Edition: May/July 2018
Same old, same old?
New authority must fundamentally change perceptions of the FSB bureaucracy as applied particularly to retirement funds.
Every now and then there come once-off opportunities to begin the clean-ups of public entities. Often they follow the exposure of maladministration, or worse, and the appointment of a new leader intent on remedial action.
It begins at the top, seen by the election of Cyril Ramaphosa as state president. In rapid succession, he returned Nhlanlhla Nene and Pravin Gordhan to key ministerial positions. Under their watch now fall such troubled state-owned enterprises as Eskom, Transnet, Denel and SA Airways. The SA Revenue Service is in line for a top-down shake too.
Not so, however, with the Financial Services Board. Not yet, at least, despite the Financial Sector Regulation Act having become effective from April. Under the Act, the FSB will be collapsed into the Financial Sector Conduct Authority.
It isn’t as though the FSB is “troubled” in a sense similar to the state-owned enterprises. But similarly needed here is enhanced efficiencies to come with a refreshment of personnel under inspired leadership. Demonstrable differentiation of the new from the old, stale in bureaucratic reflexes, will build the confidence and capacity allowed by a budget that provides remuneration levels competitive with the private sector.
Migration from FSB to FSCA will take longer than the next few months. The FSCA posts of commissioner and deputy commissioners must be advertised, applicants short-listed and interviewed, then selected. Staff will need to be transferred, with an eye on employee-relations processes, from the FSB to the FSCA.
And it will require, as National Treasury properly insists, that the FSCA be established in an “efficient and effective manner with the least disruption” until the commissioners and deputy commissioners have all commenced service. Once they have, the existing FSB executives will continue in office for a further six months to assist the new commissioner and deputies “in an advisory capacity”.
That’s the fly in the ointment. The executive officer of the FSB is Dube Tshidi. In his role as Registrar of Pension Funds, his departure from the scene should not be delayed. There are persuasive reasons, argued in the Cover Story of this edition and previously (TT Sept-Nov ’17).
Neither is Tshidi a master of accountability and urgency, even in addressing the frustrations of the Pension Funds Adjudicator (TT June-Aug ’17). By way of another example, he wields a big stick but ducks from disclosures on matters pertaining to certain curatorships. Controversies over “surplus stripping” are a long-standing case in point.
Although the FSB is a public entity, it differs from state-owned enterprises. Its revenue derives not from the fiscus or the bond market but from levies imposed on regulated institutions, substantially inclusive of retirement funds. Because it’s not in the interests of the regulated bodies publicly to smack their regulator, for fear of a backlash, they tend to simmer in silence.
Whatever the attributes of Tshidi in other aspects of FSB operations, his accomplishments as Registrar of Pension Funds are hard to flaunt. He’s also way beyond the retirement age of 65 that the Public Finance Management Act stipulates.
There’s no obvious advantage in having him hang around for advice when Olano Makhubela, seconded from National Treasury to act as deputy executive officer for retirement funds, enjoys an industry-wide respect for thoughtfulness and dialogue that Tshidi can envy.
Unlike state-owned enterprises, where only recently did funders come to influence governance structures, the payers of levies have had no say in the composition of the FSB board. Like state-owned enterprises, it reported to a minister. In the case of the FSB, this was the Finance Minister who also appointed its executive officer and their deputies.
Appointments of the FSCA commissioners and deputy commissioners start with a short-listing panel that basically comprises nominees of the National Treasury director general, the Reserve Bank governor, the National Consumer Commission head, a body such as the Institute of Directors or another body “focused on ethics and good governance in the financial sector”, and a person whom the Finance Minister will choose for “suitable experience in the financial sector”.
That’s encouraging now that Nene is overseer. He’d be aware of scrutiny to which the FSB has been exposed in the media, the courts and the parliamentary standing committee on finance. It hasn’t all been one-way flattery.
The mandate of the FSCA is much of a muchness with the FSB. Whether it will be the FSB, under guise of different livery, depends largely but not exclusively on the commissioners and deputy commissioners. Should there be no introduction of fresh faces at the top, and no replacement of key officials down the order, the promise will lack purpose.
The outstanding opportunity of the FSCA is to recruit talented youngsters, keen to launch their careers in law and related disciplines, similar to the way that they’re drawn notably to keep invigorated the US Securities & Exchange Commission. Otherwise, without an infusion of fresh blood, the advent of the FSCA will be an opportunity lost.
For all the requirements of continuity, retention of the present FSB executive officer as advisor-in-chief to the new guard (if that’s what they’ll be, titles aside) is hardly inspirational. It merely grounds the scepticism that the old bureaucracy, down to the officials he prefers, will run into the new.