Three Markets, Three Lessons: What South Africa, the Netherlands and New Zealand Teach the Caribbean

 

Why these three jurisdictions matter

The two case studies that have already been examined in this series — Australia and the United Kingdom — are the headline references in international Twin Peaks literature. Both produced extensive operating evidence. Both have generated substantial post-implementation reform programmes. Both are well-documented in IMF Financial Sector Assessment Programs, OECD reviews, and academic literature. But neither maps cleanly onto Jamaica’s circumstances. Australia is a developed market with mature regulatory institutions and deep financial markets. The United Kingdom is a global financial centre. The architectural lessons translate; the institutional context does not.

Three other jurisdictions translate more directly. South Africa, which adopted Twin Peaks in 2018 under the Financial Sector Regulation Act, is an upper-middle-income country with a Johannesburg-based stock exchange, an IOSCO Ordinary Member regulator, and an institutional capacity profile broadly comparable to Jamaica’s, scaled up. The Netherlands, which adopted Twin Peaks in 2002, is a smaller open economy with deep financial sector integration into a larger regional bloc — circumstances structurally similar to Jamaica’s relationship with the wider Caribbean and with international markets. New Zealand, which adopted its current Twin Peaks framework in 2011, is a small advanced economy that made the specific choice Jamaica is now making: housing the prudential peak inside the central bank rather than as a separate statutory authority. Each jurisdiction speaks to a different dimension of Jamaica’s transition. Reading all three together is more useful than reading any one in isolation.

South Africa: the emerging-market template

South Africa’s Twin Peaks transition began with a 2011 policy paper from National Treasury, identifying the same diagnostic failure modes that drove the Australian and UK reforms — sectoral fragmentation, prudential-conduct trade-offs inside single regulators, and inadequate consumer protection. The legislative response was the Financial Sector Regulation Act of 2017, which entered into force on 1 April 2018. The Prudential Authority was established within the South African Reserve Bank. The Financial Sector Conduct Authority was established as an independent statutory body, replacing the Financial Services Board. The Financial Stability Oversight Committee and the Financial Sector Contingency Forum were established to coordinate.

Three features of the South African experience translate directly to Jamaica.

The first is the legislative architecture. The FSRA is a single comprehensive statute that sets out the entire Twin Peaks framework — both peaks, the coordination mechanisms, the licensing and supervisory frameworks, the enforcement powers, and the resolution architecture. This is in deliberate contrast to the more scattered approach adopted by the United Kingdom, which built Twin Peaks through amendments to existing statutes plus the Financial Services Act 2012. The single-statute approach produces clearer institutional boundaries, easier interpretation, and stronger statutory anchors for cross-cutting issues. Jamaica’s Twin Peaks legislation, when finalised, would benefit from following the South African model rather than the UK model. A single Financial Sector Regulation Act covering both peaks — rather than amendments scattered across the Bank of Jamaica Act, the Financial Services Commission Act, the Securities Act, the Insurance Act, and the Pension Funds Act — produces a more coherent regulatory framework and reduces the risk of statutory gaps that the post-implementation period inevitably reveals.

The second is the implementation timeline. South Africa took six years from the 2011 policy paper to the 2018 cutover, plus a further period of phased implementation extending into 2019 and beyond. The IMF’s 2022 Financial Sector Assessment Program for South Africa explicitly noted that the implementation arc had been longer than originally projected, that institutional capacity-building had taken longer than expected, and that the post-cutover refinement of supervisory methodologies had continued for several years. Jamaica’s implementation arc — from the January 2023 policy decision to the expected 2026 cutover — is approximately three years, half the South African timeline. Whether that compressed timeline will produce a stronger or weaker post-cutover regime depends on the quality of the institutional preparation work, which is the subject of the Practice Period covered in Article 3 of this series.

