulators and the Minister, having regard to the circumstances and the context within the Republic; and (d) Assess complaints made to it concerning human rights violations directly from members of the public or affected communities.”
Contact Details
• Nomonde Nyembe– Email: [email protected]– Telephone: 0117178606
• Ayabonga Nase– Email: [email protected]– Telephone: 0117178616
• Website: http://www.wits.ac.za/law/cals