Lize de la Harpe, Senior Legal Advisor: Sanlam Life & Savings: Regulatory Unit

Introduction

It is well established that the regulators of the financial sector should be appropriately and adequately funded to enable them to effectively execute their mandates. With the implementation of the Twin Peaks regulatory system, all financial institutions have to contribute towards the operation of financial regulatory bodies, including (among others) the Prudential Authority (PA), the Financial Sector Conduct Authority (FSCA) and the various ombuds.

The Financial Sector and Deposit Insurance Levies Act, 2022 specifically makes provision for the imposition of financial sector levies on supervised entities for such funding. The various schedules to the Levies Act set out the levy calculations for different types of supervised entities. The amount specified in each schedule is determined by matching a supervised entity with a type of supervised entity listed in the column “Type of supervised entity” in the Table and applying the formula in the corresponding line of the column “Formula” in the Table.

Proposed amendments to the FSCA levy

The levies proposals of financial sector bodies for each financial year inform possible amendments to the Schedules of the Levies Act in accordance with the FSR Act. In terms of the FSR Act, when adopting the FSCA’s budget and determining levies, the FSCA must publish an explanation of the budget, estimates of expenditure and fees and levies proposals for public consultation.

The FSCA on 9 October 2025 published the following documents for public comment:

• the document titled “Explanation of FSCA budget, estimates of expenditure and levies and fees proposals” (Annexure A)
• the budget and an estimate of expenditure of the FSCA for the 2026/2027 financial year (Annexure B), and
• proposals for the levies that will be imposed (Levies Proposal) (Annexure C).

Schedule 2 to the Levies Act (Schedule 2) provides for the calculation of the financial sector levy in respect of the FSCA. The proposed amendments to the FSCA levy set out in Annexure C can be summarised as follows:

• The addition of two new supervised entities to Table B, namely an external central counterparty as defined in section 1(1) of the Financial Markets Act and an external credit rating agency as defined in section 1(1) of the Credit Rating Services Act, 2012, and

• a 4 % increase to the Base Amount and Variable Amount to be used in each Formula.

Conclusion

Section 10(4)(b) of the Levies Act provides that the levies in the Schedules to that act must be increased by the arithmetic mean of CPI as published by Statistics South Africa in the preceding calendar year, unless the Minister determines otherwise. Statistics South Africa published an average CPI of 4.4% for the 2024 calendar year.

The levy variables for 2026/2027 must therefore automatically increase by 4.4%. However, the FSCA has proposed to apply a 4% increase in line with its projected operating expenditure.

The public has until 20 November 2025 to submit comments on the proposals.

ENDS