Financial Sector Code presentation

Report
07 December 2010
© 2010,BEE Institute, All Rights Reserved
FINANCIAL SECTOR CODE
Presented by Leila Moonda
07 December 2010
© 2010,BEE Institute, All Rights Reserved
FSC
The Financial Sector Code commits all participants
to actively promoting a transformed, vibrant and
globally competitive financial sector that reflects
the demographics of South Africa, which
contributes to the establishment of an equitable
society by providing accessible financial services
to black people and by directing investment into
targeted sectors of the economy.
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Gazetting and Implementation
 Gazetted as a Sector Code on the 26th November
2012.
 Implementation applicable from measurement
periods ending after the 01st January 2012
 Transitional period ended on 30th June 2013
(automatic exemption from Access to Financial
Services and Empowerment Financing)
07 December 2010
© 2010,BEE Institute, All Rights Reserved
51 million
Contributing
Economy ..
6.9 million
30.5 million
Non- Contributing
Economy ..
07 December 2010
© 2010,BEE Institute, All Rights Reserved
>=R100 000 p.a.
R50 000 - R100 000 p.a.
R7 200 – R50 000 p.a.
<=R7 200 p.a.
07 December 2010
© 2010,BEE Institute, All Rights Reserved
>=R100 000 p.a.
R50 000 - R100 000 p.a.
R7 200 – R50 000 p.a.
<=R7 200 p.a.
07 December 2010
© 2010,BEE Institute, All Rights Reserved
B-BBEE Goal
2020
R200 000 p.a.
R100 000 – R200 000 p.a.
R50 000 - R100 000 p.a.
R50 000 p.a.
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Black Economic
Empowerment
07 December 2010
© 2010,BEE Institute, All Rights Reserved
What is BEE
Black Economic Empowerment:
Furthering the economic interests of
Black people
Black = African, Coloured , Chinese or Indian persons,
born in SA, a citizen by descent or became a citizen
before 27 April ’94
or can demonstrate that they were unable to obtain
citizenship by naturalisation under Apartheid
07 December 2010
© 2010,BEE Institute, All Rights Reserved
BEE Act
 Establish BEE Advisory Council
 Codes of Good Practice for BEE
 Transformation Charters / Sector Codes
07 December 2010
© 2010,BEE Institute, All Rights Reserved
How is BEE Enforced?
Supplier
BEE Scorecard
Supplier
Government
Supply
Supplier
07 December 2010
© 2010,BEE Institute, All Rights Reserved
How is BEE Enforced?
 Verification Agency
 BEE Verification – score
– Score is broken into levels:
• Level 1: 100 or higher
• Level 8 : 30 points
• Non compliant: <30
 Measured every 12 months
07 December 2010
© 2010,BEE Institute, All Rights Reserved
How is BEE Enforced?
Public Sector:
– BEE score incorporated in tender score
– Minimum tender requirement
– Licences
– Sale of state owned assets
– Public Private Partnerships
07 December 2010
© 2010,BEE Institute, All Rights Reserved
How is BEE Enforced?
Private Sector:
– Your score counts towards your
customer’s score
– Your supplier’s score counts towards
your score
07 December 2010
© 2010,BEE Institute, All Rights Reserved
How is BEE Enforced?
Most likely choice
Price
Supplier A
Supplier B
Supplier C
R40/ream
R35/ream
R35/ream
Quality
Service
BEE Score
Same brand of paper
5 days delivery
Non-compliant
2 days delivery 2 days delivery
High
Low
Differentiating Factor
07 December 2010
© 2010,BEE Institute, All Rights Reserved
How is BEE Enforced?
BEE not a compliance issue……
……..it is a competitiveness issue.
07 December 2010
© 2010,BEE Institute, All Rights Reserved
FSC Overview
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Who falls within the scope of the FSC?
