Drawing clear lines in the sand

Watching over South Africa’s financial institutions and the products and services available to consumers is the FSCA regulatory body. The FSCA receives strategic direction from an executive committee comprising commissioner Unathi Kamlana and three deputy commissioners: Katherine Gibson, Farzana Badat, and Astrid Ludin. Together, this leadership team oversees the management and operational strategy of the FSCA, developing standards and regulations, holding financial sector institutions to account, and ensuring that financial customers are treated fairly.

Gibson has been with the market conduct authority since its creation in April 2018. This role follows her successful involvement in formulating the very ‘Twin Peaks’ system that gave rise to the two-authority system. The other body is the Prudential Authority (PA), which is administered by the South African Reserve Bank (SARB) and regulates banks, insurers, and financial institutions. These three bodies – the SARB, FSCA, and the PA – work together to support South Africa’s financial sector safety net.

Between these bodies and the financial sector ombud system that includes the consumer dispute resolution mechanism provided by National Financial Ombud Scheme, Gibson admits that consumers are often unclear about the involvement of the FSCA in day-to-day issues. She explains that, for consumer complaints, an ombud is a quick and independent resolution channel. The FSCA exists to ensure that financial institutions are complying with the law and have the right culture and processes in place to promote consumers’ interests. The FSCA works with the sector to promote good customer outcomes. It also steps in when egregious violations like frauds and Ponzi schemes take place – mainly by those pretending to be authorised financial institutions – prompting the FSCA to publish warnings on its various communication platforms, and institute independent investigations or refer cases to the authorities.

Less police officer, more ‘point person’

‘When we need to, we do have bite,’ says Gibson. She adds that the FSCA looks to set ‘a good direction of travel for financial institutions, which are themselves learning. I think most financial institutions want to do the right thing, it’s just a question of how we continually work with them to get that delicate balance between shareholder, management interests, and consumer’.

By necessity, this must be an arm’s-length relationship built on trust, asserts Gibson. ‘We can’t be cosy, but we need the sector to trust they can be open and transparent, and not feel they’re going to be whipped if they aren’t meeting exact expectations.’ This extends to how institutions apply themselves to evolving topics like sustainability; environmental, social, and governance; triple-bottom-line reporting; and even the use of artificial intelligence in the sector.

Rather than policing, Gibson explains that the FSCA is increasingly adopting a proactive approach that ‘allows us to be more agile’. She also believes this encourages innovation and responsiveness on the part of the financial sector. Referencing the challenges some companies faced accessing business interruption cover during COVID-19, Gibson notes that this was a moment where the FSCA intervened to ‘engage with the relevant insurers and come up with a kind of intermediate compromise where they started paying out a certain amount just to keep these businesses afloat until wider insurance issues – legal issues – could be dealt with’.

A similarly proactive approach is being taken around the issue of financial inclusion, an area of personal interest for Gibson, who penned an opinion piece in Business Day in 2023 calling for financial institutions to focus more ‘on simplification, customisation, building trust, and consumer advocacy’.

Creative and innovative

According to the Finscope survey, formal financial inclusion for South African adults stood at 98% in 2023, but financial institutions should not be blinded by this number into thinking their job is done. As Gibson states: ‘The focus of business activities should be to provide true customer value and not just gain market share. We are confident that the one will lead naturally to the other.’

Right now, that high 98% mainly represents South African adults with a credit account, bank account, and funeral insurance, explains Gibson. Dig a little deeper and it becomes clear that the level of engagement is a problem. Gibson expresses: ‘Even though some eight out of 10 people have a bank account – in fact, it’s even higher than that – most of those people are using it once a month. What that means is they are probably receiving a salary or some sort of compensation, and then withdrawing it all.’

Measuring these behaviours is one thing, finding ways to address them by creating products that people need and understand is another. Here, she believes, the FSCA’s research and engagement, creative thinking, and ability to challenge the sector play a vital role. For instance, referencing the inaugural FSCA South African financial customer behaviour and sentiment study, Gibson explains that many consumers regard financial products as stressful and overwhelming, and often find themselves stuck with a product because changing is just too complex. It is worth noting that financial use grows with a sense of security and familiarity, and people do find rewards appealing, making this an interesting tool for generating first-time use.

