tax & jurisdiction
The South African financial industry has released a charter that provides poor households and communities with improved access to financial services as well as increasing the ownership of black-owned business in the sector.
The Financial Services Charter outlines a transformation framework for the insurance and banking industry, covering areas such as improving access to financial services, and financing for infrastructure, small businesses and low-cost housing.
It provides for increased access to financial services for poor households and communities, and aims to direct billions of rands of investment into transformational infrastructure, agricultural development, low-income housing and small and medium-sized black businesses.
The charter furthermore places a strong focus on procuring services from black-owned businesses and companies that are Black Economic Empowerment (BEE) compliant in terms of this or other industry charters. The charter envisages, within a decade, this will account for more than two thirds of all services bought by financial sector companies.
The aim is for 25% of companies in the financial sector to be black owned by 2010. A minimum of 10% must be direct ownership with an option to achieve a maximum of an additional 15% through direct or indirect ownership. Indirect ownership acknowledges investment by black beneficiaries, through collective savings schemes (for example, through pension funds) that hold significant shareholdings in companies in the sector.
The charter is a voluntary commitment, and has been agreed unanimously by 10 industry associations in the financial sector - the Banking Council, the Life Offices" Association, the South African Insurance Association, the Association of Black Securities and Investment Professionals (which also represented the Black Business Council), the Association of Collective Investments, the Investment Management Association of SA, the Institute of Retirement Funds, the JSE Securities Exchange SA, Foreign Bankers Association of SA, and the South African Reinsurance Offices" Association. It has also been signed by the Bond Exchange of South Africa.
Roddy Sparks, managing director of Old Mutual South Africa, said of the charter: "It takes a long, hard, realistic look at our industry, acknowledges the role we have in the rebuilding or our society, it accepts our current shortcomings and provides tough yet attainable targets going forward."
The targets of the charter come into effect on 1 January 2004, and remain in effect until the end of December 2014. Companies will publish annual BEE reports, including audited scorecards.
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