The amended Financial Sector Code (FSC) was promulgated on 1 December 2017 to meet the objectives of the Broad-Based Economic Empowerment Act 53 of 2003
By Mr. Kriben Gounden, Group Secretary, AVBOB
AVBOB Mutual Assurance Society will be measured on the amended FSC for its 2018 financial year. In terms of responsible corporate citizenship, society strives to lead by example, which is why B-BBEE is taken seriously and has been given the necessary attention.
The amended FSC has unique features and deviations from the current FSC, in that it intends to address transformation peculiarities that exist in the financial services sector. In particular, two enhanced elements of the amended FSC, namely empowerment financing and access to financial services, aims to ensure support for black-owned entities and that people in marginalised areas have access to financial transactions, sales and service points.
In addition, more robust management control, preferential procurement, and skills development measurements aim to empower black persons and enterprises. Overall, the amended FSC imposes more stringent measurement criteria, aimed at supporting true transformational B-BBEE and move away from the “points based” transactional B-BBEE approach allowed in terms of the current FSC.
In terms of the amended FSC, an additional challenge is that skills development, supplier development, ownership and management control have been identified as priority elements. Accordingly, they have a discounted element, meaning that if you fail to meet the sub-minimum criteria, your overall score is discounted by one level. The sub-minimum criteria for these priority elements are as follows:
- Ownership – an achievement of 40% of net value points available (2 out of 6 points)
- Skills Development – an achievement of at least 40% of the total weighted points for Skills Development (8 out of 20 points)
- Preferential Procurement – an achievement of at least 40% of the total weighted points for Preferential Procurement (6 out of 15 points)
- Empowerment Financing and Enterprise and Supplier Development
Achievement of at least 40% for each of the three categories within this element:
- Empowerment Financing (6 out of 15 points)
- Supplier Development (2.8 out of 7 points)
- Enterprise Development (1.2 out of 3 points)
To ensure that companies comply, more is required in terms of supplier and enterprise development programmes to help businesses thrive during these economically difficult times. Corporates should ensure that our country’s economic growth and stability becomes a core priority.
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