Change in the submission of reports to the FSTC
Financial Sector Transformation Council
The Financial Sector Transformation Council (from here on 'FSTC') is a non-profit company constituted in terms of the Financial Sector Code, gazetted under section 9(1) of the Broad-Based Black Empowerment Act 64 of 2013. The FSTC is empowered through its constituencies to enforce the Financial Sector Transformation Code.
On the 24th of May 2022, the FSTC sent out a communication in the form of reporting notice 01 of 2022. The notice contained information with regards to a change in the way companies’ reports have to be submitted. This change does not fall within the FAIS compliance domain.
The goal of the notice
The notice was published to call for all entities to whom it is applicable to submit their annual data to the FSTC. It could previously be done by reporting via email to the FSTC, but this will no longer be allowed. All reports should now be submitted electronically via Dropbox with the folder named: 'FSTC 2020/21 Reporting– (name of entity)'.
This notice is not applicable to natural or juristic persons who do not carry on commercial activities in the Republic of South Africa as well as any commercial activities of natural or juristic persons outside the Republic of South Africa. Furthermore, it is also not applicable to managers of investments on behalf of the public who are not subject to regulation by the FSCA, such as lawyers who hold money in intermediate trusts.
The process of the FSTC to obtain data
The FSTC has the task of determining progress relating to BBBEE in the financial services sphere. This is done by collecting data on entities in relation to their BBBEE development. The HR or accountants in consultation with Verification Agents (BEE Compliance Officers) are generally in control of the BEE components of a business. The way in which the FSTC collects BBBEE data is to send out a yearly request of information to entities. When the information is received, the FSTC compiles an annual report which contains the progress of financial institutions with the Financial Sector BBBEE codes.
Which entities are required to report?
Banks;
Long-term & Short-term insurers;
Retirement fund administration;
Financial services intermediation and brokerage (FSP's);
Public entities involved in the financial sector;
Asset management, consulting and administration;
Private equity, venture capitalist and impact investors;
Underwriting management agents;
Management of collective investment scheme assets;
Industry Trade Associations operating in the sector;
Management of investments on behalf of the public, including, but not limited to, private equity.
Who should report and how
Financial Institutions that meet the requirements of a Qualified Small Financial Institution (QSFI), that has an annual turnover between R10 million and R50 million, and are more than 50% black-owned (where there is an existing equity deal in place) or at least 51% black-owned (for all deals concluded after the commencement date of the amended Code) or 100% black-owned, should submit an affidavit confirming their annual turnover and BBBEE status to the FSTC.
An affidavit confirming annual turnover and BBBEE status of Exempted Micro Enterprises should also be submitted to the FSTC.
Financial institutions with an annual turnover of more than R50 million must have their BBBEE status verified by a Verification Agent. The agent must submit a verification certificate together with the full verification report to the FSTC within 30 days of issuing the verification certificate.
Should you require assistance in drafting or submitting an affidavit or you simply want to discuss your requirements in terms of BBBEE, please do not hesitate to contact us.