The Financial Services Sector Code (gazette no 35914) – summarised scorecard

The code is not yet finalised but this is a good summary of the whole scorecard. If you want a downloadable version take a look here

The Financial Services Sector Code (gazette no 35914)

The FSC was gazetted under section 9(1) of the B-BBEE Act on the 26^th of November, 2012 and is binding on all stakeholders operating in the Financial Services Sector. This includes (but is not limited to)

• Banking;
• Long-term insurance;
• Short-term insurance;
• Re-insurance;
• The management of retirement, pension and collective investment scheme assets;
• Management of formal collective investment schemes;
• Financial Services Intermediation and Brokerage;
• Management of investments on behalf of the public, including, but not limited to, private equity, members of any exchange licensed to trade equities or financial instruments in South Africa and entities listed as part of the financial index of a licensed exchange; and
• Underwriting Management Agents.

It does not apply to the international trading operations of those entities who operate in South Africa.

The commencement date of the code is 1 January, 2012.

Definitions

• Exempt Micro Enterprises (EMEs) – enterprises whose annual turnover falls below R5 million per year. These enterprises are exempt from any form of B-BBEE and are automatically level 4 contributors. EME's that are more than 50% black owned are level 3 contributors.
• Qualifying Small Financial Institutions (QSFIs) – a financial institution with designated investments of less than R50million and whose annual turnover falls between R5 million and R35 million.

 

FSC Scorecards

 

Companies complying with Empowerment Financing

Element	Points
Ownership	14 + 3 bonus
Management Control	8+ 1 bonus
Employment Equity	15 + 3 bonus
Skills Development	10
Preferential Procurement	16
Empowerment Financing	15
Enterprise Development	5
Socio-economic Development	3
Access to Financial Services	14
TOTAL	100 + 7 bonus points

Companies excluded from complying with Empowerment Financing

Element	Points
Ownership	14 + 3 bonus
Management Control	8+ 1 bonus
Employment Equity	15 + 3 bonus
Skills Development	10
Preferential Procurement	16
Enterprise Development	15
Socio-economic Development	3
Access to Financial Services	14
TOTAL	95 + 7 bonus points

 

complying with Empowerment Financing

 

QSFI's must select 5 out of the 9 elements with ownership being compulsory. Once the choice of elements is made these elements are used each year.

Element	Points	Weighting
Ownership	14 + 3 bonus	20%
Management Control	8+ 1 bonus	20%
Employment Equity	15 + 3 bonus	20%
Skills Development	10	20%
Preferential Procurement	16	20%
Empowerment Financing	15	20%
Enterprise Development	5	20%
Socio-economic Development	3	20%
Access to Financial Services	14	20%
TOTAL	100 + 7 bonus points	100%

Companies excluded from complying with Empowerment Financing

QSFI's must select 5 out of the 9 elements with ownership being compulsory. Once the choice of elements is made these elements are used each year.

Element	Points	Weighting
Ownership	14 + 3 bonus	20%
Management Control	8+ 1 bonus	20%
Employment Equity	15 + 3 bonus	20%
Skills Development	10	20%
Preferential Procurement	16	20%
Enterprise Development	15	20%
Socio-economic Development	3	20%
Access to Financial Services	14	20%
TOTAL	95 + 7 bonus points	100%

Contributors are measured using the table below.

Contribution Level	B-BBEE score range	Recognition level
Level One Contributor	≥ 100 points	R1.35/R1 spent
Level Two Contributor	≥ 85 points but < 100 points	R1.25/R1 spent
Level Three Contributor	≥ 75 points but < 85 points	R1.10/R1 spent
Level Four Contributor	≥ 65 points but < 75 points	R1/R1 spent
Level Five Contributor	≥ 55 points but < 65 points	R0.80/R1 spent
Level Six Contributor	≥ 45 points but < 55 points	R0.60/R1 spent
Level Seven Contributor	≥ 40 points but < 45 points	R0.50/R1 spent
Level Eight Contributor	≥ 30 points but < 40 points	R0.10/R1 spent
Non-Compliant Contributor	< 30 points	R0/R1 spent

