The amended Financial Services Sector Code (FSC) is now legally binding for all entities and organisations operating in the financial sector, says Trade and Industry Minister Rob Davies.
In a statement on Monday, Minister Davies said the sector code, which was gazetted on Friday and subsequently endorsed by Cabinet, is now legally binding.
The FSC commits all participants to actively promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa, which contributes to the establishment of an equitable society by providing accessible financial services to black people and by directing investment into targeted sectors of the economy.
The FSC is the product of interaction between financial sector trade associations, Association of Black Securities and Investment Professionals (ABSIP), labour, community and government.
Minister Davies 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.
The Department of Trade and Industry (dti) said it has 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.
The financial sector in South Africa manages over R8 trillion assets, contributing 21.6% to the Gross Domestic Product (GDP) of the economy annually.
Transformation and empowerment
Minister Davies said 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 National Economic Development and Labour Council (NEDLAC) Summit where stakeholders committed to a sector charter. The Amended FSC has unique features and deviations that intend to address transformation peculiarities that exist in the sector, said Minister Davies.
Minister Davies said as a catalyst for empowerment, the FSC has two unique elements, namely 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 R122 billion shall be spent 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, said the Minister.
Meanwhile, Access to Financial Services element in the FSC aims to ensure that marginalised people have access to transaction, sales, and service points.
Access to financial services includes aspects such as: inclusive banking and access to affordable and understandable long term and 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, said Minister Davies.
Source: South African Government News Agency