FINANCIAL SECTOR: DRAFT FLAC-RELATED DIRECTIVES OUT FOR COMMENT

FINANCIAL SECTOR: DRAFT FLAC-RELATED DIRECTIVES OUT FOR COMMENT

• 20 August 2026
• Financial Sector
• SA Legal Academy

The Prudential Authority has called for input by 23 September 2026 on two draft directives on the treatment of investments in unsecured subordinated debt (FLAC) or similar instruments. One proposed new directive affects mutual banks, as well as their auditors. The other has implications for local banks, their controlling companies and auditors, and the branches of foreign banks.

This is noting:

• a FLAC standard and associated guidance note issued in 2024 and 2025
• that the draft directives deal with designated and non-designated systemically important financial institutions, and
• the importance of ensuring that the financial institution concerned has sufficient loss-absorbing and recapitalisation capacity in resolution.

Please click the links below for more information:

• draft directive for banks
• draft directive for mutual banks
• 2024 FLAC standard
• 2025 FLAC guidance note

Published by SA Legal Academy Policy Watch

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