SOUTH AFRICA’S AMENDED FINANCIAL SERVICES SECTOR CODE NOW LEGALLY BINDING

PRETORIA, South Africa’s amended Financial Services Sector Code (FSC), which has been endorsed by the cabinet and gazetted, is now legally binding for all entities and organizations operating in the financial sector, says Trade and Industry Minister Rob Davies.

The FSC commits all participants to actively promote a transformed, vibrant and globally competitive financial sector which 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.

It is the product of inter-action between financial sector trade associations, the Association of Black Securities and Investment Professionals (ABSIP), labour unions, communities and the government.

Davies approved and gazetted the FSC under 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 among stakeholders that following the gazetting of the 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 services sector and other considerations.

The financial services sector in South Africa manages more than 8.0 trillion rand (about 595 billion US dollars) of assets, contributing 21.6 per cent to the Gross Domestic Product (GDP) of the economy annually.

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,” he noted.

“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.”

Davies said that 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 which is 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,” he added.

In this regard, no less than 122 billion Rand 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.”

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 Davies.

Source: NAM NEWS NETWORK

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