Retirement funds scorecard left out of Financial Sector Code
BUSINESS LIVE / 29 NOVEMBER 2017 - 05:41 / MOYAGABO MAAKE
The final version of the Financial Sector Code has been gazetted and was at the government printer on Tuesday with a crucial omission: a mandatory scorecard for retirement funds that would have seen more black principal officers and trustees managing more than R4-trillion in investable assets.
The scorecard was withdrawn during negotiations due to concerns regarding the cost of compliance for funds, Financial Sector Charter (FSC) Council CEO Isaac Ramputa said.
During negotiations, a mandatory scorecard emerged where retirement funds could earn up to eight points for appointing black principal officers, executives and senior management and a further eight points for black trustees with voting rights. A total of 80 points could be earned for procuring services from black-owned asset consultants, actuaries, employee benefit providers and asset managers.
This scorecard has disappeared from the final code.
"The FSC code is a product of negotiations by stakeholders and the decisions taken during the process are the final product," Ramputa said. "It is the discussions of the FSC Council that concluded that the scorecard be replaced by the voluntary dispensation. There was concern raised about the cost of compliance for retirement funds."
The voluntary dispensation suggests that large retirement funds measure compliance with the preferential procurement and management control elements of the amended code.
The Association of Black Securities and Investment Professionals (Absip), which has been lobbying for the mandatory retirement fund scorecard, strongly disagreed with suggestions that this scorecard would have cost retirement funds.
"The cost of a verification certificate is less than R30,000 per annum for a retirement fund," said Asief Mohamed, an Absip representative to the FSC Council. "This excuse is not valid."
Mohamed said retirement funds had always voluntarily submitted themselves to verification using the applicable elements of the existing code.
"It is the intention, however, to make it part of the main part of the FSC code," Mohamed said. "Absip has been actively lobbying for this. We hope to achieve this within the next 12 months with the support of the constituency members. The major constituencies have indicated support for this."
Ramputa said there was no way of anything changing at this stage. This is even as the standing committee on finance voted on a report dealing with transformation in the financial sector on Tuesday, which recommended a number of changes to the code to speed up transformation.
The report is silent on specific recommendations for retirement funds but suggests compelling the financial services industry to provide information on compliance with the code to the FSC Council and the newly established B-BBEE Commission through licensing conditions.
Standing committee chairman Yunus Carrim said the retirement fund issue was being dealt with through separate processes.
"There’s agreement that we will deal with amendments later, as per agreement with the Department of Trade and Industry and National Treasury when we review targets," Ramputa said.
He said the review, which the final code says will take place 12 months after it is gazetted, will incorporate "the issues coming out of processes in SCOF [standing committee on finance] and Nedlac [National Economic Development and Labour Council] summit next year."
LINK - https://www.businesslive.co.za/bd/companies/financial-services/2017-11-29-retirement-funds-scorecard-left-out-of-financial-sector-code/
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