UK financial regulatory reform supports SA Reserve Bank

George Osborne, Chancellor in the UK conservative-liberal coalition government, announced, on 16 June, the end of the existing, apparently ineffective, tripartite arrangement for financial regulation, implemented over a decade ago, in favour of a twin peaks approach*. The powers of the Bank of England will be significantly increased.

Click to view a presentation which outlines the UK Government’s plans to reform the institutional framework for financial regulation in order to avoid a repeat of the financial crisis.


After the UK had moved to the single “super-regulator” model, South Africa reviewed the situation in South Africa.

The preference of the Government was to transfer the supervision of banks from the Reserve Bank into an enlarged Financial Services Board (FSB). This proposal ran into strong opposition from the Reserve Bank itself, with the then Reserve Bank Governor and the Registrar of Banks warning it would put the stability of banks at risk.

It is believed that the review task group favoured the twin peaks approach. The “super-regulator” proposal was quietly shelved in the wake of SA’s 2002 banking crisis and no significant changes were made to alter the existing approach.

* Twin Peaks Approach

Is a form of regulation by objective, is one in which there is a separation of regulatory functions between two regulators: one that performs the safety and soundness supervision function, and the other that focuses on conduct-of-business regulation and consumer protection. (Australia, The Netherlands)

When prudential and consumer protection facets are combined, it often leads to an emphasis on consumers rather than prudential regulation, allowing banks to run themselves to some degree.

Politicians are likely to focus on the consumer because they are voters.