A snip of the latest news on the FSC
The current enquiry into transformation within the Finance sector must surely stem from these heightened calls for radical economic transformation. We hear from the press reports that
The Black Business Council has called for all new insurance licences to be restricted to companies with a minimum black ownership of 51% and for set-asides of up to 35% for black entrepreneurs as a condition of licences.
National Economic Fund CEO Philisiwe Mthethwa said today that a fundamental deficiency of the draft financial service code is its lower 10% target for direct ownership, which compared unfavourably with the minimum 25% target in the generic BEE codes. (The dti COGP and other sector codes permit any combination of direct or indirect ownership to meet the ownership targets.)
Zodwa Ntuli (B-BBEE Commissioner) also criticised the draft Finance Sector code, saying it did not set timelines for the achievements of the targets that were “very low”. She argued that the draft financial sector code in its current form did not advance radical economic transformation but rather regressed it. If these deficiencies were not addressed, the generic codes of good practice should apply.
What is clear though is the whole point of the sector scorecard is to measure transformation in a consistent manner and there is a real difficulty in measuring transformation when the codes are changing every few years and data capture is so complicated. To give a clear picture of progress one needs consistent targets and comprehensive reporting. In sectors dominated by majors, one missing return can have a significant impact on averages. We do know that a relatively low response rate by financial institutions in the data capture for the 2014/5 BEE report has caused difficulty in drawing a conclusive sector picture. Different and conflicting sets of statistics will probably be presented to Parliament by organisations who have conducted various surveys within the sector. The Black ownership % of JSE listed companies will continue to be an area of robust debate!
To this end, we can expect further changes in the Draft Financial Services Sector Code as a result of this parliamentary investigation. We can also anticipate an increased focus on annual reporting by sector participants and an intense discussion on the role of licensing in the transformation of the financial services sector!