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Cape Town – Transformation in the financial sector cannot continue at a snail’s pace because high levels of frustration points to a “huge social explosion looming”, an interim report that was discussed in Parliament advised.
The report – which is still a work in progress – was tabled at parliament’s standing committee on finance and portfolio committee on trade and industry on Wednesday.
The report follows hearings that saw 62 submissions from a range of stakeholders, including government departments, regulatory and statutory agencies, industry bodies, business, labour, civil society, political organisations and individuals.
The draft report acknowledged that much had been done to transform the financial sector, but recommended about 80 actions that need to be implemented over time.
“The committees do not expect that all our recommendations will be implemented immediately,” the report said.
“There needs to be a phased approach with immediate, short-term and long-term aims.
“We are not calling for an overnight overhaul of the financial sector, but we are clear that further transformation cannot take place at a snail’s pace either.
“As far as possible, the nature and pace of the transformation has to be negotiated with all relevant stakeholder, but where there is no prospect of significant consensus on irreconcilable interests, government and parliament have to take decisions.
“The huge inequalities in our country and the impatience and frustration of the excluded and marginalised in our society point to a huge social explosion looming that will consume all stakeholders in the financial sector, including government and parliament.
“It is in all our interests that the financial sector makes an adequate contribution to the economic transformation our country so desperately needs.”
The report noted that South Africa’s financial sector controls about R12trn worth of assets, which is four times the country’s gross domestic product (GDP). It contributes about 21.6% to the GDP and over 15% to corporate income tax per annum. It employs over 250 000 people.
Renewed focus on transforming sector
Ismail Momoniat, head of tax and financial sector policy at National Treasury, told parliament on Wednesday that the hearings brought renewed focus among all stakeholders on how to transform the financial sector to serve South Africa better.
“There is a new focus on how to make the Financial Sector Codes more relevant and better aligned to transformation,” he said. “CEOs of key sub-sectors (banking, life insurance, asset management, short-term insurance) are meeting and engaging with Treasury and regulators on how to transform more effectively.”
Earlier on Wednesday, the Banking Association of South Africa (BASA) said its members want to take charge of the transformation agenda by becoming more robust in their transformation strategy.
“The mandate from the board is to become far more robust about transformation,” BASA MD Cas Coovadia told the Cape Town Press Club on Wednesday. “We want to take charge of this agenda and put it on the table. We need to be driving it.”
Commenting ahead of the draft report being discussed, Coovadia said: “This report is one input into our transformation agenda. The (Financial Sector Charter) code can carry on, but if we are working optimally, then we wouldn’t be having this discussion.”
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