“Twin Peaks” regulation sees the creation of a prudential regulator house in the South African Reserve Bank, while the Financial Services Board would be transformed into a dedicated market regulator. The new regulation has not been implemented as of yet and Allan Greenblo asks if now is the right time, given FSB senior executive Rosemany Hunter’s recent court application. And given the FSB would be an authority over market conduct, one would expect the FSB’s conduct to be in order, which Hunter questions. It’s a lengthy document that Greenblo says cannot be dismissed as the ravings of a disaffected crank. And it points to the question, is now the right time for a clean sweep, before ‘Twin Peaks’ becomes a reality? Finance Minister Pravin Gordhan has something else on his plate to deal with. – Stuart Lowman
By Allan Greenblo*
There’s no way that ‘Twin Peaks’ financial regulation can be implemented as presently envisaged; no way, that is, unless government is prepared to risk the possible disaster of a crumbling peak. It has been warned.
Restructure of the Reserve Bank, to take care of prudential supervision, looks to be smooth sailing. But for the Financial Services Board, due to be remoulded as the authority over market conduct, the same cannot be said.
This is because of the court application brought by Rosemary Hunter, one of the FSB’s most senior executives, against the FSB itself. Her demand for the release of certain reports has set the scene for public-policy outrage. Targeted allegations in her founding affidavit, complemented by mountains of supporting annexes, are too meticulous to be dismissed as the ravings of a disaffected crank:
Link to court application documents.
The papers go to the heart of FSB governance. They scream for National Treasury not willy-nilly to morph FSB personnel into the market-conduct peak until it has explored the FSB’s own market conduct under executives and directors to be impartially vindicated or rusticated.
At the least, senior FSB officials will need to be scrutinised for competence and probity before their contracts are extended for moves to the new authority. Such is the gravity and stature of their positions that a selection panel, similar to hearings before the Judicial Service Commission, would help to stimulate public confidence where it’s sorely needed.
By coincidence, the Hunter application is on the cusp of ‘Twin Peaks’. It makes perfect the timing of a clean sweep through the FSB.
Like the Securities & Exchange Commission in the US, the SA regulator of market conduct can be structured into an aspirational destination for the best and the brightest of this country’s suitably qualified job-seekers. Funded by levies on private-sector savings, the FSB and its successor cannot be run as a public-sector bureaucracy.
Meanwhile, since the FSB must continue to function, a few niggling questions:
- Why has the FSB integrated annual report, for the year to end-March 2015, still not been published? Are there any areas where the contents of the report and the allegations of Hunter are inconsistent?
- Hunter has specifically fingered FSB executive officer Dube Tshidi and FSB board chair Abel Sithole (who happens also to be principal executive officer of the Government Employees Pension Fund). For delivery of the FSB’s statutory mandate, can the three of them still be expected to work together? If not, who should be suspended and who in their stead should be offered acting appointments? (Is former FSB chair by now sufficiently bored in her Knysna retirement to ride to the rescue?)
- After the rand’s hammering, Finance Minister Pravin Gordhan is on a mission to restore confidence and trust in the SA investment environment. Cited in the Hunter application as a respondent, because it’s to him that the regulator of non-bank savings and investment institutions reports, could he have wished for a more straightforward test of his commitment?
Wish or no wish, Gordhan is immediately put to the proof.
*Allan Greenblo is editorial director of Today’s Trustee, a quarterly magazine mainly for principal officers and trustees of retirement funds.
