'Gupta clause' in financial bill worries DA

Cape Town – The Democratic Alliance (DA) on Monday raised a concern over the inclusion of a clause in the Financial Sector Regulation Bill (FSRB) – also known as Twin Peaks – that will allow the body that deals with the closure of bank accounts to set specific standards for doing so. 

“I’m intrigued by the fact that the so-called 'Gupta clause' which would allow the Financial Sector Conduct Authority to set standards in the closure of bank accounts has now been reinserted into the Bill by the National Treasury in the NCOP (National Council of Provinces) phase,” DA spokesperson of finance David Maynier told Fin24. 

“We look forward to debating and discussing the matter tomorrow in the committee.” 

READ: Ministers stall on banks intervention over Gupta blacklisting 

Parliament’s standing committee on finance will on Tuesday discuss the changes made to the Bill after the NCOP’s select committee on finance had deliberated the draft legislation. The committee formally adopted the bill on May 10, 2017. 

The FSRB that will overhaul the way banks‚ insurance companies‚ retirement providers and other financial sectors are regulated has been in the making for a number of years. It was first introduced for public comment in December 2013 and a revised version was published in December 2014.

It makes provision for a so-called Twin Peaks model of financial regulation. On the one hand the South Africa Reserve Bank will be responsible for regulating all financial institutions – banks, insurance houses and the asset management sector. 

On the other hand financial conduct will be governed by a new entity, called the Financial Sector Conduct Authority, which will replace the current Financial Services Board (FSB). 

In the amended version of the bill, the Financial Sector Authority (that will be established once the bill is passed into law) will have the powers to set “conduct standards” for the refusal, withdrawal or closure of a financial product or a financial institution. This include bank accounts. 

READ: Treasury touts Twin Peaks bill amid banking scandal 

The bill was adopted by the National Assembly in December last year, but the DA and the Economic Freedom Fighters (EFF) opposed it. It was then sent to the NCOP for further discussion and possible changes. 

During the deliberation at NCOP level early in May this year, Roy Havemann, chief director of financial markets and stability at National Treasury, told committee members that the new paragraph had been added to the clause 106(3) dealing with the refusal, withdrawal or closure of financial products and services by a financial institution. 

Committee members agreed to the change at the time. 

Gupta bank account closures

The closure of bank accounts has become a controversial issue since the four big banks Absa, Nedbank, Standard Bank and FNB severed ties with the Gupta family’s business Oakbay and related companies. 

According to a report on BusinessLive more than half of the bank accounts of Gupta-related entities have been closed in recent months by their last remaining bankers. 

The appointment of Finance Minister Malusi Gigaba, replacing Pravin Gordhan, in a Cabinet reshuffle at the end of March ignited fears that he was deployed to the position to serve the agenda of the Gupta family. 

Gigaba has denied such claims. 

READ: Gigaba admits: I celebrated Diwali with the Guptas 

In November last year, Gordhan in his capacity as finance minister, approached the courts to seek relief from having to intervene on behalf of the Guptas to get their bank accounts reopened. Judgment in the case is reserved.