The FS Code applies to
–
–
–
–
–
–
–
–
–
–
Banking;
Long-term insurance;
Short-term insurance;
Re-insurance;
The management of retirement, pension and collective investment scheme
assets;
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
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Scorecard Overview
Scorecard varies by entity size
– Generic
• More than R35 million turnover per annum
– Qualifying Small Financial Enterprises (QSFI)
• R5 million to R35 million per annum + designated investments less
than R50 million
• Measured as per DTI Qualifying Small Entities (QSE) scorecard
– Exempted Micro Enterprises (EME)
• Less than R5 million
• NO SCORECARD!
07 December 2010
© 2010,BEE Institute, All Rights Reserved
FSC vs DTI Scorecards
Element
FSC Points
DTI Points
Ownership
14
20
Management Control
8
10
Employment Equity
15
15
Skills Development
10
15
Preferential Procurement
16
20
15 + 5
15
14
0
3
5
100
100
Empowerment Financing and Enterprise
Development
Access to Financial Services / Consumer
Education
Socio-Economic Development
Total
07 December 2010
© 2010,BEE Institute, All Rights Reserved
FSC Broker Scorecard
Element
FSC Points
Ownership
14
Management Control
8
Employment Equity
15
Skills Development
10
Preferential Procurement
16
Empowerment Financing and Enterprise Development
Access to Financial Services / Consumer Education
15 (exempted from
Empowerment Financing)
2 (exempted from Access)
Socio-Economic Development
3
Total
83
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Recognition Levels
B-BBEE Status
Qualification
Level One Contributor
≥ 100% on the FSC Scorecard
135%
Level Two Contributor
≥ 85% but < 100% on the FSC Scorecard
125%
Level Three Contributor
≥ 75% but < 85 % on the FSC Scorecard
110%
Level Four Contributor
≥ 65% but < 75% on the FSC Scorecard
100%
Level Five Contributor
≥ 55% but < 65% on the FSC Scorecard
80%
Level Six Contributor
≥ 45% but < 55% on the FSC Scorecard
60%
Level Seven Contributor
≥ 40% but < 45% on the FSC Scorecard
50%
Level Eight Contributor
≥ 30% but < 40% on the FSC Scorecard
10%
Non Compliant Contributor
< 30% on the FSC Scorecard
0%
07 December 2010
© 2010,BEE Institute, All Rights Reserved
B-BBEE recognition level
Ownership
Ownership
Total Points Targets
2.1. Voti ng Ri ghts of Bl a ck Peopl e
3 25% + 1 Vote
2.2. Voti ng Ri ghts of Bl a ck Women
1 10% + 1 Vote
2.3. Economi c Interes t of Bl a ck Peopl e
3 25%+ 1 Sha re
2.4. Economi c Interes t of Bl a ck Women
1 10%+ 1 Sha re
2.5. Economi c Interes t of Bl a ck Des i gna ted Groups , Bl a ck Pa rti ci pa nts i n
Empl oyee Sha re Owners hi p Schemes , Bl a ck Pa rti ci pa nts i n Broa d Ba s ed
Owners hi p Schemes a nd/or Bl a ck Pa rti ci pa nts i n Co-ops
1
2.5%
2.6. Net Equi ty Va l ue (Formul a A a nd B a s per pa ra . 4 of Annexe 100 (C)
3
A/B
2.7. Di rect or Indi rect Owners hi p i n Exces s of 15%
2
10%
Ownership Fulfilment
Total
14
Bonus Points
2.9. Owners hi p by Bl a ck New Entra nts
2
10%
2.10. Owners hi p by ESOPs , Broa d Ba s ed Schemes a nd Co-ops
1
10%
Total Including Bonus Points
07 December 2010
17
© 2010,BEE Institute, All Rights Reserved
Ownership Exemption
Local subsidiaries of Multi-nationals are
exempted from Ownership.
Does not apply to branches of foreign banks
who are required to do additional
Empowerment Financing to achieve
Ownership points.
