I came across a most interesting document on the FSB website. Allan Greenblo, Editorial Director of Today’s Trustee, conducted an interview with Mr Dube Tshidi (pictured above), executive officer of the FSB.
One question and answer which I am sure readers will find very interesting concerns the issue of legal protection for the Regulator from being sued for gross negligence:
Q: The FSB appears alone amongst state agencies to enjoy legal protection from being sued for negligence. What is the justification for this provision under the Financial Services Laws General Amendment Bill?
Mr Tshidi responded as follows:
Your opening statement is incorrect. The Bill did not introduce the concept of limited liability for the FSB. The limitation clause (s23) has existed since promulgation of the FSB Act in 1990. The proposed amendment – i.e. removal of the words “not grossly negligent” from s23 – aligns the FSB Act with other statutes dealing with the liability of organs of state under similar circumstances. A few examples are in the Banks Act, the Labour Relations Act, the Social Services Professions Act, the Prevention of Public Violence & Intimidation Act, the Sea Birds & Seals Protection Act and the Public Audit Act.
In addition to the alignment with national legislation, the proposed amendment will also bring the liability provision in line with international provisions and requirements. The International Organisation of Securities Commissions (IOSCO), of which SA is a member, similarly prescribes one of the core principles as adequate legal protection for regulators acting in the bona fide exercise of their functions.
The main difficulty with the current wording of s23 is that it may mean that, if a plaintiff can establish gross negligence (the fault element), then the FSB (or relevant officer or appointee) may be liable for any ensuing economic loss even if the imposition of liability would not accord with the legal convictions of the community and the Constitution (the wrongfulness element).
Some of the FSB’s decision-making powers concern contested matters e.g. approval of pension-fund amalgamations that some members might oppose. But the Constitutional Court has held that compelling public considerations require that adjudicators of disputes are immune from damages claims if they act honestly. This is a constitutional requirement for all valid exercises of public authority.
Far from the amended provision prejudicing potential litigants against the FSB, it will assist them. It will allow the court to enquire, without any possible distortions caused by the current wording of s23, whether the power was exercised honestly and with due care to avoid and minimise damage to others i.e. the bona fide exercise of power.
The article covers a number of other very interesting matters, including J Arthur Brown, the appointment and remuneration of curators, investor protection, the Regulator’s handling of the Ghavalas affair and the efficacy of its operations and proposed policy changes.
Please click here to read the full article.