An intermediary perspective on global regulatory and supervisory shifts
Fast-paced digital innovation by financial product and service providers is keeping South African intermediaries on their toes. Over the past few years, they have become accustomed to meeting evolving customer needs and expectations under a dynamic regulatory and supervisory framework.
The global view
Day one of the Financial Sector Conduct Authority (FSCA) Conference 2026 focused on domestic issues; day two kicked off with a broader, global lens. At the top of the programme, FSCA Deputy Commissioner Farzana Badat was joined on stage by International Association of Insurance Supervisors (IAIS) Secretary General, Jonathan Dixon, to discuss developments in financial regulation and supervisory trends. Dixon played a significant part in shaping the South African twin peaks framework before accepting the IAIS role in 2017.
In his brief opening remark, Dixon highlighted climate risk, digital innovation and geopolitical uncertainty as key influencers of resilience and societal outcomes across the global financial services industry. “I am happy to share the message that South Africa has a lot to be proud of,” he said. “As I look at regulation and supervision in South Africa, I can comfortably say it is in the lead of what is happening within emerging market and developing economy jurisdictions, and certainly matches that in some of the more advanced economies.”
Badat upped the ante on audience engagement by running a series of real-time polls on critical regulatory and supervisory issues. Her scene-setter sought to determine the biggest driver of financial sector ‘shifts’ experienced over the past decade. Options included digital innovation and big tech entering finance; climate risk and sustainability; geopolitical volatility; regulatory change; or none of the above. An overwhelming majority of the audience chose digital innovation and big tech entering finance as the key driver.
Three main change drivers
The FSCA Deputy Commissioner then pressed the IAIS Secretary General to identify some of the change drivers, and comment on how global supervisors have responded to them. He started with a basic framing for regulating under constant change. “A decade ago, there was an emphasis on recognising that regulation needs to be outcomes-focused, looking at key principles and the outcomes that we want to achieve,” Dixon said. “We [realised that] we could not try and write rules and regulations for everything when things are changing so quickly.”
In his view, the three key drivers of global financial shifts include artificial intelligence (AI) and digital innovation; investments in supervisory technology or SupTech; and the recognition that financial market development and financial inclusion issues lay within supervisors’ core mandates. “AI has the potential to radically transform the financial sector, and we are only just beginning to understand what that could mean,” Dixon said, before going into detail on the impact of huge investments into AI and technology.
Supervisors quickly cottoned on that AI enables products, services and use cases that were not thought possible 10 years ago. They had to wrap their collective minds around what AI represented and whether an entirely new regulatory framework was needed in response. According to Dixon, the realisation was that “AI was not introducing a new range of risks that required a new framework, but rather amplifying existing risks.” In this context, the correct approach was to adapt existing regulatory frameworks to the specifics of AI.
Improved efficiency and effectiveness
It soon became clear that supervisors would have to invest in AI and digital innovation to keep up with changes within the sector, and to improve their own efficiency and effectiveness.
Dixon offered a somewhat philosophical view under this heading. He said that the key risks and trends exhibiting in 2026 were cross-sectoral in nature, stemming from factors like climate change, cyber risk and digital innovation. He added that a twin peaks model for South Africa’s financial sector regulatory framework was the right choice, as “it enables supervisors to look at the supervisory risks across the sectors, and to have a single approach or philosophy on how to look at those risks,” he said.
On the third driver, Dixon singled out ensuring the financial health of businesses and households as key to societal resilience. “Having access to affordable, appropriate financial products is key,” he said. “And we are seeing supervisors recognise that, not only those who have a market development mandate, but also others, who realise this has potential financial stability implications.” Further along in the discussion, Badat turned to the crucial issues of financial resilience and sustainability.
“Historically, the major financial crises were precipitated by vulnerabilities within the large financial institutions, particularly the banking sector,” she said, before asking whether the increasing complexity of financial markets and interconnectedness of the system opened new vulnerabilities. She asked the audience where the next financial shock might stem from: traditional financial institutions; non-bank financial institutions; third-party tech providers; crypto and digital assets; or from cyber vulnerabilities. The audience leaned towards the last option.
Accommodating emerging markets
FAnews decided to wrap its coverage of the comprehensive discussion with a look at the proportionality of regulation across emerging markets (EM) and developing economies (DE). “Has the IAIS taken any steps to strike an appropriate balance between ensuring global consistency that is proportionately implementable in emerging markets; and do you see any role for emerging market supervisors in shaping global standards in the future?” Badat asked. Dixon offered another reasoned response.
“We see the proportionality principle as being the bridge, on the one hand of encouraging global supervisory convergence, but on the other of recognising there are local circumstances around markets, customers and levels of development that need to be accommodated in the implementation of these standards,” he said. “The principle of proportionality is embedded in our insurance core principles, making it very clear that supervisors have the flexibility to apply these minimum standards in a way that is appropriate for their markets.”
The IAIS is a body of more than 200 supervisory authorities, of which about half fall into the EM-DE category. According to Dixon, this diversity is among the association’s core strengths. He noted that the recently-established committee on standard setting and supervisory practices had recognised the need for relevance to EM-DE jurisdictions. “We are making sure that South Africa, and its experience as an EM-DE and of the broader African region is brought to the table,” Dixon said. “The EM-DE perspective is explicitly considered.”
Outcomes-based supervision
In the final poll, the audience singled out ‘improving efficiencies to become a more outcomes-based supervisor’ as an area the FSCA needs to strengthen. “There is a lot you can do with effective supervision, even in the absence of a complete regulatory toolbox,” Dixon concluded. By way of example, he said that industry had to start living the Conduct of Financial Institutions (COFI) Bill’s intended outcomes despite the legislation being in progress. Supervisors, meanwhile, must be equipped to make the right judgements to ensure principles-based outcomes.
Writer’s thoughts:
The regulation and supervision debate at FSCA Conference 2026 shone the spotlight on South Africa’s world-class twin peaks regulatory framework. Are you happy with the progress made under the conduct and prudential authorities since 2017? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
