There have been recent discussions around the lack of transformation in the financial services industry in South Africa.  This has led to discussions of potentially reviewing and codifying the Financial Sector Charter (FSC) in an effort to fast-track transformation in the workplace and ownership in the financial services sector.

The Financial Sector Charter is a voluntary agreement by all National Economic Development and Labour Council members (NEDLAC), a multilateral social dialogue forum on social, economic and labour policy.  All banks in the country, local and international are required to adhere to the NEDLAC charter.

The FSC commits its participants to promote a “transformed, vibrant, and globally competitive financial sector that reflects the demographics of South Africa, and contributes to the establishment of an equitable society by effectively providing accessible financial services to black people and by directing investment into targeted sectors of the economy.”

The employment equity element which is set out in the Management Control Code 200 of the revised Codes of Good Practice of October 2013, contributes 15 points to the overall total of 105 points.  The employer receives points for meeting the target for the participation for black people (with additional points for meeting the target for participation by black women) at board, executive management, senior management, middle management and junior management levels and for meeting the target for black disabled people.

Recent parliamentary discussions that took place towards the end of 2017, when submissions were made by major banks and various associations within the country’s financial institutions, brought the spotlight on banks which have been under attack for alleged slow transformation.  Banks are insistent that they are still committed to achieving their racial transformation targets.

A first report compiled through various public hearings held throughout the course of 2017 has proposed that targets in the Financial Services Charter be made compulsory and possibly get incorporated into regulations.  It further proposes that financial services corporations that fail to meet the target be penalised for their failure to do so and that achieving these targets be made a conditions for the licensing of financial institutions. A policy on this fine system will be presented by June 2018.

Conclusion

Discussions around this developing issue are still taking place and nothing has been codified.  Therefore banks, as employers, would do well to aim at getting a head-start by adopting a “robust” approach and set equity goals that are aimed at achieving equity representation in senior and executive management and ultimately accelerating employment equity.

The benefit that comes with this is increased performance and attraction of foreign investment and clientele.

This article was written by Mohammed Chavoos, Director and Peal Mathonsi, Associate Designate, Norton Rose Fulbright South Africa Inc

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