Pretoria - The new draft of the Financial Services Charter (FSC), gazetted by Department of Trade and Industry Minister Rob Davies, has been welcomed by Keith Levenstein, CEO of EconoBEE.
The draft of the charter will be up for public comment until the minister issues it as a sector code, which is expected in the next three to four months.
Once it has been declared a sector code, the charter will apply to all institutions operating within the financial services industry. This includes banks, insurance companies, brokers and bond originators.
Until then, affected companies will continue to use the Codes of Good Practice.
The new draft of the Financial Services Charter, gazetted in terms of 9(5) of the B-BBEE Act, is being gazetted in two phases. Phase 1 has only now been gazetted and companies operating in the financial services field can look forward to a detailed scorecard published in phase 2.
Levenstein said he welcomed the issuing of the new draft of the charter, because he believed it removes confusion around the status of the sector codes.
"The altered phrasing shows that the FSC is now becoming more true to the codes, which was not the case with older drafts. The differences are based on specific [disparities] in the financial sector, which is exactly the purpose of the sector codes," he said.
The latest draft also includes the creation of the concept of a Qualifying Small Financial Institution (QSFI) with an annual turnover of less than R35 million or investments of less than R50 million.
QSFI's will be required to choose 5 of the 7 elements on which to be scored.
A certain group of businesses are exempt from B-BBEE and are referred to as Exempt Micro Enterprises (EMEs). The EME concept retains its definition as a company with an annual turnover of less than R5 million in the new draft.
Levenstein, however, added that one of the controversies around the gazetting of the codes was the ownership level, where targets have been set at both 15 percent (direct ownership) and 25 percent (indirect ownership). The 25 percent target is used by the Codes of Good Practice.
"We hope that the amendments to the charter will encourage true transformation, and at the same time, EconoBEE eagerly awaits the reconciling of the PPPFA with the B-BBEE codes as this will remove the last major hurdle in properly implementing empowerment and B-BBEE," said Levenstein.
