B-BBEE reporting to the Financial Sector Transformation Council
The Financial Sector Code under Section 9(1) of Broad-Based Black Economic Empowerment Act was amended. In terms of the Amended Financial Sector Code entities operating in the financial sector are required to report to the Financial Sector Transformation Council on B-BBEE compliance.
Application of the Financial Sector Code
This Amended Financial Sector Code applies to any natural or juristic person conducting a business, trade or profession in the South African financial sector including, but not limited to, the following:
Retirement fund administration;
The management of collective investment scheme assets;
Financial services intermediation and brokerage;
Public entities involved in the financial sector e.g. DBSA, Land Bank;
Asset management, consulting and administration;
Private equity, venture capitalist and impact investors;
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;
Underwriting management agents; and
Industry Trade Associations operating in the sector.
This Amended Financial Sector Code does not apply to the following:
- Natural or juristic persons who do not have trading operations in the Republic of South Africa;
The trading operations of natural or juristic persons outside the Republic of South Africa; and
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.
Section 8.3 to 8.5 of the Amended Financial Sector Code set outs the reporting requirements of entities as follows:
“8.3 Each financial institution, irrespective of the fact that it is a member of a group, must be measured and reported on its own.
8.4 A financial institution that is a member of a group may be measured and reported on as part of the South African group provided that such group reporting is approved in advance by the Financial Sector Charter Council.
8.5 Each financial institution must report annually to the Council on its progress implementing the provisions of this Amended FSC. The Charter Council reserves the right to name institutions that do not submit reports. In addition, all aforementioned affected entities not submitting the most recently required report to the Council, will automatically be discounted by one level down in the next rating that follows the non-submission.”
What the FSTC requires in relation to reporting
The FSTC will send a notification to a financial institution with the reporting requirements, and the due date for the reporting.
Entities with a turnover greater than R 50 million a year ( Qualifying as Generic) are required to submit the details of the Verification Agent(VA) and a confirmation letter ( addressed to the Council and the VA) which confirms that the VA is permitted to submit the full and final verification report to the council and all other information required. EME ( entities with turnover under R 10 million) and QSE ( entities with turnover between R 10 million and R 50 million) are required to submit a sworn affidavit to the FSTC.
Information may be sent to firstname.lastname@example.org
Recent communication from the FSTC indicated that the deadline for submission was the 31st of March 2019 but urged entities who have not submitted reports to do so without delay.
Failure to submit a report will result in an automatic discount by one level in the next rating that follows non-submission.