The third is the conduct authority’s institutional development. The Financial Sector Conduct Authority has emerged over its first eight years of operation as a substantively conduct-focused regulator, building specialist capabilities in market conduct supervision, financial inclusion, retirement fund member protection, and credit ratings agency oversight. The FSCA’s Treating Customers Fairly framework, originally adopted from the UK FSA’s earlier work, has been extended and refined into a distinctive South African regulatory product. The FSCA’s enforcement record, while not approaching the scale of the FCA’s, has built measurable supervisory credibility over the operating period. The trajectory from new conduct authority to substantively credible institution has taken approximately five years of operating experience. Jamaica’s new FSC, post-cutover, should expect a comparable trajectory.

The Netherlands: small open economy, deep integration

The Netherlands adopted Twin Peaks in 2002 — four years after Australia, eleven years before the United Kingdom — through the Financial Supervision Act, which has subsequently been amended multiple times to reflect EU regulatory developments and domestic policy refinements. De Nederlandsche Bank, the Dutch central bank, became the prudential peak with responsibility for safety and soundness across banks, insurance companies, pension funds and other prudentially-regulated institutions. The Autoriteit Financiële Markten, the Authority for the Financial Markets, became the conduct peak with responsibility for market conduct, consumer protection and the supervision of audit firms. The two regulators have operated in parallel for over twenty years.

The Netherlands matters for Jamaica for three reasons that the larger Twin Peaks adopters cannot match.

The first is scale and integration. The Netherlands is a small open economy by population — around 18 million people — with a financial sector heavily integrated into European Union frameworks. Domestic regulatory choices are constrained by EU directives. Domestic financial institutions operate across multiple jurisdictions. Domestic supervisors must coordinate not only with each other but with the European Central Bank, the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority. The supervisory complexity of operating Twin Peaks in a small open economy with deep regional integration is substantially higher than in a self-contained large economy. Jamaica’s circumstances are structurally analogous: a small economy whose financial institutions operate across CARICOM, whose correspondent banking depends on US institutions, whose listed issuers report on multiple Caribbean exchanges, and whose international cooperation requirements run through IOSCO, the FATF, the BCBS and other international standard-setters. The Dutch experience demonstrates that Twin Peaks can work at small economy scale — but that the institutional cost is real, and the coordination demands on senior supervisory leadership are substantial.

The second is the central-bank prudential peak model. DNB sits inside the central bank, leveraging the central bank’s financial stability data, its macroprudential analysis, its monetary policy operations, and its institutional credibility. The benefits are real: prudential supervision benefits from immediate access to systemic risk indicators, from the Central Bank Council’s coordination of monetary and supervisory matters, and from the institutional gravitas of operating under the central bank’s name. The costs are also real: prudential supervision can be drawn into matters that are properly the central bank’s broader concerns, conduct issues that have prudential implications can be subordinated to monetary policy considerations, and the boundary between supervision and central banking can become blurred at the senior leadership level. Twenty-plus years of operating evidence shows that the model works but requires deliberate institutional design to keep prudential supervision focused on its mandate. Jamaica’s choice to house the prudential peak inside the Bank of Jamaica replicates this model, and the Dutch experience is the most relevant operating evidence available.

The third is the AFM’s evolution as a conduct authority. The AFM has developed over its operating life into a substantively credible conduct regulator, with particular strengths in market integrity supervision, financial advice quality, audit firm oversight and consumer credit conduct. The AFM has built international cooperation relationships through ESMA and IOSCO, has developed risk-based supervisory methodologies, and has accumulated an enforcement track record that has earned domestic and international respect. The AFM’s resourcing relative to the size of the Dutch financial sector, the structure of its supervisory teams, the cadence of its supervisory engagement with regulated firms, and the quality of its public reporting are all reference points worth examining for the new Jamaican FSC. The AFM is, in effect, a smaller-scale version of the FCA — and the operational templates that the AFM has developed at small-economy scale translate more directly to the Caribbean context than the FCA’s templates, which were developed at global financial centre scale.

