South African Insurance Association

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The gazetting of the Amended Financial Sector Codes “The Amended FSC”

Minister of Trade and Industry, Mr. Rob Davis finally gazetted the much awaited for Amended Financial Sector Codes (FSC), following a four year long alignment process.

While the timing of 1 December, 2017 was considered unfortunate by some of the stakeholders, the gazette was seen as an indication of a positive outlook in terms of the government’s view on the transformation of the financial sector and its commitment to assist in accelerating progress.

The amended FSC followed a very close alignment to the Code of Good Practice (the Codes), with only a few deviations where it was deemed appropriate, after taking into account the sector’s challenges and opportunities in driving transformation. Among the changes incorporated in the amended FSC, the following are worth noting for the industry:

  • Ownership – The principle of “Once Empowered, Always Empowered” has been abandoned and replaced by the new principle of “Net Value Created”, which will allow for the utilisation of Equity Equivalent Programmes to top up equity shortfall.
  • Management Control – the introduction of a target specifically for Africans in order to respond to the current underrepresentation challenges.
  • Skills Development – the introduction of a stratified approach to create the development of a pipeline and improve participation by black people at higher management levels.
  • Preferential Procurement and; Enterprise and Supplier Development – introduction of support of industry specifics (brokers, intermediaries, fund managers, etc.) black service providers. 

The balance of the scorecard has remained fairly the same, with the sector encouraged to optimise its participation in industry specific elements like Access to Products, Consumer Education and Empowerment Financing (for Banks and Life Offices).
The Amended FSC has come into effect as from the date of gazetting and will be subject to review after the first 12 months of being gazetted.

For more information contact:
Themba Palagangwe
SAIA GM: Governance and Transformation

Zanele Gigaba
SAIA Manager Transformation