New deposit insurance will help regain trust in financial regulations - Godongwana
Finance Minister Enoch Godongwana says regaining public trust in financial regulation requires deep structural reforms and a shift towards greater accountability, transparency, and public inclusivity.
He addressed the South African Reserve Bank’s launch of the Corporation for Deposit Insurance on Thursday.
This is South Africa’s deposit insurance scheme, created and mandated by law to protect qualifying bank depositors in the unlikely event of their bank failing.
Godongwana said trust is fundamental to any financial system’s effectiveness and existence.
“The Twin Peaks model revolutionises financial safety and consumer protection by splitting regulatory duties into two focused areas: one ensures financial institutions are robust and secure, and the other safeguards consumer interests.
"This model not only enhances the system's stability but also bolsters consumer confidence by offering clearer oversight and reducing financial crisis risks."
"It positions two dedicated bodies - the Financial Sector Conduct Authority and the Prudential Authority - at the forefront, enhancing the management of complex financial systems and boosting both consumer and investor confidence,” he added.
Speaking at the same event, Reserve Bank Governor Lesetja Kganyago said the subsidiary would provide cover of up to R100,000 to each qualifying depositor per bank.
He said they hope to avoid situations like the 2018 VBS bank collapse, which resulted in depositors losing their savings.
"The Corporation for Deposit Insurance is an important milestone in making the financial system safer and one that serves all South Africans. This means that should a Bank fail to meet its obligation; covered deposits are protected by having timeous access to their deposits."
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