Arriving at these insights speaks volumes about the depth and diversity of expertise within the FSCA, as well as an enviable ability to read the room and steer clear of ‘groupthink’. Building a cross-section of skills that would be prized in any global business is no coincidence, it is the result of a deliberate approach to leadership and skills development that hinges on building internal capabilities, as well as bringing in new ideas and talent. This is where Henley Business School Africa steps in.

The Henley Business School Africa connection

For the past three years, the FSCA has partnered with Henley Business School Africa to ‘build the talent pool and equip our pipeline with good, future-proof skills,’ explains Gibson. Since 2020, 45 FSCA mid-level managers have been enrolled on the Senior Management Development programme over three cohorts. The results have been impressive.

‘Generally, what we’ve been experiencing is a deep level of enrichment,’ says Gibson. ‘Everybody has really benefited positively, but in addition to that, around one in four participants have actually experienced some upward career mobility – that’s quite high, I think.’

Such outcomes bode well for talent retention at the FSCA, which requires a cross-section of very specific skills to operate effectively, including deep technical knowledge of the financial sector to understanding the impact of the sector on financial stability and consumer protection. Although regulators like the FSCA typically employ lawyers and economists, such as Gibson, she acknowledges that the net today is being cast wide to draw in a diverse spectrum of skills; to promote big-picture and critical thinking, problem-solving, and innovation; as well as the ability to ‘manage people and deal with people in the right way’.

Ultimately, as Gibson suggests, the FSCA is a service organisation, so these human-centric abilities are critical. ‘If you look at our main cost drivers, they are centred around people. We have amazing talent; they are our assets and we really need to look after them. It’s a competitive market and we develop a very specialised skills set which is highly valued both in the private sector and by other regulators.’

In January 2024, the FSCA was certified as a Top Employer for 2024 following an evaluation by the Top Employers Institute. ‘We are proud of this,’ states Gibson, noting that it’s a good way of ‘benchmarking ourselves at the right standard’. It is also reflective of a forward-thinking approach to work and leadership at the FSCA, attributes that Gibson exemplifies.

Leading and learning

Gibson is a far cry from being a controlling or autocratic boss. Reflecting on how she leads and her affinity for inclusive leadership, Gibson explains that giving autonomy and focusing on outcomes is more her cup of tea. This is also how she prefers to work.

‘I’ve never been one who can sit in one place day after day, I feel like it drains my own creativity. My office is the laptop and I can work from anywhere…. I need that, and thankfully I’ve had bosses who are extremely accommodating and who care more about my contributions than if I’m sitting at a desk at a particular time of day,’ she explains. ‘That’s something I want to inculcate.’

Furthermore, Gibson is a leader who is open to learning and receiving insights from all quarters. ‘I gravitate towards people who think differently from me and have different skills - people I can learn from,’ she affirms. ‘Even if I’m the manager or leader in a particular context, all of us have so much to learn and a lot to share. I’m definitely one that believes that hearing people’s views gives you more power; it doesn’t take away from your power.’

Similarly, Gibson feels that no matter how busy you are, it is essential to carve out time for continuous learning and feeding your innate curiosity. ‘In my case, it doesn’t have to all be about economic stuff. It could be about ethics or around how the digital world is changing. I recently had the privilege to attend a Harvard Business School programme; it was a completely immersive six-day case study on strategic financial inclusion and seeing the financial inclusion journey from a cross section of views, from providers to governments and funders.’

Looking back, Gibson acknowledges the importance of academic qualifications and the luxury of ‘being immersed and inspired by like-minded people’ at university. She holds a Master’s degree in Economics (cum laude) from the University of Natal, but notes that a successful career is also built on experience, curiosity about the world, being ‘open to absorbing knowledge’, and luck.

Gibson’s career path involved a fortuitous, early detour from chartered accountancy (CA) to pursuing a career in economics. Her introduction to economics was an unexpected ‘right fit’ and she never looked back. ‘The CA story wasn’t for me at all, so I stuck with economics. I feel really lucky to have found something that’s a much better fit for how I see the world,’ reflects Gibson. ‘To find something that resonates with your value system, and how you think and see the world, is what we are all aiming for. That’s the Holy Grail. For me, economics helps me make sense of the world and how we, as humans, work. Plus, you get to make a positive impact. So, for me, it’s been an incredible journey.’