FSCA leaderless while the red tape rolls
South Africa was given until the end of October to provide comment on the draft Conduct of Financial Institutions (COFI) Bill. Yet to date the FSCA does not have a commissioner or any deputy commissioners. One is left wondering what is happening behind closed doors. The COFI Bill will eventually combine all the financial services legislation under one Act.
Neither a commissioner nor a deputy has been appointed to allow for the COFI Bill to go forward, after former acting honcho Able Sithole relocated to the Public Investment Corporation, and its main architect Caroline da Silva is leaving the establishment at the end of November. The appointment of the top spots has been extended twice this year with unsuccessful applicants not receiving any reasons.
On Monday a fortnight ago civil society organisations Open Secrets and the Unpaid Benefits Campaign, represented by the Centre for Applied Legal Studies, applied to the Gauteng High Court (in Pretoria) on an urgent basis to call for a transparent process to select the new commissioner and deputy commissioners of the FSCA.
As the oversight body for the financial sector, appointments to the FSCA have farreaching consequences for all people in South Africa. Therefore, the independence and transparency of the FSCA is a particularly crucial safeguard of its ability to act in the public interest, the court papers state.
“The FSCA has a specific mandate to scrutinise the conduct of actors, including big business, in the financial sector and ensure that customers are treated fairly. Given its importance, it is crucial that the public be able to see and scrutinise the appointment of the people at the helm of the FSCA, to ensure that this leadership will serve the public and regulate financial companies without fear or favour,” it is stated.
According to the statement, the court application is the last resort after over 18 months of writing to the Minister of Finance. The statement goes on to say that Minister Tito Mboweni has “to date never responded, other than sending an acknowledgement of receipt showing a disregard for efforts by civil society, who have pressed for stability and leadership with integrity at this key regulatory body.
“It was thus with dismay that we noted, a year after the appointments should have been made, Treasury announced a new shortlisting panel had been constituted, and that the appointments process would go ahead without proper public consultation, effectively in secret.”
To facilitate a faster appointment process, Finance Minister Tito Mboweni amended the regulations, but with no provision for media and public participation or scrutiny of the process. It is important that these positions are filled as a matter of urgency, however. For the appointment process to be fair and transparent, the public must have access to this process.
Secretive, rushed appointments could do great harm, as we have seen in some of the appointments made in instances of State Capture. Minister Mboweni cannot continue to act as if the public has no right to be a part of key appointments at regulators whose function is to serve the public.
What should be of concern to all South Africans is that the FSCA will administer the new COFI Bill, which will give it extensive powers. The appointment of the commissioner and deputies should be made in the interests of all South Africans and should have been made a priority. Surely these appointments should have been made before this Bill was brought out for comment?
It is important for the industry to have a sound framework, but one must worry when the regulatory authority’s own house is not in order to manage this framework.
Rumour has it that Olano Makhubela, divisional executive of retirement funds at the FSCA, will take one of the deputy seats, while the former pension fund adjudicator Muvhango Lukhaimane will be the successor in his sector. The three national treasury transfers sent to establish the FSCA years ago, and working in the retirement regulatory space, Corlia Buitendag, Alta Marais and Loraine de Swardt, will be taking early retirement prior to her arrival.
Meanwhile, the Government Employees Pension Fund (GEPF) has appointed its acting title holder, Musa Mabesa, to the permanent position of principal executive Officer. The former chair warmer and acting commissioner at the FSCA, Abel Sithole, is now heading up the PIC. The GEPF made the announcement a day after Open Secrets and the Unpaid Benefits Campaign (UBC) made their application to the high court.
All while the FSCA lacks leadership, Mboweni talked about introducing mandatory preservation in retirement funds in his Medium-Term Budget Policy announcement and cutting executive pay at state organisations. Current interim commissioner Dube Tshidi earns over R10-million per annum, according to the FSCA’s latest annual report. He was the former CEO of the Financial Services Board and is a current member of the FSCA executive.
As the oversight body for the financial sector, appointments to the FSCA have far-reaching consequences for all people in South Africa. Therefore, the independence and transparency of the FSCA is a particularly crucial safeguard