Concerns over BEE demands in the financial services industry

Sakeliga raised concerns that the Financial Sector Conduct Authority (FSCA) may withhold licenses and prosecute financial services providers operating below future stipulated BEE thresholds.

Their concerns followed the signing of a memorandum of understanding (MoU) between the FSCA and BEE Commission.

The BEE Commission said the MoU supported strengthened cooperation and collaboration between them and the FSCA.

This collaboration promoted the transformation of the financial sector and advanced the transformation of the economy.

FSCA Commissioner Unathi Kamlana said the partnerships will help them contribute positively to the country’s transformation agenda.

Sakealiga did not share the enthusiasm, arguing that the FSCA was preparing to demand BEE prerequisites from financial services providers.

“The MoU signed between the FSCA and the BEE Commission this week indicates an escalating risk of BEE demands in the financial services industry,” it said.

“The MoU forms part of the FSCA’s transformation strategy, adopted in March 2023. The strategy aims to make all financial services licenses subject to BEE preconditions.”

Sakeliga said it was opposing the expansion of BEE in several key sectors. In the financial sector, they focus on preventing the Conduct of Financial Institutions Bill (COFI) from taking effect.

COFI seeks to empower the FSCA to set BEE prerequisites which financial service providers must comply with or lose their licenses and face prosecution.

Currently, without COFI, the FSCA cannot lawfully withhold licenses or prosecute financial service providers for failing to comply with BEE prerequisites.

However, this does not prevent the FSCA from increasing pressure on the industry and laying the groundwork for enforcement. 

Sakeliga said it will continue to monitor developments in the financial sector and progress with COFI.

It also warned against providing the FSCA with transformation plans, BEE certificates, or other compliance material unrelated to financial services.

“Sakeliga encourages industry steadfastness and support to prevent BEE-licensing from harming the public and the industry,” it said.