The Role of the FSRA

The Role Of The Fsra Through Its Market Conduct Supervision

The Financial Services Regulatory Authority (FSRA) is mandated under Section 4 e-f of the FSRA Act, 2010, to foster through regulation and supervision that Financial Services Providers (FSPs) observe high standards of conduct, that there is fair competition in the non-bank space, an orderly non-bank sector, and protection of stakeholders. In August 2023, the FSRA restructured itself and set up a dedicated Market Conduct Department to administer this mandate. With the upcoming World Consumer Rights day on 15March which is commemorated globally, today’s article is aimed at raising awareness to the public on what the FSRA focuses on in terms of its market conduct supervision responsibilities in a bid to foster FSP’s respect of consumer rights.

Market Conduct International Best Practice Standards

Just as it is the case for both prudential and AML/CFT supervision, there are also international standards on Market Conduct Supervision. For example, the OECD’s High-Level Principles of Financial Consumer Protection, and the World Bank’s Good Practices for Financial Consumer Protection. The FSRA’s regulatory and supervisory framework is aligned with these standards which both advocate for consumer rights through the key principles outlined below.

Principles

1. Equitable and Fair treatment of consumers - the FSRA fosters that consumers receive the same high level of service from FSPs regardless of individual characteristics like race, gender, age or socioeconomic status. This includes ensuring that unfair, misleading, aggressive or discriminatory practices are addressed timeously, financial products and services are designed and distributed having regard to the needs of financial consumers in the target market, and that there are fair rules on contractual terms and conditions, product suitability, and fair practices are in place.

2. Access and Inclusion - the FSRA seeks to support consumers’ access to and use of financial products and services aligned with goal of an inclusive financial system in Eswatini. That is through addressing barriers that prevent consumers from accessing and using financial products and services in the formal, regulated financial system, as well as encouraging non-banks to come up with products that attract previously disadvantaged groups e.g. forcibly displaced persons, elderly and the youth, women, SMMEs, people with disabilities etc.

3. Transparency and Disclosure - FSPs should be upfront about key terms and conditions of products and services so that consumers can make informed decisions. Information provided should be clear, timely and not misleading to consumers.

4. Protection of Consumer Assets against Fraud, Scams, and Misuse - the FSRA fosters that FSPs should ensure the safety of consumer assets by implementing appropriate measures to prevent fraud, scams and misuse. This includes ensuring there are clear and transparent liability arrangements between FSPs and consumers in the event of financial loss.

5. Protection of Consumer Data and Privacy- FSPs should respect consumer privacy and handle consumers’ personal information securely and in accordance with the Data Protection Act and other relevant financial services laws. FSPs must implement robust data protection measures to prevent unauthorized access and data breaches. Consumers should be informed about how their data is being used and as well an instances of privacy breaches.

6. Complaints Handling and Redress - the FSRA requires FSPs to establish accessible, free, independent, fair, timely and efficient complaint resolution processes. This includes FSPs notifying consumers on the alternative resolution mechanism where customers are not satisfied with responses given by FSP on a submitted complaint (i.e. Office of the Ombudsman for Financial Services which is free or then approach the courts).

7. Financial Literacy and Awareness/ Consumer Education - The FSRA has a dedicated Unit under the MCD focused on providing financial education to the general public. However, we recognised that the FSRA’s financial education initiatives alone cannot be enough. Therefore, the FSRA encourages FSPs as good corporate citizens to also play their part and invest in financial education programs to help consumers understand their rights, make informed financial decisions and not to simply focus on marketing initiatives.

8. Competition -the FSRA expects FSPs to refrain from anti-competitive practices that can infringe on consumer’s rights to be able to search, compare, where appropriate, switch between products and service providers easily.

The FSRA reaffirms its commitment to safeguarding the rights of consumers in the non-bank financial sector. We pledge to enforce strict regulatory measures, promote transparency and fair treatment of consumers as well fostering continuous collaboration with stakeholders which is essential in upholding consumer rights effectively.