Premature agreement between FSCA and BEE Commission – Solidarity

26 March 2024

The recent announcement of an agreement between the Financial Sector Conduct Authority (FSCA) and the BSEB Commission of the Department of Trade, Industry and Competition has caused a wave of concern in the financial sector. Solidarity is opposed to this premature agreement which sets transformation requirements for financial institutions as the Conduct Standard for Financial Institutions Bill (the CoFI Bill) has not yet been ratified.

The CoFI Bill which regulates the conduct of financial institutions is a state-centralised component in the regulation of the financial sector and it will hold adverse consequences for this sector.

The CoFI Bill has not yet been ratified. It is currently before parliament. The necessary input from the public and the sector itself has not yet been provided. Solidarity is ready to fight the CoFI Bill at every public hearing, and we will submit the necessary comments as soon as public participation for this proposed bill opens.

Solidarity also believes that this agreement should be considered invalid, as the proposed bill has not yet been enacted. 

“Any agreement based on the assumption of this bill’s legislative authority is premature,” said Riaan Visser, head of Solidarity’s Finance Network.

A critical look at this agreement reveals the potential dangers it poses to the financial sector. Solidarity is concerned about the impact of racial prescriptions on South Africa’s economy and the potential consequences of the agreement. If the CoFI Bill were to come into effect, it could possibly violate Solidarity’s court order against racial discrimination.

The proposed CoFI Bill will have a potentially devastating impact on the financial sector. If financial firms must close their doors due to their failure to meet transformation requirements (as is currently contained in the proposed CoFI Bill), the consequences will be felt over a wide area, with job losses a real possibility.

The FSCA’s sharp focus on transformation rather than its primary task of regulating financial services is concerning, Visser added. Although the FSCA states that the strict application of transformation is a priority, the question exists as to whether this strictness is in the best interests of the financial sector.

“It is clear that a further discussion and consideration is necessary before any agreement can be entered into or action taken that could have far-reaching consequences,” Visser said.

Solidarity would like to hold discussions with the FSCA to find middle ground together on the proposed CoFI Bill and the FSCA’s transformation policies so that the interests of businesses and employees in this sector can be kept safe.

“The interests of all parties involved, including the government, the FSCA, the financial sector and the South African economy as a whole, must be taken into account to determine a way forward that will strike the right balance between transformation and the sustainability of the financial sector,” Visser said.

Issued by Riaan Visser, Head: Solidarity’s Finance Network, 26 March 2024