New Zealand: the central-bank model under stress

New Zealand’s Twin Peaks framework was established through the Financial Markets Authority Act 2011 and the Financial Markets Conduct Act 2013, building on a longer reform process triggered by the failure of finance companies during the 2008 global financial crisis. The Reserve Bank of New Zealand became the prudential peak, with banking supervision powers strengthened progressively and insurance supervision powers added through the Insurance (Prudential Supervision) Act 2010. The Financial Markets Authority became the conduct peak. The regime has subsequently been extended through the Financial Markets (Conduct of Institutions) Amendment Act 2022, which entered into force in March 2025, providing the FMA with enhanced powers to supervise the conduct of financial institutions including banks and insurers. The Reserve Bank of New Zealand Act 2021 modernised the central bank’s governance and clarified the boundaries between monetary policy and prudential supervision.

New Zealand’s experience is particularly instructive for Jamaica because the regime has been under demonstrated stress. In 2018, the Reserve Bank’s prudential supervision of CBL Insurance was the subject of an Independent Review by Dame Sian Elias, which identified significant supervisory failures including delayed intervention, inadequate analysis of solvency concerns, and weaknesses in supervisory escalation. The 2018 Review of the Reserve Bank’s Act, conducted by an external review group, identified broader concerns about the prudential supervision function inside a central bank that also conducted monetary policy. The Phase Two Review of the Reserve Bank Act, completed in 2019, recommended structural reforms including a separate Prudential Council, enhanced parliamentary oversight, and clearer institutional boundaries between monetary and prudential functions. Subsequent reforms have implemented many of those recommendations.

The resulting evidence is more useful for Jamaica than the more triumphalist accounts that sometimes circulate in international policy literature. Twin Peaks is a structural improvement over single-regulator models. Twin Peaks with the prudential peak inside the central bank is a defensible architectural choice. But the central-bank prudential peak model requires deliberate institutional safeguards — a separate Prudential Council, enhanced parliamentary oversight, clearer boundaries between monetary policy and prudential supervision, distinct senior leadership for prudential matters, and structural protections against subordination of prudential concerns to monetary policy concerns. New Zealand had to add these safeguards after operational stress revealed their absence. Jamaica has the opportunity to design them in from the outset.

The second New Zealand lesson is on conduct supervision evolution. The FMA, established in 2011, has progressively expanded its conduct supervision footprint over the subsequent decade and a half. The Conduct of Institutions Act 2022 represented a significant extension of conduct supervision into banking and insurance, in response to evidence that conduct issues in those sectors had not been adequately addressed under the original Twin Peaks framework. This pattern — initial conduct supervision focused on capital markets and financial advice, with subsequent extension into banking and insurance conduct as evidence of inadequacy accumulated — is consistent with the Australian, UK and South African experiences. The Caribbean transition can avoid this lag by designing comprehensive conduct supervision into the original framework rather than adding it incrementally over a decade.

The synthesis: what these three jurisdictions teach the Caribbean

Reading South Africa, the Netherlands and New Zealand together produces a coherent set of operational implications for the Caribbean Twin Peaks transition. Five lessons in particular emerge from the synthesis.

The first lesson, drawn principally from South Africa, is on legislative architecture. A single comprehensive Financial Sector Regulation Act covering both peaks, the coordination mechanisms, the licensing and supervisory frameworks, the enforcement powers, and the resolution architecture is structurally clearer than amendments scattered across multiple existing statutes. The Caribbean Twin Peaks transition should follow the South African model on legislative design rather than the UK model. The institutional clarity benefits compound over time.

The second lesson, drawn principally from the Netherlands, is on small-economy operational scale. Twin Peaks works at small open economy scale but imposes real institutional costs. The two regulators must each have specialist capabilities, supervisory data infrastructures, enforcement teams and international cooperation functions. The cumulative resourcing required is materially higher than running a single regulator at the same supervisory standard. Caribbean policy-makers should plan for this resourcing reality rather than expecting Twin Peaks to operate within the existing combined budget envelope of the BOJ and FSC. The Dutch experience demonstrates that the cost is justified — but only when the resources are actually available.

