Category Archives: National Treasury

Banking Association & National Treasury reach agreement on responsible lending

ETHICORE client, the Banking Association South Africa has together with its member retail banks reached a historic and landmark agreement with the National Treasury, to improve responsible lending and prevent households from being caught in a debt spiral.

The agreement comes against the backdrop of continued media coverage and reporting by the National Credit Regulator expressing concerns about the rate of unsecured credit being granted by banks and the level of indebtedness in the country. Whilst these do not present any financial stability at present as confirmed by the most recent September 2012 Financial Stability Review of the South African Reserve Bank, the Banking Association and National Treasury have agreed on the need to ensure that current lending trends do no create future prudential risks.

The agreement calls for several other measures to be taken, including a review of loan affordability assessments, appropriate relief measures for distressed borrowers, reviewing the use of debt orders and limiting the use of garnishee orders.

The agreement is the result of recent meetings between the Banking Association and National Treasury, including a meeting with the Minister of Finance on 27 August 2012.

Download the agreement here: Joint NT BASA Statement_Responsible Lending_02Nov2012

Financial Services Laws General Amendment Bill tabled in Parliament

The Financial Services Laws General Amendment Bill (Bill 29 of 2012), was tabled in Parliament on 25 September 2012.

Cabinet approval and public consultation
Cabinet approved the Bill for tabling in Parliament towards the end of February 2012. The Bill was released for public comment in March 2012 and the commentary period was extended to 2 May 2012. A range of financial services stakeholders, interested and affected parties were consulted by Government during information session held as part of the consultative process on the Bill. These include, the ETHICORE client The Banking Association South Africa, the Association of Savings and Investments South Africa, the South African Insurance Association, the Institute of Retirement Funds and the Congress of South African Trade Unions.

Objectives of the Bill
According to a statement released by the National Treasury on 27 September 2012 upon tabling of the Bill in Parliament, the Bill address the urgency of issues contained in eleven financial sector laws, including legislative gaps highlighted after the 2008 financial crisis and to align these laws with the new Companies Act (2008) and other legislation.

The Bill seeks to:

  • Close gaps identified by the Financial Sector Assessment Program conducted by the IMF and World Bank regarding South Africa’s adherence to international standards for financial regulation;
  • Align financial sector legislation with the new Companies Act, 2008;
  • Eliminate overlaps caused by the Consumer Protection Act, 2008; Companies Act, 2008; and Competition Commission Act, 2009; and
  • Make the Financial Services Board (“FSB”) the lead regulator where there is concurrent jurisdiction.

Changes to the original Bill
National Treasury has also pointed out in its statement that the Bill contains new amendments that were not present in the original version of the Bill. According to National Treasury, these changes are reflective comments received during the consultation process and the 33 written submissions received and include:

New amendments to the Financial Services Board (FSB) Act:-

  • Limitation of liability of the regulator if it exercises the powers conferred upon it in terms of statute provided those powers were exercised in good faith (‘bona fide’).
  • Empowers the Minister to prescribe a code of engagement, consultation and communication for the FSB.
  • Appropriately clarifies the interaction between financial and non-financial legislation.
  • Defers some of the emergency powers to legislation next year that will lay the basis for implementing the “Twin Peaks” regulatory reform.
  • Provides for exemptions and directives to be tabled by the FSB.
  • Ensures that information received by the FSB is treated confidentially.

New amendments to the Pension Funds Act:

  • Provides for whistle-blowing protection for board members, valuators, principal/deputy officers, and employees who disclose material information to the Registrar.
  • Requires a fund board member to attain skills and training as prescribed by the Registrar, within a certain period.
  • Extends personal liability to employers in respect of non-payment of pension contributions to a fund.
  • Provides protection for board members from joint and several liabilities if they act independently and honestly in exercising their fiduciary obligations.
  • Requires pension funds to notify the Registrar of their intention to submit an application to register prior to commencing the business of a pension fund.

Forthcoming Parliamentary
The Bill has now been referred to Parliament’s National Assembly Standing Committee on Finance as a proposed Section 75 Bill in terms of the Constitution. This meaning that it does not affect the Provinces, but must be referred to the National Council of Provinces. ETHICORE will publish further information on the forthcoming Parliamentary process on the Bill. Should you have any enquiries and/or regarding the content of this post or the forthcoming Parliamentary process, kindly do not hesitate to contact us.

Document downloads
The following documents on the Bill released by Parliament and the National Treasury are available for below:

Financial Services Laws General Amendment Bill (B29-2012)

National Treasury Explanatory Memo (27 Sept 2012) to Financial Services Laws General Amendment Bill

National Treasury Response to comments on Financial Services Laws General Amendment Bill (27 Sept 2012)

National Treasury statement (27 Sept 2012) on Financial Services Laws General Amendment Bill

SA Statement on US credit downgrade

 

The Minister of Finance Mr Pravin Gordhan, the Governor of the South African Reserve Bank Ms Gill Marcus and members of the Financial Stability Oversight Committee recently held discussions about the possible impact of the USA credit rating down and the on-going sovereign debt concerns in Europe on South Africa’s financial stability.

 

Their joint statement, reaffirmed that “South Africa has deep and liquid financial markets which continue to function even during this difficult time of global financial turmoil. All rating agencies rate South Africa at an investment grade. Standard and Poor’s in particular, affirmed South Africa’s sovereign rating and even revised the rating outlook from negative to stable. These ratings are a testimony to our sound management of the economy, and public finances and demonstrate confidence in our fiscal consolidation measures. Our financial system remains strong, with adequately capitalised financial institutions, supported by a robust regulatory framework.”

They have sought to reassure markets, investors, the business community and economic actors that “The National Treasury and the Reserve Bank will continue to actively monitor the situation to mitigate any financial stability risks and any adverse short term and long term effects on the broader economy. We remain confident in the growth forecast and fiscal projections outlined at the time of the Budget. These will be updated in October at the time of the Medium Term Budget Policy Statement. Government will continue to implement measures to accelerate economic growth and stimulate faster job creation.” says the joint statement.

For media queries please contact Lindani Mbunyuza at National Treasury on Tel +27 (0) 12 315 5645 and Hlengani Mathebula at the SARB on +27 (0) 12 313 4210.

Download the full statement here: SA reation to US downgrade