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Eyebrows raised as Financial Sector Conduct Authority delays release of annual report


Ruan has been a financial writer for 18 years. The fact that she is always surrounded by people smarter than her is her favourite perk of the job. Her previous stints include editor positions at Financial Mail, Business Day and Finweek. She has also ventured into corporate, public relations and even tried working for herself, but couldn't get to grips with her own management style. She returned to her first love: financial journalism in 2019 by joining the Business Maverick Team as Associate Editor. Ruan dotes over her rescue dogs and talks about them non-stop. She blames them for not being able to own nice things.

The financial year-end for both the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) at the SA Reserve Bank (SARB) was 31 March 2020. The PA published its annual report for the period on SARB’s website on 29 June. As for the FSCA – nada.

There seems to be some misunderstanding about when the annual report of a public body actually becomes publicly available for open discussion. But when it comes to the high ranks of the Financial Sector Conduct Authority (FSCA), which reports to Parliament through the minister of finance, there should be no such confusion. Evidently, however, there is.

According to feedback received from the regulator’s public relations firm, the 2020 annual report was due to be in Parliament on 11 November, and “then gets tabled… and once this happens, the FSCA is then able to release to the public”, they state.

“With Covid-19, the process of tabling and the committee coming together could take three weeks.”

But Business Maverick questioned this stance, as by law, as soon as the publication is tabled in Parliament, which happens as soon as it gets there, it is a matter of public record. So there is no basis on which the FSCA can decline to disclose it to the media or anyone else who is asking for it.

In response to that, the account manager replied that the FSCA had contacted the National Treasury, and the feedback regarding the process is: “Let’s rather wait for the table before sharing. The tabling should be finalised by Friday [13 November].”

According to the Public Finance Management Act (PFMA), all public entities submit their annual reports to Parliament through the Finance Ministry at the end of August each year. The FSCA has been complying with this requirement since it published its first annual report way back in 1991, when it was still known as the Financial Services Board.

The practice since then has always been for the regulatory executives to present the annual report to the Standing Committee on Finance (SCoF). This has been common practice for many public institutions, and has been so for many years. The FSCA thus has no reason to deviate from this 29-year practice in the release of its 2019/20 financial report.

Surely, the newly appointed interim commissioner of the FSCA, Olano Makhubela, needs to demonstrate compliance with section 195 of the Constitution regarding transparency and accountability.

He told BM that there is nothing untoward going on.

He confirmed that the report is scheduled to be tabled on Friday, and if there were to be any further delay it would be for logistical reasons, and not due to another inherent problem at the organisation. He added that the information contained in the report will only be released to the public at tabulation, which he confirmed is in line with Treasury advice.

Makhubela, who is also the divisional executive for retirement funds supervision at the FSCA, was appointed head honcho for the next three months, but will continue with these responsibilities.

He has allegedly also been promised the deputy commissioner position.

The appointment process is a controversial one, and is currently a matter before the courts.

People close to the matter state if Makhubela had been publicly interviewed for the post, a member of the public could have asked the panel to ask him whether he agrees with the position taken by the FSCA and former interim commissioner Dube Tshidi regarding its annual report process and, if not, what he did to resist it.

Speaking of which, Deputy Director-General for Tax and Fiscal Policy Ismail Momoniat stated in his answering affidavit at the initial Open Secrets court application, that he was told of three forthcoming retirements of members of the FSCA’s transitional management committee. The FSCA announced the retirements of Marius du Toit in December 2020 and Jurgen Boyd in March 2021, and now Makhubela has confirmed that his predecessor Tshidi will make up the trifecta of soon-to-be retirees.

Makhubela says the renewal of leadership at the FSCA is a normal state of affairs, and promises that it is business as usual as the 500-strong staff complement at the organisation ensures the wheels still turn smoothly.

Meanwhile, the Treasury states that it is “protocol” that the annual report is made public when Parliament publishes its ATC (Announcements, Tablings and Committee) reports. “So, it will be made public tomorrow.”

But all this business behind closed doors has become a bitter pill to swallow for the public and advocacy groups.

Back in 2016, the FSCA’s predecessor, the Financial Services Board (FSB), denied the public access to its 2015/16 annual report for more than six months, on the false grounds that it could not be published as it had not yet been tabled in Parliament.

It was during this time that the FSB was being hauled to court to face accusations that its then CEO, Dube Tshidi, and other officials acted illegally in closing hundreds of retirement funds and transferring their unclaimed benefits to some of the larger financial institutions without making proper efforts to trace the beneficiaries. The funds in question, which number about 4,000, came about when employers consolidated stand-alone funds into umbrella funds.

A legal expert said that when the FSB refused to disclose its annual report in 2016 before it had presented it to SCoF, it also said that it was “protocol”.

“But there is no such thing. And it has the effect of undermining the work of Parliament because members of the public will not be able to point out errors and omissions to SCoF MPs so that they can ask the FSCA presenters about them when they present.”

With the FSCA back in court, and its annual report way overdue, one can’t help wondering if history is repeating itself. DM/BM


Comments - Please in order to comment.

  • Rob Glenister says:

    Where there’s smoke …
    In other areas of business, I’ve noticed a tardiness on the part of the FSCA when compared to the actions of the FSB that it replaced. Taking years to issue a license and requiring submission of the same documents repeatedly is only one example. Appears to me that an even higher level of bureaucracy has established itself amongst their ranks and this does not augur well.
    The loss of Caroline da Silva will no doubt have its repercussions.

  • Alley Cat says:

    In early 2000 I attended a hugely expensive Wits Business School course with if I remember, 5 delegates form what was then the FSB and was concerned that these were future leaders of the organisation who were going to look after our financial interests. They contributed almost nothing to the group and often left the classes early and always on a Friday “because we finish work early on a Friday”.
    Not surprised that they are lacking in commitment and transparency as an organisation…

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