Tougher implementation of transformation in the financial-services sector is on the cards if the recommendations of a draft report by Parliament’s finance and trade and industry committees are adopted.
The draft report emerged from public hearings during which a lot of anger and frustration was expressed about the slow pace of transformation in the sector.
It proposes that the targets in the Financial Sector Charter be made compulsory and possibly incorporated into regulations.
The final conclusions will feed into the financial sector summit planned by the National Economic Development and Labour Council for 2018.
So the Business Day tells us today (one of the few articles you can read for free). Has the brigadier come back to haunt us again? At face value this reeks of zwane, id est
“Corporates must achieve the targets in the financial sector charter and must be penalised if they fail to do so. Achieving the targets could be made a condition for the licensing of financial institutions,” the draft report says.
Let's look at this report rationally.
- It's a draft report. Whilst it purports to have Treasury's support it has a long way to go. It would require amendments to certain pieces of legislation that allocate banking licences. I think it would take a long time to push this through, any amendment to banking legislation will cause a wide variety of people to start shivering in their threadbare takkies.
- There is a court case pending that argues that the mining charter is "vague, contradictory and "irrational provisions" are contrary to what the constitution requires for the principles of the rule of law." My understanding of the court case is that this charter should not be a condition for licence. If this goes to the Constitutional Court, as it is likely to do, and is successful then it sets a precedent that you can't make empowerment requirements a condition of licence.
Is gigaba (still lower case because he has yet to show that he's not a gupta pony) playing a zwane game then? I don't know - I read this morning in some article that he is politically ambitious and a fast learner which suggests that he isn't doing it. I am quite sure that his smug grin knows that this type of gerrymandering will cause a lot of international and local discontent. If he wants to run the country at some stage, which I sincerely hope never happens, then he does need a banking system that isn't compromised. Not that empowerment is compromising, but relaxing laws to bring in unqualified new entrants could result in the banking system collapsing.
At the very least gigaba has got the banks' ear
Banking Association SA MD Cas Coovadia said in an address to the Cape Town Press Club that the banking industry had decided to take a far more “robust” approach. Banks would be proactively seeking to achieve equity representation in senior and executive management as well as to ensure that they procured from small-and medium-owned enterprises.
One thing is absolutely clear though - the revised FSC is a long way away from gazetting.
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