As part of an assessment of the commitment to conduct standards in the sector, DB & Associates, a management consulting firm operating in South Africa and Australia, held over 100 meetings with the executive leadership of the top 25 firms in South Africa’s financial sector over the past 18 months. This coincided with a Royal Commission of Inquiry into misconduct in the Australian financial industry, which delivered its final report earlier this year. The Commission’s findings were, to say the least, sobering.
DB & Associates’ initial assumption was that, because South Africa is a developing country with high levels of corruption in government, things would be worse in South Africa than Down Under. They found, however, that this prediction could not have been more wrong.
In a recent opinion piece DB & Associates points out that “what was encountered is a financial services industry which, while not perfect by any means, nonetheless comports well with standards of good conduct. The reasons are many and varied. They include a far deeper awareness that the financial industry must serve the community in which it operates, not the other way around.” There exists an appreciation of the need to contribute to redressing economic inequality, embedded by decades of discrimination, for two reasons. The first is simply social justice, but also to create the kind of economic prosperity that firms themselves need in order to grow. But doubtless also the treating customers fairly (TCF) regime has played an important role in readying financial firms for the forthcoming introduction of new conduct legislation: the Conduct of Financial Institutions Act (CoFI).
The DB & Associates study identified gaps that relate mainly to requirements to transform culture and governance, and the disjuncture between TCF and the Conduct of Financial Institutions Act (CoFI).
Click here to read their opinion piece that further unpacks the challenges that remain.