07 December 2010

FINANCIAL SECTOR CODE

07 December 2010

Agenda

Where are we in the gazetting process?

Who does it apply to?

What has changed?

07 December 2010

Gazetting - Where are we?

Public commentary for phase 2 closed on the 1st May

Comments will now be reviewed by the dti / Council

Following comments some changes may be made to the document

Submitted to dti for final gazetting as a Section 9(1) Sector Code

07 December 2010

Who does it apply to? The FS Code applies to

– Banking;

– Long-term insurance;

– Short-term insurance;

– Re-insurance;

– Asset Managers;

– Managers of formal collective investment schemes;

– Financial Services Intermediation and Brokerage

– Underwriting Management Agents

– Private equity fund managers

– Members of any exchange licensed to trade equities or financial instruments

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WHAT HAS CHANGED

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Exempted Micro-Enterprise Annual Total Revenue of R5 million or less

Deemed to have B-BBEE Status of Level 4 = 100% procurement recognition

Direct black or black woman ownership greater than 50%: Level 3 = 110% procurement recognition

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Qualifying Small Financial Institution

Designated investments of less than R50 million and with an annual Total Revenue of between R5 million and R35 million

A QSFI must select any five of the eight Elements

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FSC Scorecard

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Equity Equivalents

Available to any Financial Sector Company Measurable against the value South African operations Additional BEE Transaction Financing, Access to

Financial Services, Targeted Investments, Enterprise Development, etc

Target local entities = 5% of value of company as at 31/12/2010

Target foreign branches = 25% of value of local entity as at 31/12/2010

07 December 2010

Due to the Sector specific exclusions, financial

institutions must at all times include within their

portfolio of enterprise development

programmes, initiatives targeting Black Owned

property, brokerage and insurance intermediary

businesses

Preferential Procurement

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Enterprise Developmentfor enterprises exempt from Empowerment Financing

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Enterprise Developmentfor enterprises NOT exempt from Empowerment Financing

Contributions recognisable:– Grants, human capital support, direct costs

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Empowerment Financing for Long-term insurers

R17 billion in ADDITIONAL financing from 1/1/2012 to 31/12/2017

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Access

Target marketThe target market for long-term and short-term insurance products will be based on income tax threshold for individuals= R60,000 per annum and double the tax threshold for families = R120,000

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Products are for the priorities of retirement, death and serious illness

Minimum standards will be CAT standards, (CAT= fair Charges, easy Access, decent Terms)

Access : long-term insurance

07 December 2010

Access : short-term insurance

Product range expanded to:

•Motor Vehicle

•Household contents

•Home owners

•Black SME’s

•Agriculture

•Live Stock

•Co-operatives

07 December 2010

SED

Balance of 1% overall target allocated to Consumer Education