Page 80 - Profile's Unit Trusts & Collective Investments - March 2026

Chapter 5 Legislation and guidelines

Chapter 5

Legislation and guidelines
NQF
Relevant to
The need for regulation 242584: 1 - 4
It is an unfortunate fact that money attracts crooks, and the lure of big money can 242593: 1 - 4
change ordinary people into cheats. 243147: 3, 4
243155: 1, 3
The financial markets have, over the years, seen their fair share of swindlers and scam
artists. The losses to investors from various fraudulent schemes – from Masterbond in the 1990s, to
Jack Milne in early 2000 to Gary Tannenbaum in the late 2000s, Mirror Trading International in 2020
and BHI Trust in 2023 – investors have, over the decades, lost hundreds of billions, as a result of
unregulated or inadequately regulated investment schemes.
The operators of investment scams will, of course, always search for ways to work outside of
regulatory structures. A strong regulatory environment cannot eliminate scams (although it can
help to reduce them), but it has the more important function of creating an investment environment
in which investors can place their faith. The regulatory framework governing collective investment
schemes (and the companies and individuals that sell them) provides investors with the confidence
to entrust their hard-earned savings to third parties.
The regulation of collective investment schemes in South Africa is evolving and is based on
legislation and regulatory instruments issued under this legislation, which seek to protect investors,
protect the integrity of these investments and ensure financial institutions are sound and operate
fairly.
The following pieces of legislation are relevant:
R The Collective Investment Schemes Control Act 45 of 2002 (CISCA), which regulates the
establishment, administration, and supervision of collective investment schemes and their
managers.
R The Financial Sector Regulation Act 9 of 2017 (FSR Act), which introduced the Twin Peaks
regulatory model and establishes prudential and market-conduct regulation. Binding conduct
standards issued under this Act apply to providers and managers of collective investment
schemes.
R The Financial Intelligence Centre Act 38 of 2001 (FICA), which aims to combat money
laundering and financing of terrorist activities. It names collective investment scheme
managers and financial advisers as accountable institutions.
R The Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act), which regulates
the conduct of financial services providers that includes collective investment scheme
providers and financial advisers.
In addition to this legislation, it is important to be aware of draft and proposed legislation. Mostly
notably, the Conduct of Financial Institutions (COFI) Bill and proposed amendments to CISCA and
FAIS to align with this legislation. It is worth noting that this legislation is expected to bring proposals
made under the treating customers fairly (TCF) framework developed some time ago into regulation.
Collective Investment Schemes Control Act (CISCA)
The first legislation for the regulation and supervision of the unit trust industry was promulgated
in 1947. The Unit Trusts Control Act (UTCA) was amended several times over the years and had
become unwieldy by the end of the 20th century.
CISCA was designed to accommodate a whole range of collective investment schemes and to
bring SA in line with best practice elsewhere in the world.
One important purpose of the Act was the facilitation of the development of investment options
such as hedge funds and open-ended investment companies (OEICs), bringing SA in line with

78 Profile’s Unit Trusts & Collective Investments March 2026