Reminder: FSCA calls for public comments on a draft strategy for promoting financial sector transformation
Please refer to last week’s newsletter for more details.
Section 10(1)(a) of the B-BBEE Act requires every organ of state and public entity – such as the FSCA – to apply a relevant code of good practice issued in terms of that Act when determining qualification criteria for the issuing of licences, concessions or other authorisations in respect of economic activity in terms of any [other] law. This puts an obligation on financial sector regulators to apply the FS Code when issuing a licence in terms of financial sector laws. However, a direct role for financial sector regulators in promoting transformation of the sector has in the main been limited. This is in part due to the lack of enabling financial sector legislation in relation to transformation.
It is recognised that regulators such as the FSCA can better support the FSTC in driving meaningful progress toward commitments made under the FS Code. Regulators are able to set requirements on regulated entities at licensing stage and on an on-going basis (related to the regulatory objectives) and enforce the achievement of these requirements.
In relation to transformation, and in line with the National Treasury’s proposed COFI Bill and consequential amendments to the FSR Act, the FSCA could potentially take actions such as:
- require financial institutions to have in place a transformation plan, aimed at achieving targets set under the FS Code;
- set minimum B-BBEE levels that must be targeted by each firm and documented in the transformation plan, especially for larger firms within the financial
sector, and particularly to require progression through the levels of transformation over defined periods of time;
- consider transformation plans during the licensing process;
- supervise the progress of financial institutions against their plans;
- take action when there is a lack of commitment to or achievement of targets set in transformation plans; and
- minimise regulatory barriers to entry for small, black-owned entities in the financial sector, and supporting small black businesses with suitably enabling regulatory compliance requirements.