DRAWING FROM MY REPORTS IN LEGALBRIEF POLICY WATCH
Apparently widespread perceptions of a reluctance on the part of SA’s financial sector to transform meaningfully first surfaced during public hearings on the Financial Sector Regulation Bill in May 2016. As most readers know, the Bill was passed in June 2017 and most of the Act’s provisions have since been operationalised. However, the slow pace of financial sector transformation surfaced again during the ANC national executive committee’s January 2017 lekgotla, when it was resolved that government should ‘develop and implement’ a programme for transforming and deracialising what was described at the time as SA’s ‘highly concentrated financial sector’. Unfortunately, a media statement on the outcome of the lekgotla was lost when the ruling party’s website was ‘suspended’ (IOL) the following year.
That said, the first step in the ensuing process took the form of an invitation from the National Assembly’s Standing Committee on Finance for written submissions in anticipation of public hearings, which were held in March. Issues of concern to the committee at the time included the slow pace of ‘deracialisation’ and Financial Sector Charter implementation in the context of a ‘high level of monopoly’. The invitation is no longer available on Parliament’s website.
In November 2017, the committee adopted and discussed a report on financial sector transformation prepared in liaison with the National Assembly’s Trade & Industry Committee. A year later, National Economic Development & Labour Council representatives briefed Standing Committee on Finance members on preparations for a financial sector summit expected to inform a review of the report and the preparation of its next iteration. However, by the time a new Standing Committee on Finance had been constituted under SA’s sixth democratic Parliament, the summit envisaged had still not taken place. In November 2019, when financial sector stakeholders were invited to report on progress made in addressing issues raised in the original report, a Parliamentary Monitoring Group record of proceedings noted input from National Treasury tending to suggest that little if anything had changed. At the time, the Financial Sector Transformation Council was in the process of ‘reviewing’ the sector’s broad-based black economic empowerment (B-BBEE) codes of good practice for implementation in 2020.
Possibly because of the impact of Covid-19 Disaster Management restrictions on parliamentary proceedings and public gatherings, the report was not discussed again until March 2021, at which point the summit had still not materialised. However, clearly annoyed by comments made at the time by National Treasury’s Ismail Momoniat in the context of the since enacted Financial Sector Laws Amendment Bill, the Standing Committee on Finance issued a media statement tending to suggest that banking sector transformation would soon occupy a more prominent place on its agenda. This was noting concerns about the ‘monopoly of four banks’ and the possible implications of this for black South Africans wishing to ‘enter’ the sector.
Nothing further developed until 16 February, when the committee issued a statement expressing concern about the Financial Sector Transformation Council’s non-compliance with section 10(4) of the B-BBEE Act, which makes annual reporting to the Minister of Trade, Industry & Competition mandatory. Apparently, the council has not submitted a report to the Minister since 2019.
It is against that backdrop that the Financial Sector Conduct Authority has called for input on a draft strategy for promoting financial sector transformation.