THE PERIMETERS OF POWER

This marks Collective Insight’s first appearance in the FM. In the past, Collective Insight provided a forum for critical debates for investors about what financial service products and services could, or could not, achieve. Now, in its new home, it widens its scope to include discussions about the extent to which our financial services industry can be expected to address the broader environmental, social and governance issues of SA.

These new requirements are nothing short of radical. International agencies and investors are appealing to SA to collaborate regarding sustainable development goals, climate change and the stability of global financial markets. Locally, South Africans who have entrusted their savings to the care of our financial services industry are asking important questions about the viability of our retirement savings model and the extent to which issues of fraud (governance), society (jobs and job security) and the environment are really being addressed under its fiduciary care.

With so many demands and agendas, the critical question becomes: who has the power here to direct or implement these radical shifts for the industry?

The articles that follow try to flesh out an answer from a number of perspectives. Collectively, they provide the reader with insights about the role of each of the players in the financial value chain in shaping these changes. What are the basic perimeters of power that should be expected from each of the players? What is within their power, and what isn’t?

The narrative thread here takes the reader through the new challenges that confront the financial regulator, the Financial Sector Conduct Authority, and looks at what the government could and should achieve far more rapidly through a more co-ordinated policy approach. It then steps back and asks questions — about the role of regulation in markets; the distinction between principles, guidance and stewardship; the duties of fiduciaries; and the role of professionals and control of their conduct.

Then it identifies how easy it is to create unintended consequences when policy decisions are made in sector silos or without regard for competing agendas.

Finally, it shines a spotlight on the voices that simply aren’t loud enough: those of the pension fund members whose finances the industry safeguards. Are the perimeters of power between players totally clear? Most definitely not — and that’s why many of the players in the value chain often hold back and wait for some other entity to take the lead.

The most powerful message that comes from this collection of articles, then, is that all South Africans have a say in how this transformation unfolds. We all have a voice. And unless we start exercising it from our own “perimeters of power” and collaborate with all the agents in the financial value chain, the transformational goals will never be achieved.

All South Africans have a say in how this transformation unfolds