Financial sector public hearings resume
Parliament’s scrutiny of transformation in the financial sector resumes on Wednesday amid debate on the need for radical economic transformation to reduce the dominance of white monopoly capital.
Over the past few months, major financial institutions have taken part in public hearings held jointly by the finance and trade and industry committees to recount progress made in transforming the sector, especially in providing greater access to financial services.
Employment equity has emerged as a key challenge for a number of banks, while the asset-management industry has been identified as being concentrated in white hands.
Calls have been made for the creation of a state bank to facilitate the financing of blackowned enterprises.
Finance committee chairman Yunus Carrim has warned that the sector must transform voluntarily or be transformed by the government, emphasising that it was unacceptable that the country’s four major banks controlled 90% of the market.
The financial sector manages more than R8-trillion in assets and employs more than 250,000 staff.
Black-owned advisory, financing and fund management company Regiments Capital will make a presentation on Wednesday in which it will advocate changes to legislation and tax policy to facilitate the equitable allocation of capital to support the national developmental priorities.
It will also propose the introduction of measures such as risk pooling, cross-subsidisation and government guarantees to enable the poor to access credit at comparable rates to the wealthy or high earners.
Also scheduled to make presentations are the National Credit Regulator, the JSE, the Black Insurance Advisors Council, the National Black Business Caucus, the South African Auto Repairer and Salvage Association, Retail Auto Aftermarket Federation and the South African Builders’ Contractors Civil Association. At the end of the day, the Treasury and/or the Department of Trade and Industry will provide their initial response to the submissions.
Regiments Capital will highlight what it believes are the financial sector’s structural impediments including its focus on the wealthy and high earners, which results in limited innovation and competition.
“The credit allocation interests and services charges are individual-focused with no evident risk pooling or crosssubsidisation. This results in a dual economy in which the poor borrow less than the rich, but pay significantly higher interests and bank charges,” the company will argue.
It will also argue that the limitations placed on asset allocation by the Pension Funds Act should be revisited to allow for investment in developmental projects and that legislation providing for second- and third-tier banks should be introduced.