Code FS000, Statement 000, 2.9
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Management Control, Employment
Equity and Skills Development
 No adjusted recognition for gender.
 Separate targets for Black Women
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Management Control
Management Control – Measurement Criteria
Weighting
Target
2.1 Board Participation
2.1.1 Voting rights of Black board members as a percentage of voting rights of all
board members
2.1.2 Voting rights of Black women board members as a percentage of voting rights
of all board members
2.1.3 Black executive members of the Board as a percentage of all executive
members of the board
2.1.4 Black women executive members of the Board as a percentage of all executive
members of the board
0.5
0.5
1.0
1.0
50%
25%
50%
25%
2.2 Top Management
2.2.1 Black Senior Top Management as a percentage of all Senior Top Management
2.2.2 Black women Senior Top Management as a percentage of all Senior Top
Management
2.2.3 Black Other Top Management as a percentage of all Other Top Management
2.2.4 Black women Other Top Management as a percentage of all Other Top
Management
Total
1.5
1.5
40%
1.0
1.0
40%
20%
20%
8
2.3 Bonus Points
2.3.1 Black Independent Non-Executive Board Members as a percentage of all
Independent Non-Executive Board Members*
07 December 2010
© 2010,BEE Institute, All Rights Reserved
1.0
40%
Exclusion of Expats
 If there is a Global Policy imposing board
members, executive or senior managers they
can be excluded from the calculations.
 Limited to 20% of category, sub-minimum of 1
 If Black South African staff are seconded to
overseas operations, the maximum number of
expats excluded can be increased
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Employment Equity
Employment Equity – Measurement Criteria
2.1 Black disabled employees as a percentage of all employees
2.2 Black women disabled employees as a percentage of all employees
2.3 Black Senior Management as a percentage of all Senior Management
2.4 Black women senior management as a percentage of all senior
management
Weighting
0.5
0.5
3.0
Target
3.0%
1.5%
60.0%
2.0
30.0%
2.5 Black Middle Management as a percentage of all Middle Management
2.6 Black women Middle Management as a percentage of all Middle
Management
2.7 Black junior management as a percentage of all Junior Management
2.8 Black women junior management as a percentage of all Junior
Management
Total
2.9 Bonus points for meeting or Exceeding EAP target for Senior
Management
2.10 Bonus points for meeting or Exceeding EAP target for Middle
Management
2.11 Bonus points for meeting or Exceeding EAP target for Junior
Management
3.0
75.0%
2.0
37.5%
2.0
80.0%
2.0
40.0%
1
87.5%
1
87.5%
1
87.5%
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Skills Development
Skills Development – Measurement Criteria
Skills Development Expenditure on Learning Programmes specified in the Learning
Programmes Matrix for Black employees as a percentage of the financial institution’s
leviable amount
Skills Development Expenditure on Learning Programmes specified in the Learning
Programmes Matrix for Black women employees as a percentage of the financial
institution’s leviable amount
Skills Development Expenditure on Learning Programmes specified in the Learning
Programmes Matrix for disabled Black employees as a percentage of the financial
institution’s leviable amount
Skills Development Expenditure on Learning Programmes specified in the Learning
Programmes Matrix for disabled black women employees as a percentage of the
financial institution’s leviable amount
Skills Development – Learnerships
Number of Black employees participating in Learnerships or Category B, C and D
Programmes as a percentage of total employees
Number of Black women employees participating in Learnerships or Category B, C
and D Programmes as a percentage of total employees
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Weighting
Target
3.0
3.0%
1.5
1.5%
0.5
0.3%
0.5
0.15%
Weighting
Target
3.0
5%
1.5
2.5%
Preferential Procurement
Preferential Procurement – Measurement Criteria
B-BBEE Procurement Spend from all Suppliers based on their B-BBEE Procurement
Recognition Levels as a percentage of Total Measured Procurement Spend
B-BBEE Procurement Spend from all Suppliers that are QSEs or EMEs based on
their B-BBEE Procurement Recognition Levels as a percentage of Total Measured
Procurement Spend
Procurement Spend on any of the following Suppliers as a percentage of Total
Measured Procurement Spend:
