FSB’s Tshidi sharpens his teeth
DUBE Tshidi, the CEO of the Financial Services Board, has more enemies than he cares to count. But he isn’t losing sleep over the number of people who want him out of office.
“They think that if I walk out, their problems will walk out. You see, regulation is not about an individual, it’s about the institution,” Tshidi said in a recent interview at his Pretoria office.
Legally trained — he has an LLB from Vista University and received an LLM in Frankfurt, Germany — Tshidi has learnt to develop a thick skin. When he sets his mind to a task, he sticks it out, as attested by reports that he taught himself to read the Bible in Latin.
He has previously been witness to this sort of drama at the FSB. Prior to taking on the role of CEO, Tshidi watched his predecessors, including Rob Barrow and Jeff van Rooyen, tussle with a number of financial institutions that didn’t fancy the regulator meddling in their business, Fedsure and Fedbond being two prominent examples.
The FSB is the state institution tasked with regulating all financial services companies except the banks — a list that includes insurers, asset managers and pension funds — and investigating insider trading. There is no shortage of well-heeled institutions ready to take the FSB to court to contest its decisions.
“I grew up in this institution. This was my first job and it will be my last job. I never worked anywhere else,” Tshidi said.
He recently survived a concerted campaign against himself and attorney Tony Mostert by the curators of MORE PROACTIVE: Dube Tshidi, the Financial Services Board CEO, looks forward to twin peaks pension funds allegedly looted by Cadac chairman Simon Nash. Also gunning for them was convicted former Fidentia boss J Arthur Brown.
“You have to have a strong jaw to take the punch,” Tshidi said.
He has been the CEO of the FSB since 2009 — his contract was extended in 2011 to June this year.
When asked whether he will be available for another term, Tshidi gives the standard political answer: “I serve the people. As long as my boss says serve, I will serve.”
When his bosses suggest it is time to move on, however, Tshidi is likely to pour much of the same energy he has used in his job into running his mango farm in Tzaneen, Limpopo. Growing mangos will probably be a whole lot easier.
The FSB was accused of sleeping at the wheel when it came to regulating the microlending sector in which African Bank was a huge player before it crashed in August last year.
Thanks to runaway credit granted by microlenders, many of South Africa’s poorest were sucked into intractable debt traps — partly because of the numerous “extra charges” bolted onto lending contracts, including credit life insurance, which the FSB is responsible for regulating.
Tshidi responds that the FSB never had jurisdiction over monitoring and regulating banks’ lending practices.
Instead, the Reserve Bank’s banking supervision department and the National Credit Regulator were responsible for oversight of lending.
Tshidi says he is not clear what happened with African Bank, but under the government’s new “twin peaks” plan, his organisation will have far more power to intervene in these sorts of cases.
The Financial Services Conduct Authority (FSCA), which will replace the FSB, will be launched under the model, which is aimed at putting an equal focus on supervision of prudential standards and market conduct. The new body will have far greater oversight capabilities.
The FSCA will have stronger regulatory powers and will oversee investment products such as hedge funds, which the FSB did not have the permission to monitor in the past.
This would increase the odds that cases such as Fidentia, a scam masterminded by Brown, which stripped millions in pension savings from widows and orphans, will be detected earlier.
Tshidi said the new regulator will be more intrusive, more intensive, more preemptive and more proactive.
Hopefully, this will placate some of Tshidi’s more strident critics, who say the FSB simply responds to crises, rather than pre-empting them.
The new body will have greater powers to protect the customers of financial institutions, ensuring they are treated fairly.
At the same time, the Reserve Bank is to establish the Prudential Authority, which will aim to strengthen the financial safety and soundness of financial institutions.
It’s a big change, and Tshidi says implementing the “twin peaks” model will count as one of his career highlights. He is hopeful that the legislative changes will be signed into law before the end of the year.
However, this will not please everyone — specifically critics who say there is already too much regulation in the financial sector.
Sit down to lunch with a group of bankers and they will grumble about the volume of paperwork that must be signed before a single deal is done.
Tshidi doesn’t buy this. “Those who don’t want the FSB to know [how their busi- ness is conducted] say there is too much regulation. There isn’t too much regulation. They are happy to keep you in the dark.”
Thanks to South Africa’s past, many consumers are not financially astute, which means unscrupulous organisations can easily take advantage of them, Tshidi said.
He is determined to make financial institutions toe the line and treat customers fairly.
“I will hit their pockets hard, if [they] … hit consumers hard in their pockets,” he said.
You have to have a strong jaw to take the punch There isn’t too much regulation. They are happy to keep you in the dark