FSC B-BBEE scorecard

Equity element

Ownership. Total points - 17 (including 3 bonus points)
Description		Weighting points	Compliance Target
	Voting rights
Exercisable voting rights in the enterprise in the hands of black people.		3	25% + 1 Vote
Exercisable voting rights in the enterprise in the hands of black women.		1	10% + 1 Vote
	Economic interest
Economic interest of black people		3	25% + 1 Vote
Economic interest of black women		1	10% + 1 Vote
Economic interest of the following black natural people in the enterprise black designated groups black participants in employee ownership schemes black beneficiaries of broad-based ownership schemes; or black participants in co-operatives		1	2.5%
	Ownership Fulfilment
Net Equity Value		3	No restrictions
Direct or Indirect Ownership in Excess of 15% (including Equity Equivalents and Asset Sales)		2	10%
	Bonus points
Black new entrants		2	10%
Ownership by ESOPs and Co-ops		1	10%

 

Management element

 

Management Control. Total points –9 (including 1 bonus point)
Description		Weighting points	Compliance Target
	Board participation
Voting rights of black board members as a percentage of voting rights of all board members		0.5	50%
Voting rights of black women board members as a percentage of voting rights of all board members		0.5	25%
Black executive members of the board as a percentage of all executive members of the board		1	50%
Black women executive members of the board as a percentage of all executive members of the board		1	25%
	Top management
Black senior top management as a percentage of all senior top management		1.5	40%
Black women senior top management as a percentage of all senior top management		1.5	20%
Black other top management as a percentage of all other top management		1	40%
Black women other top management as a percentage of all other top management		1	20%
	Bonus Point
Black independent non-executive board members as a percentage of all independent non-executive board members		1	40%

 

Employment Equity

 

Employment Equity. Total points – 18 (including 3 bonus points)
Description	Weighting points	Compliance Target
Black disabled employees as a percentage of ALL employees	0.5	3%
Black women disabled employees as a percentage of ALL employees	0.5	1.5%
Black senior management as a percentage of all senior management	3	60%
Black women senior management as a percentage of all senior management	2	30%
Black middle management as a percentage of all middle management	3	75%
Black women middle management as a percentage of all middle management	2	37.5%
Black junior management as a percentage of all junior management	2	80%
Black women junior management as a percentage of all junior management	2	40%
BONUS POINTS
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in senior management	1	87.5%
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in middle management	1	87.5%
Bonus Point for meeting or exceeding the Economically Active Population (EAP) targets in junior management	1	87.5%

 

Skills Development

 

Skills Development. Total points – 10
Description		Weighting points	Compliance Target
Skills development expenditure on learning programmes specified in the Learning Programmes Matrix
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for Black employees as a percentage of the financial institution's leviable amount		3	3% of payroll (3x SDL)
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for Black Women employees as a percentage of the financial institution's leviable amount		1.5	1.5%
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for disabled Black employees as a percentage of the financial institution's leviable amount		0.5	0.3%
Skills Development Expenditure on Learning Programmes specified in the Learning Programmes Matrix for disabled Black Women employees as a percentage of the financial institution's leviable amount		0.5	0.15%
	Learnerships
Number of Black employees participating in Learnerships or Category B, C and D Programmes as a percentage of total employees		3	5% of staff
Number of Black Women employees participating in Learnerships or Category B, C and D Programmes as a percentage of total employees		1.5	2.5%

Preferential Procurement

Preferential Procurement. Total points – 16
Description	Weighting points	Compliance Target
B-BBEE procurement spend from all suppliers based on the B-BBEE procurement recognition levels as a percentage of total measured procurement spend	8	70%
B-BBEE procurement spend from all Qualifying Small Enterprises (QSEs) or from Exempted Micro-Enterprises (EMEs) based on the applicable B-BBEE procurement recognition levels as a percentage of total measured procurement spend	3	15%
B-BBEE procurement spend from any of the following suppliers as a percentage of total measured procurement spend
Suppliers that are 50% Black owned	2.5	12%
Suppliers that are 30% Black Women owned	2.5	8%