Suppliers that are 50% Black owned
Suppliers that are 30% Black women owned
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Weighting
Target
8
70%
3
15%
2.5
2.5
12%
8%
Total Measured Procurement Spend
Included spend
– Operational expenses, cost of sales and capital
expenditure
– Labour brokers and independent contractors
– Costs related to facilitating BEE contributions –
Enterprise & Socio-economic Development
– discretionary stock-brokering spend procured by
investment managers on behalf of clients, regardless of
whether this spend is recorded in the financial
statements of the investment manager
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Preferential Procurement
Exclusions
– Taxes or levies
– Organ of state or public entity with
regulated monopoly
– Bodies listed in Schedule 1 of PFMA
– Salaries and wages
– Pass through third party procurement
where it is not recorded in your books
– Investments in or loans to an Associated
Enterprise
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Preferential Procurement
Exclusions
– Enterprise Development and Socioeconomic Development
– Imports:
• Capital goods or components for valueadding in South Africa provided that there is
no existing locally produced equivalent
• Or one can differentiate local from imported
on the basis of brand or technical
specifications
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Preferential Procurement
Exclusions
– Property expenditure, where the property is held
as an investment
– Broker commissions and commissions paid to
insurance intermediaries;
– Reinsurance premiums;
– Any items of procurement where the supplier is
imposed in terms of a Global Policy for technical
reasons
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Preferential Procurement
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
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Enterprise Development

Measures the monetary and non-monetary
contributions, recoverable and non-recoverable
contributions

Objective of contributing to the development,
sustainability and financial and operational
independence of the beneficiary entities

Options in terms of the target
– 3% of Net Profit After Tax (NPAT)
– 3% x “indicative profit margin” x Turnover (where
“indicative profit margin” is NPAT/turnover)
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Enterprise Development
for enterprises exempt from Empowerment Financing
Weighting
Points
Target
Criteria
Qualifying ED contributions made by the measured entity as a percentage
of the target
15
07 December 2010
© 2010,BEE Institute, All Rights Reserved
3% of
Cumulative
NPAT
Access
Target market
 The target market for long-term and shortterm insurance products will be based on
income = tax threshold for individuals=
R60,000 per annum and double the tax
threshold for families = R120,000
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Brokers and Access
• Short-term and long-term insurers will have
Access targets
• Distribution will be key to ensuring they meet their
targets
• Products must be affordable
• Will brokers be able to distribute products within
an affordability framework
• Alternative distribution channels
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Consumer Education
Consumer Education:
 transferring knowledge and skills to consumers, future
consumers and potential consumers
 for individual well-being and the public good
 development of consumer’s knowledge and understanding of
the financial sector and its products and services.
 empowering consumers with knowledge to enable them to
make more informed decisions about their finances and
lifestyles
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Consumer Education
Measurement
Criteria
Weighting Target
Consumer Education
07 December 2010
2
Year 2012: 0.25%
Year 2013: 0.30%
Year 2014: 0.40%
© 2010,BEE Institute, All Rights Reserved
SED
Socio- Economic Development – Measurement Criteria
Cumulative value of all Socio-Economic Development Contributions made by
a financial institution as a percentage of the cumulative net profit after tax *
07 December 2010
© 2010,BEE Institute, All Rights Reserved
Weighting
Target
3
2012 = 0.75% of
NPAT;
2013 = 0.7% of
NPAT;
2014 = 0.6% of
NPAT
Socio-Economic Development
Qualifying Beneficiaries:
– Black people
– Organisations where 75% or more of benefit
flows to black people = 100% counts
– Where the benefit is less than 75% it counts
pro-rata
07 December 2010
© 2010,BEE Institute, All Rights Reserved

similar documents