South Africa recently introduced a new regulator and regulatory framework whose primary objective is to supervise the conduct of business of all financial institutions there. The Financial Sector Conduct Authority (FSCA) represents a distinct change in the country’s approach to regulation of its financial services industry.
The change brings with it the potential for an individual accountability regime to be established where senior managers are held personally liable for regulatory breaches and conduct failures. It’s certainly not improbable given the UK, Australia, Hong Kong, Singapore and the US have all implemented forms of individual accountability and more countries are likely to follow suit over the coming years.
Accountability is one of the key indicators of a strong corporate culture, according to a recent article in FAnews. The piece reasons the possibility of regulatory sanctions fosters an enhanced sense of accountability, which should in turn strengthen corporate culture and ultimately reduce misconduct.
There is no certainty on whether “individual accountability” will be introduced into South Africa or in what form. However, it would not be wise to ignore the regulatory tone and direction that the FSCA is taking in this regard. Senior management will receive increased scrutiny and attention from the FSCA for their roles and accountability within financial institutions.