The Financial Sector Charter (FSC) Council has signed off on the final amended code for the financial services sector.

Posted by Transcend
Tuesday, 14 March 2017  |  Comments

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However, the Broad-Based Black Economic Empowerment (B-BBEE) Commission is not satisfied with its lower targets and that it will not be a tool to achieve transformation.

A draft amended FSC code was gazetted in March for a two-month period of public comment and the reworked version, which takes account of public comments, has been approved.

Council CEO Isaac Ramputa said on Thursday there was not much difference between the gazetted draft and the final version and the council would be submitting the code to Finance Minister Pravin Gordhan.

The council will make a presentation to next week’s public hearings on transformation of the financial services sector, which have been organised by Parliament’s standing committee on finance.

Liso Steto, the Department of Trade and Industry’s acting chief director of black economic empowerment, told MPs on Wednesday there was a decline in the average scores for ownership and management control in the sector between 2013 and 2014, though access to financial services had improved.

Steto said the level of transformation in the sector and compliance was still low. The ownership requirement in the reworked code is 20% compared with 25% for the generic codes. Steto told MPs this difference was due to the sector being "highly regulated".

Local branches of foreign banks could do equity equivalents of 25% of value.
Skills development is weighted towards non-management staff at 8% of the qualifying points and 2% for higher levels of management. There are also lower targets for procurement.

Ntuli said the draft financial sector code did not go a long way to promote B-BBEE. The sector had challenges at top and senior management, which were more than 60% white-dominated. So it was not correct for skills development tobe focused on lower-tier workers.

In terms of ownership, the code provides for automatic equity equivalents for the ownership target — for example, by extending more loans to black entrepreneurs without specifying the special terms that would qualify this as advancing transformation. "Our view is that there is no authorisation for something like this in the B-BBEE act. Also, we need to understand the preferential terms of the financing to differentiate it from normal loans," Ntuli said.

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