DAVID SHAPIRO: Compliance will be the death of business yet
Endless red tape and increasing surveillance are becoming more demanding than the rigours of running a company
Commentators have described PSG’s exit from the JSE as the end of an era, the termination of a hugely rewarding investment for those who had the vision to back the “Boere Buffett”, Jannie Mouton.
CEO Piet Mouton’s decision to check out and go fishing is also an acknowledgment that the period of high-octane entrepreneurship, that had its genesis in the 1990s, has come to an end; quelled by things such as the energy-sapping demands of compliance and regulation. Having to climb rock faces and swim across crocodile infested rivers every day meant running a business was no longer fun.
PSG listed on the JSE in 1995 during a decade of groundbreaking transformation in the financial services industry, a revamp cultivated by political change, globalisation and cutting-edge developments in technology. Leon Campher (Coronation), Hendrik Du Toit (Investec) and John Winship (BOE) were some of the trailblazers who challenged the stranglehold of the large insurers in the asset-management industry such as Sanlam, Liberty and Old Mutual.
Gencor and Investec warned the JSE they would establish a competing exchange unless the cozy club opened its membership to corporates, and Barnard, Jacobs & Mellet became the first stockbroking business to list on the JSE. The internet provided savers with information on companies and economies at the touch of a button, trading on the JSE went electronic, while the easing of exchange control opened the way for investors to gain direct access to foreign securities.
The rapid pace of technological advancement, though, brought new dangers to the financial services industry. Regulators around the globe worried about how effortlessly illicit capital flowed across borders. They scrambled to implement controls to bar unlawful transactions, but the power and speed of the internet, together with a proliferation of complex new financial products, left administrators trying to crush the banking equivalent of the Lernaean Hydra, the mythical multiheaded sea monster. Each time they cut off one escape route two more emerged.
Over the years, surveillance has become even more rigorous. Every facet of our business is now monitored and scrutinised, from our banter with colleagues to the origins of our clients’ wealth. Popia, Cyber Security, Fica and Fais form part of our daily conversation. In SA we have the extra burden of meeting strict government rules on transformation.
No-one is questioning the need to regulate markets nor the need to uphold the principles of good governance. But, as Piet Mouton implied in his restructuring announcement, the increasing demand of compliance on executives’ time is dulling the pleasures of managing a public business.
In my world, gathering and processing the documentation required to sign up a customer, especially a trust or a company, would test the patience of a Benedictine monk. The task is so onerous and frustrating that it hampers client mobility and creates a barrier to entry into the financial services industry. Recently, an accountant friend, so annoyed by the persistent demands of his broker to produce the death certificate of the benefactor of a trust — who had died about 40 years ago — submitted a photograph of the deceased’s tombstone and scornfully asked if this would pass as evidence of the party’s demise.
• Shapiro is chief global equity strategist at Sasfin Wealth.