FSCA | Financial Regulator Of South Africa

Description and functions of the FSCA

The Financial Sector Conduct Authority was established in the Republic of South Africa in 1990. The regulator issues licenses and controls brokerage, investment, and insurance companies. Its mandate includes supervision over currency transactions and transactions with bills of exchange, bonds, stocks, and derivatives in the South African stock market. Recently, the regulator has been controlling all large issuers whose stocks are listed on Africa’s largest stock exchange, the JSE.

Tasks and purposes of the FSCA in the Forex market

• Issue licenses and ensure that regulated entities comply with the law. A license can permit the provision of all types of financial services or only a part thereof, e.g., currency transactions only, derivatives transactions only, etc. The FSCA website lists permitted activities for each licensee

• Monitor licensees to ensure that clients are not deceived

• Maintain the transparency of the financial sector and the attractiveness of the jurisdiction for international investors

• Provide licensees with information support

The FSCA is almost entirely subordinate to the Ministry of Finance of South Africa and is part of the organizational structure of the country’s regulators alongside the ombudsman, the National Credit Regulator, the Reserve Bank, and separate departments responsible for overseeing separate sectors (retail trade, banking supervision, etc.). The regulator’s mandate is strictly limited. For example, the FSCA does not investigate cases of fraud.

To obtain an FSCA license, a broker has to

• Have its executives be personally present when signing and submitting the documents. Opening a physical office in South Africa is not necessary

• Have a resident of South Africa on its management team

• Open an account at a South African bank

• Reserve funds in an account to be frozen as collateral

• Have its executives take a regulation test to confirm their knowledge and competence

• Submit financial statements in the form required by the regulator

The requirements are less strict than European regulators’, but, unlike offshore controlling bodies, the FSCA oversees its licensees responsibly.

Official website and available information

The FSCA website has the following structure:

• Upper menu with the sections About Us, Careers, Contact Us, and News. Here you can view the regulator’s organizational structure, mission, and annual reports. The News section contains warnings to licensees, interviews, media releases, electronic newsletters, current information, changes in legislation, etc

• Main menu

• The Footer partially repeats the upper and main menus. It also contains a Useful Links section and the Site Map

FSCA Review — Website sections

Structure of the main menu:

• Regulated Entities is the largest section with a list of regulated entities, information about the licensing of separate categories of legal entities, fees, and much more

• The Enforcement Matters section is about legal issues

• Customers. Here you can file a complaint, visit an educational portal, find information about benefits for private clients, etc

• Regulatory Framework. Directives, regulations, etc., are contained here

Sections that will interest traders:

• Customers. Here you will find all information for clients, including a complaint submission form

FSCA Review — Website sections

• FAQs answers the most frequently asked questions and provides links to other controlling agencies in South Africa

FSCA Review — Website sections

• News > Warnings & Alerts Here you can view the sanctions that have been applied by the regulator. A license may remain active, but a warning from the regulator should be a red flag for a trader

FSCA Review — Website sections

How to confirm a broker’s license on the FSCA website

One of the FSCA’s advantages over offshore regulators is that it provides complete and transparent information. On the regulator’s website, you can find detailed information about a broker by its license number without registration.

To confirm a broker’s license on the FSCA website, do the following:

• 1

  On the broker’s website, locate information about its licenses. In most cases, it’s in the footer of the website’s homepage. Otherwise, look for it in such sections as “About Us”, “For Traders”, etc. Or ask for a license number from the broker’s support service. Note that an FSCA license can be held by a separate division of the broker

Follow a link if it’s active (like in this case).

• 2

  If you only see a license number, but there is no link, open a new tab in your browser and enter “check FSCA license” in the search bar. Perhaps, on the regulator’s website, you can also search for brokers by license numbers, but it’s done faster through a browser. When you enter the broker’s name or license number in the search box on the FSCA website, the search doesn’t work

Search for brokers by license numbers

• 3

  Enter the license number in this window

Search for brokers by license numbers

• 4

  Check the company’s name, permitted types of services, and other information

Search for brokers by license numbers

Note:

Note that, in this case, the broker is allowed to make transactions with derivatives. When you find a valid license, pay attention to the types of services it allows

Another way to find a license:

FSCA Review — Website sections

Follow the arrow on the screenshot. If necessary, select another item in this section. Next, select “Financial Services Provider”.

FSCA Review — Website sections

The first way of searching is more convenient, as it doesn’t require you to know the website’s structure.

FSCA’s basic requirements for brokers

The requirements are relatively lenient because they don’t include full disclosure of business information. But within its mandate, the regulator tries to loosely monitor the broker’s activities.

FSCA’s jurisdiction

The FSCA is a financial regulator of South Africa, but obtaining a license does not require official registration in the country. Brokers that meet the FSCA’s requirements can obtain a license and don’t need to open a physical office in South Africa. FSCA-licensed brokers can operate in other countries as well on the condition that they abide by local legislation. The regulator’s main requirement for foreign brokers is to do legal business without fraudulent actions, such as money laundering.

Cancellation of an FSCA license means that a broker cannot operate in South Africa, but it doesn’t have any effect on the broker’s right to keep rendering services in other countries. Therefore, the FSCA performs regulation in South Africa only.

Submission and consideration of complaints

The FSCA considers every individual complaint. The regulator cannot always help private traders due to its limited mandate, but every complaint can inform the regulator of violations in sufficient time to issue a public warning and draw the attention of other government bodies to an offender, thereby preventing potential problems.

How to lodge a complaint with the FSCA:

1. Lodging a complaint directly with the FSCA:

• On the website’s homepage, select Customers > Complaints & Questions

FSCA Review — Website sections

• Select “Complaints/Enquiries/Compliments/Media Queries Form”

FSCA Review — Website sections

Complete the above form.

2. Lodging a complaint with other authorities. Additionally, you can send a complaint to other government authorities, depending on the specifics of your problem.

• In the website’s footer, select “FAQ”

FSCA Review — Website sections

• Open the “Client Complaint” list

FSCA Review — Website sections

Here you will find the organizations to which you can send your complaint.

FSCA-licensed brokers | How to check on a broker

Traders Union analysts are always ready to help you save time and give you as much useful information as possible. Every month, they visit regulators’ websites to check on the validity of licenses and monitor warnings. All information is updated on TU’s website. You don’t need to view regulators’ websites – all data is already updated in TU’s brokers’ ratings.

About the author of this review

Oleg Tkachenko, Author and analyst at TU

Oleg Tkachenko has been TU’s financial analyst and economic observer since 2016. During this time, he has prepared more than 100 reviews of financial companies and analytic articles on technical and fundamental analysis, as well as developed over 10 proprietary trading strategies. Oleg’s motto is to help everyone come all the way from a novice trader to a professional.