The third lesson, drawn principally from New Zealand, is on the central-bank prudential peak model. The architectural choice Jamaica is making — housing prudential supervision inside the BOJ — is defensible and has a long international track record. But the model requires deliberate safeguards. A separate prudential decision-making body inside the BOJ. Distinct senior leadership for prudential matters with statutory protection. Enhanced parliamentary oversight of the prudential function. Clear institutional boundaries between monetary policy decisions and prudential supervisory decisions. Structural protection against subordination of prudential concerns to monetary policy concerns. Jamaica should design these safeguards into the legislation, not retrofit them after operational stress.

The fourth lesson, drawn from all three jurisdictions, is on conduct supervision evolution. Initial conduct supervision tends to focus on capital markets, financial advice, and visible consumer-facing products. Conduct supervision of banking and insurance — the sectors with the largest customer bases and the most consequential conduct outcomes — tends to lag, requiring separate legislative interventions five to ten years after the initial Twin Peaks framework. The Caribbean transition should design comprehensive conduct supervision into the original framework, covering banking and insurance conduct from the outset, rather than building the framework incrementally as evidence of inadequacy accumulates. This is a significant institutional ambition and requires the new FSC to be resourced and empowered for that scope from Day One.

The fifth lesson, drawn from all three jurisdictions but most clearly from South Africa, is on implementation timeline realism. Six years from policy paper to fully operational regime is the typical implementation arc for emerging-market Twin Peaks transitions. Jamaica’s compressed three-year timeline from January 2023 to the expected 2026 cutover is achievable through the structured Practice Period innovation but produces post-cutover challenges that should be anticipated. The first three years of operation will likely reveal institutional capacity gaps, supervisory methodology refinements, statutory ambiguities and coordination friction points that will need to be addressed through subsequent regulatory work. Caribbean institutions should expect this and engage constructively with the post-cutover refinement process rather than treating the legislative event as the conclusion of reform.

What Caribbean boards and senior management should take from the synthesis

Three operational implications follow from the three-jurisdiction synthesis for boards and senior management of Caribbean financial institutions.

The first is on regulatory engagement strategy. The South African experience shows that the conduct authority’s institutional credibility builds over approximately five years of operating experience. The Caribbean conduct regulator, post-cutover, will follow a similar trajectory. Institutions that engage constructively, transparently and systematically with the new conduct regulator from Day One will build supervisory relationships that compound through that institutional development period. Institutions that treat the new regulator as a less credible junior counterpart will find that the institutional credibility eventually arrives, and the supervisory relationship at that point is shaped by the engagement history of the preceding years.

The second is on small-economy resourcing implications for compliance functions. The Dutch experience shows that the regulatory cost burden in a small open economy with deep regional integration is materially higher than in a large self-contained economy. Caribbean financial institutions should plan for compliance function resourcing that reflects this reality. The cost of maintaining adequate compliance and conduct frameworks in a Twin Peaks regime, with concurrent obligations to multiple regulators, is genuinely higher than under the legacy framework. Institutions that under-resource these functions will experience supervisory friction. Institutions that resource them adequately will operate more smoothly and compete more effectively.

The third is on continuous-evolution preparedness. The New Zealand experience shows that Twin Peaks frameworks evolve continuously, with material legislative additions five and ten years after initial implementation. Caribbean institutions should expect that the 2026 framework will be supplemented by 2028 amendments, 2030 extensions, and ongoing refinements throughout the next decade. Institutional governance arrangements should be designed to accommodate this continuous evolution rather than treating the 2026 framework as a static target. Boards that establish dedicated regulatory change governance functions will be better positioned than those that treat regulatory change as a one-off project.

