The financial sector charter (FSC) and the mining charter are arguably the most important of the transformation charters drafted so far.
One of the cornerstones of the FSC is the charter council, which is responsible for overseeing the implementation of the FSC. According to article 15 of the charter, which deals with implementation, this independent body will be tasked with conducting reviews in 2009, 2011 and 2015 and will make decisions on the progress of the FSC.
The council will assess the effect of the FSC on the sector and decide on any further steps to address identified shortcomings and failures at individual financial institutions and subsector, sector and national levels.
Perhaps more importantly, the council will be responsible for approving and confirming BEE ratings and annual audits of each financial institution. In short, it regulates the charter that touches most aspects of the SA business landscape. Given the nature of the sector and its expected role in underpinning economic transformation, the council is an influential body.
According to the FSC, the first annual reports from financial institutions on their progress in implementing the FSC are due on March 31 2005. They will report on the year ended December 31 2004. But it is uncertain whether the council will be ready to receive and assess all the reports by March 2005.
The council was officially established only two months ago by finance minister Trevor Manuel. Since then it has held one meeting in Pretoria in late October 2004 where all 21 members were in attendance. The establishment of a process for drafting a constitution that would inform the structure of the organisation was on the agenda. Association of Black Security Investment Professionals (Absip) representative Kennedy Bungane says: "The first meeting was positive. We reached consensus on the process we should adopt in drafting the constitution and the way forward."
Elias Masilela, who is acting deputy director-general at the national treasury and one of two representatives from the department, was elected as the interim chairman of the organisation until a constitution is formed.
The council comprises six members of the financial services community, four labour representatives, four social and community representatives, four government officials and three representatives from Absip.
The council has to establish structures and processes that will enable it to meet all its obligations. It will also have to determine how it will finance its operations. A business plan has been commissioned and financial institutions will be required to fund the council in accordance with the budget.
The FSC makes it clear that the council needs to be independent, but the funding suggests the banks and insurers may have indirect influence.
The council will also guide how the FSC will be interpreted and understood. Financial institutions are eager to get clarity on these matters. For example, the council decided that equity ownership should be "unencumbered" before it can be credited, so banks such as Absa and Standard Bank would not be able to score points on their empowerment for many years still. The provisions are stipulated clearly in the FSC, but much of it is open to interpretation and it is the council's responsibility to ensure clarity.
