The Financial Sector Charter

The Financial Sector Charter (FSC) Council has met with the Ministers of Trade & Industry and Finance in an attempt to establish whether the Ministers still see it appropriate to gazette the Financial Sector Charter under Section 9 of the Broad Based Black Economic Empowerment Act.

Following this meeting, the Board of the FSC Council has met on several occasions in an attempt to resolve the major outstanding issue relating to ownership. At this time it remains uncertain whether the FSC will be gazetted.

During 2007, SAIA reported that a deadlock had been reached on the “ownership” component of the Financial Sector Charter (Charter) and that the deadlock had been elevated to the principals of the respective constituencies in the Charter Council for guidance. It was expected that in 2008 the respective principals would have gone through the necessary process to resolve the matter. This expectation was heightened by the six months’ extension to the transition period granted by the Department of Trade and Industry to allow various sectors to reach consensus on alignment and submit applications for sector codes.

Regretfully, the above process did not yield the expected results and the impasse on ‘ownership’ remains. The respective Charter constituents are still holding on to their positions. The trade associations still believe that the “ownership” pillar should not be tampered with and left as is in the Charter. The Labour and Community constituencies, on the other hand, believes that ownership goes to the core of transformation and therefore should be fully aligned with the Codes. The Association of Black Securities and Investment Professionals (ABSIP) advocated a middle-of-the-road approach by saying that all deals concluded using the Charter should continue to be recognised and that future deals be based on the codes.

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In August 2008, the Minister of Finance convened a meeting of all Financial Sector Charter (Charter) participants with the aim of resolving the impasse. However, Labour and Community constituents could not attend the meeting. All parties at the meeting recommitted themselves to the Charter. The Minister of Trade and Industry stated that he found himself in an invidious position as he was expected to be a participant and a referee in the discussions. He undertook to meet with Labour and the Community to get their side of the story and revert with a considered approach. The feedback received to date has been that the Minister and the principals of the two constituents have been struggling to find a suitable date for a meeting.

So, despite their best endeavours, the Charter constituencies have not been able to convince each other on the merits of their arguments on the matter. As a result, on 1 September 2008 the sector’s transformation was by default governed by the generic Codes of Good Practice and the Charter exists for information purposes only.

The SAIA Board Committee: Transformation approved that SAIA would advise its members to report under both legal frameworks until further clarity was realized.

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The South African Insurance Association
Association Incorporated under Section 21
Registration No.1998/25543/08

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PO Box 30619
Braamfontein
2017

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Milpark

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Email: info@saia.co.za

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The Financial Sector Charter

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