 

Empowerment Financing and Enterprise Development

 

Enterprise Development for those exempted from Empowerment Financing

Enterprise Development. Total points – 15
Description	Weighting points	Compliance Target
Qualifying ED contributions made by the measured entity as a percentage of the target	15	3 % of Cumulative NPAT

Empowerment Financing – Long Term Insurers

Empowerment Financing. Total points – 15
Description	Weighting points	Compliance Target
Targeted Investments	12	R27bn
BEE Transaction Financing	3	R15bn
TOTAL FOR LONG TERM INSURANCE SECTOR	15	R42bn

Empowerment Financing – Banking Sector

Empowerment Financing. Total points – 15
Description	Weighting points	Compliance Target
Targeted Investments     Transformational Infrastructure     Black SME Financing     Black Agricultural Financing     Affordable Housing	12	R48bn
BEE Transaction Financing	3	R32bn
TOTAL FOR BANKING SECTOR	15	R80bn

Enterprise Development for those needing to comply with Empowerment Financing

Enterprise Development. Total points –5
Description	Weighting points	Compliance Target
Qualifying ED contributions made by the measured entity as a percentage of the target	5	0.2 % of NPAT

Socio-Economic Development

Socio-Economic Development. Total points – 3
Description	Weighting points	Compliance Target)
Cumulative value of all Socio-Economic Development Contributions made by a financial institution as a percentage of the cumulative net profit after tax	3	2012 = 0.75% of NPAT 2013 = 0.7% of NPAT 2014 = 0.6% of NPAT

Socio-Economic Development (exempt from Access to Financial Services)

Socio-Economic Development. Total points – 3
Description	Weighting points	Compliance Target)
Cumulative value of all Socio-Economic Development Contributions made by a financial institution as a percentage of the cumulative net profit after tax	3	0.7% of NPAT

 

Access to Financial Services (Banking Sector) – 14 points

	Access Method	Qualifying Market/area	Points	Qualifying Criteria	Range	Target
1	Geographic Access (Reach)		5	One or more of:
1.1	Transaction point	50% or more of households falling within LSM 1-5	1	Draw cash or purchase from their accounts	5km	85%
1.2	Service point		1	Reset a pin, Money transfers, GET a statement and initiate account queries	10km	70%
1.3	Sales point		2	replace a card, deposit cash into their accounts, or acquire: a transaction account, a funeral policy, a savings account, or a loan.	15km	60%
1.4	Electronic Access	Individuals earning less than R5,000 per month increasing by CPIX p.a.	1	TBC
2	Banking Densification	Individuals in the LSM 1-5 group nationally	2	Access to cash withdrawal facility per measuring unit	TBC	1500
3	Product Related Access	Individuals in the LSM 1-5 group nationally	3	Number of active accounts for qualifying products per institution	National	TBC
4	Affordable Housing Origination	Qualifying measures as per metrics agreed	2	Mortgage and development loans to qualifying households	National	TBC
5	Consumer Education	Qualifying individuals in the LSM 1-8 group	2	Consumer, Primary and Basic Education	National	2012 = 0.25% 2013 = 0.3% 2014 = 0.4%

Access to Financial Services (Short-Term Insurance Sector) – 14 points

Access to Financial Services	Weighting	Industry Targets
Appropriate Products	2	8
Insurance Policies	10		Maximum sum insured:
Motor vehicle		6%	R60k
Household Contents		6%	R100k
Property/Homeowners		3%	R350k
Black SMEs – equipment contents		15%	R100k
Black SMEs – premises		10%	R500k
Agriculture		6%	TBD
Livestock		6%	R600k
Co-operatives		6%	TBD
Consumer Education	2		Year 1: 0.25% Year 2: 0.3% Year 4: 0.4%