The Financial Sector Conduct Authority (FSCA) is developing an artificial intelligence (AI) framework, as it accelerates a broader digital transformation programme aimed at making the regulator more data-driven and automated.
This is according to the financial regulator’s Integrated Report for the financial year ended 31 March 2026, which was presented this week by FSCA commissioner Unathi Kamlana before Parliament’s standing committee on finance.
The report reflects a year of sustained focus on strengthening the regulatory framework governing the conduct of financial institutions and market integrity.It also outlines the FSCA’s continued focus on prudent financial management and organisational resilience.
The FSCA reported revenue of R1.235 billion and a net surplus of R119 million for the 2025/26 financial year.
The report shows that technology is increasingly being treated as part of the FSCA’s regulatory infrastructure, and it identifies digital transformation as one of six material matters affecting its ability to create and preserve value.
The FSCA says the development of the AI framework forms part of its efforts to modernise the way it operates and supervises the financial sector.
“The FSCA has adopted a digital transformation strategy to fundamentally transform the organisation into an increasingly digital, data-driven, secure and innovative organisation through greater use of automation and artificial intelligence to enhance digital services, stakeholder engagement and integrate business processes.
“Governance of information and data has been embedded in the corporate governance of the FSCA. An AI framework is being developed to provide the guidelines and approach for the development and deployment of AI responsibly,” says the report.
The FSCA is SA’s financial sector market conduct regulator, which oversees the conduct of financial institutions and aims to protect financial customers, ensure fair treatment, and promote the integrity and efficiency of financial markets.
The report notes the AI framework is the only outstanding element under Principle 10, which covers the governing body’s oversight of data, information and technology.
This places responsible AI governance alongside the FSCA’s wider technology programme, which includes data governance, analytics, automation and the continued digitisation of regulatory processes.
“Throughout the year, the FSCA operated in an increasingly complex and rapidly-evolving financial sector, requiring us to respond to emerging risks, technological innovation and changing market dynamics, while maintaining our focus on fair and effective regulatory outcomes,” stated Kamlana.
“Our progress was made possible through the continued commitment and collaboration of our stakeholders, whose support remains important to the delivery of our mandate.”
Regulatory tech platform
The AI framework is being developed alongside a wider shift towards supervisory technology, with the FSCA seeking to use data and automation to strengthen regulatory processes, according to the report.
The Integrated Regulatory System (IRS) is intended to provide the technological foundation for this transition.
“The report identifies the continued implementation of the IRS as an opportunity to improve project management, regulatory processes and access to data-driven insights. At the same time, the regulator identifies opportunities to use real-time data processing, analytics and secure information systems to generate regulatory insights.
“The digital programme therefore presents a dual challenge for the FSCA: it must modernise its own operations, while ensuring the technology underpinning supervision remains secure, reliable and appropriately governed,” according to the report.
The FSCA’s risk disclosures also identify digitalisation as a specific risk because of the organisation’s growing dependence on technology, digital platforms and emerging technologies, including AI.
Scam escalation warning
The growing use of digital channels has also increased the FSCA’s exposure to technology-enabled financial misconduct.
The regulator says during the 2025/26 financial year, it issued 140 public warnings about scams, compared with 107 in the previous year. Most concerned suspected unregistered financial services providers and investment or trading schemes distributed through social media platforms.
“Approximately one-fifth of the warnings involved impersonations of licensed financial institutions and service providers. The FSCA, its commissioner and members of staff were also impersonated in reported cases.
“The increase highlights another dimension of the regulator’s digital challenge: technology is not only changing legitimate financial services, but is also being used to distribute fraudulent offerings and reach consumers at scale.”
This makes digital monitoring, data analysis and timely regulatory intervention increasingly relevant to consumer protection, it notes.
The FSCA’s technology strategy therefore has implications beyond administrative efficiency, particularly as online platforms become an increasingly important route through which financial products and scams reach consumers.
Crypto oversight expands
The FSCA is also having to adapt its supervisory capabilities to a financial sector that increasingly includes digital assets and technology-based business models.
During the reporting period, the regulator continued expanding its oversight of crypto asset service providers (CASPs), including through onsite inspections and engagement with the sector.
“The number of inspections involving CASPs increased from 10 to 30 during the year, with some conducted jointly with the Financial Intelligence Centre. The FSCA also established the Crypto Asset Supervisory Engagement Forum to strengthen information sharing and engagement between regulators and the CASP industry,” the report states.
The regulator’s approach reflects the broader challenge created by rapidly-changing financial technologies: supervision increasingly requires access to better information, stronger analytical capabilities and technology that can keep pace with new forms of financial activity.
This is also evident in the FSCA’s strategic objective of transforming itself into a more efficient and responsive conduct regulator. Its industry conference earlier this year brought together regulators, financial sector participants and technology stakeholders to examine how regulation needs to evolve alongside changes in financial services.
As the regulator digitises its processes, expands its use of automation and builds an integrated regulatory platform, it is also putting governance structures around the technologies it expects to increasingly rely on, it states.
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