The draft Conduct of Financial Institutions Bill will transform South Africa’s financial and asset management sector. This is according to the Deputy Minister of Finance, David Masondo.
Masondo was speaking in a Business Day webinar when he said that under the bill transformation will become an explicit function of the Financial Sector Conduct Authority (FSCA).
The bill will also require financial institutions such as banks to have transformation plans that comply with current Black Economic Empowerment (BEE) legislation, said Masondo.
Some of the powers given to the FSCA under the bill include:
- Transformation;
- Operations;
- Culture;
- Product Design;
- Selling;
- Marketing; and
- Internal Procedures.
The FSCA regulates the financial industry and has power over any financial institution that is licensed in terms of a financial sector law, from banks to retirement fund administrators.
Said Masondo: ‘From the side of the state, what motivates us, what informs what we’re doing is a constitutional imperative for transformation.
‘The equality clause in the constitution requires the state to undertake measures to transform South Africa in all facets of our society. We are also motivated by inclusive growth.’
Shift in BEE laws
This comes after the business group, Sakeliga, noted a shift in BEE laws and how they function.
BEE previously focused on the relationship between the state and its service providers, said Piet le Roux, Chief Executive of Sakeliga.
Says Le Roux: ‘Lately, in codes such as the legal sector code, BEE regulation jettisons the requirement of the state as a transacting party.
“The new approach is to regulate for BEE requirements regardless of state involvement, which poses serious implications for freedom to trade and freedom to procure professional services.”
More new laws
The change in BEE laws and how they are implemented is driven by the Employment Equity Amendment Bill, the aim of which is to accelerate transformation in South Africa.
Under this bill, which is currently before parliament, the Minister of Labour will be able to set sector-specific equity targets in almost all of South Africa’s industries.
Before setting these targets the Minister will consult the relevant sector(s), and take into consideration the input from the Commission for Employment Equity (CEE). After this the Minister may set numerical employment equity targets for any sector, or a part of it, by a notice in the government gazette.
Targets may differ depending on occupation levels, sub-sectors or regions, the department said.
According to the bill, the minister must publish a draft of any notice in the government gazette and any affected or interested parties must be given 30 days to comment.
Some of the considerations the Minister must take into account include:
- The qualification, skills and experience required to be employed in a particular occupational level;
- The rate of turnover and natural attrition in a sector; and
- Recruitment and promotional trends within a sector.