Closing Act II

Three articles ago, this series began the international evidence section with Australia, the Twin Peaks pioneer. Two articles ago, the series examined the United Kingdom, the most actively reforming Twin Peaks regime. This article completes Act II by drawing on three further jurisdictions whose circumstances translate more directly to Jamaica’s than either of the headline cases. The cumulative evidence base is now extensive. The architectural decision Jamaica is making in 2026 is well-supported by international precedent. The supplementary instruments, institutional safeguards, resourcing realities, and continuous-evolution requirements are all well-evidenced from operating jurisdictions over more than two decades of experience.

Act III of this series, beginning with the next article, narrows the focus from architectural comparison to a specific drill-down: the regulatory arrangement of the Jamaican stock market itself. The Jamaica Stock Exchange operates as a self-regulatory organisation under the existing Securities Act, in a structure that the Twin Peaks transition will reshape. The international evidence base assembled in Act II provides the comparative foundation. Act III applies that foundation to the specific question of how the Jamaican capital market should be regulated after the cutover. For boards of listed issuers, securities dealers, investment advisers and the wider capital market community, Act III is where the international principles meet the operational reality of the Caribbean financial system.

 

PARTNER WITH DAWGEN GLOBAL International Evidence, Caribbean Application South Africa, the Netherlands and New Zealand provide operating evidence on Twin Peaks at scales and in circumstances that translate more directly to the Caribbean than the headline Australian and UK cases. The legislative architecture, central-bank prudential peak design, small-economy resourcing requirements and continuous-evolution governance lessons are all directly applicable to Jamaica’s 2026 transition. Dawgen Global helps policy-makers, regulators, boards and senior management apply this international evidence base to the specific institutional decisions Caribbean stakeholders must make — Big Firm capabilities, with Caribbean understanding. Six advisory engagements designed for this moment: ▸  Legislative Architecture Advisory — for policy-makers, regulators and industry associations engaging with the Caribbean Twin Peaks legislative drafting process, comparative analysis of single-statute versus scattered-amendment approaches drawing on South African, UK and Australian models. ▸  Central-Bank Prudential Peak Design Review — for institutions and stakeholders engaging with the structural design of prudential supervision inside the Bank of Jamaica, comparative analysis of New Zealand and Dutch experience with central-bank prudential peaks. ▸  Small-Economy Compliance Cost Modelling — quantitative modelling of compliance cost implications for Caribbean financial institutions, drawing on Dutch and New Zealand operating data on regulatory cost burdens at small open economy scale. ▸  Multi-Regulator Engagement Strategy — designing internal frameworks for engaging constructively with two specialist regulators including supervisory communications protocols, escalation pathways and senior management coordination arrangements. ▸  Conduct Supervision Maturity Roadmap — five-year readiness plan benchmarking conduct framework maturity against the trajectory of South Africa’s FSCA, the Netherlands’ AFM and the new Jamaican FSC’s expected institutional development. ▸  Continuous Regulatory Change Governance — establishing board-level regulatory change governance functions designed to accommodate the continuous evolution that all mature Twin Peaks regimes have demonstrated over their operating life. Begin the conversation today. Email: [email protected]

COMING NEXT IN THIS SERIES

Article 7  —  The Jamaica Stock Exchange Under Twin Peaks: An SRO at a Crossroads

Act III opens with the question that the Twin Peaks transition makes unavoidable: how should the Jamaica Stock Exchange be regulated after the cutover. The JSE operates as a self-regulatory organisation under the existing Securities Act, listed on its own exchange, exercising market oversight functions through its Regulatory and Market Oversight Division. The next article examines what the JSE’s SRO model means under Twin Peaks, where the architecture creates new questions, and what international practice on stock exchange supervision suggests for the Caribbean capital market.

ABOUT THE AUTHOR

Dr. Dawkins Brown is the Executive Chairman and Founder of Dawgen Global, an independent, integrated multidisciplinary professional services firm headquartered in New Kingston, Jamaica, operating across more than fifteen Caribbean territories. With Big Four heritage and over twenty-three years of professional experience, Dr. Brown writes regularly on Caribbean financial regulation, capital markets, governance and strategy through the LinkedIn newsletter Caribbean Boardroom Perspectives.

About Dawgen Global