The Minister of Trade and Industry, Dr Rob Davies says that the Amended Financial Services Sector Code (“FSC”) is now a legally binding document on all entities and organisations operating in the financial sector. This follows the gazetting of the FSC on Friday, 1st December 2017, and subsequent endorsement by Cabinet. The Minister approved and gazetted the FSC in terms of Section 9 (1) of the Broad Based Black Economic Empowerment (B-BBEE) Act 53 of 2003 as amended by B-BBEE Act 46 of 2013. It has also been agreed amongst stakeholders that post the gazette of the sector code there will need to be a review process taking into account the report of the recently held parliamentary hearings on transformation of the financial sector and other considerations.
Minister Davies says that the financial sector in South Africa manages over R8 trillion assets, contributing 21.6 per cent to the gross domestic product of the economy annually and therefore transformation of the sector is vital for the country.
“Transformation of this sector is key because it is the life blood for all other sectors of the economy. The process to develop a charter emanated from the 2002 NEDLAC Summit where stakeholders committed to a sector charter. The Amended FSC has unique features and deviations that intent to address transformation peculiarities that exist in the sector,” says Davies.
Ministers Davies indicates that as a catalyst for empowerment, the FSC has two unique elements called Empowerment Financing and Access to Financial Services.
“The aim for Empowerment Financing is to ensure support for Black Owned entities (including Black Industrialists), Black Agriculture Funding necessary to assist with the land reform process, Transformational Infrastructure Financing (emphasis here is on funding of previously neglected areas such as townships and rural areas) and Low cost housing funding. In this regard no less than R 122 billion shall be spend by the sector under Empowerment Financing to investment (black SMME finance, affordable housing, and infrastructure and Black industrialisation) and Risk Capital Finance and BEE transaction financing,” adds Minister Davies.
Minister Davies further indicates that Access to Financial Services element in the FSC
aims to ensure that marginalised people (LSM 1-5) have access to transaction, sales, and service points.
“Access to financial services includes aspects such as: inclusive banking, access to affordable and understandable long term insurance risk cover, and access to affordable and understandable short term insurance risk cover. The measurement of this element will be based on whether there is penetration of products, development of appropriate products, densification of service points, electronic access, and geographic access amongst the LSM 1-5 beneficiaries,” concludes Davies.
Click on the link to access the FSC
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