Financial sector transformation progress below expectation

16 January 2020 Financial Sector Transformation Council

The financial sector still needs to improve its performance against its transformation targets as set in the Amended Financial Sector Code (FS Code).

The 2017/18 Financial Sector State of Transformation Annual Report shows that in general, Financial institutions in the sector did not meet their transformation targets and need to do more. The report, which was released on 20 December 2019, provides findings of the overall performance of the sector in terms of transformation and covers the period 1 December 2017 to 30 November 2018. It is the seventh to be published by the Financial Sector Transformation Council (FSTC), and the first report to be issued under the Amended Financial Sector Code published on 1 December 2017.

Response rate

167 financial institutions reported, down from 181 in the 2016 report. Of these 167 entities, half achieved empowerment contributor levels of between 1 and 4. According to the FSTC, the lower response to calls for submission of reports continues to present a challenge despite reporting being made mandatory in the FS Code. It is, however, noted that many of the larger entities have complied. In an attempt to improve the response rate, the report is also naming those financial institutions who have not complied.

Performance Highlights

Findings indicate that Black Ownership in the sector is still below target and that the sector has not improved on Management Control which measures the number of Black people participating in Board and management structures. These findings are also in line with the B-BBEE Commission’s analysis of reports submitted by JSE-listed companies that shows performance by the financial sector is regressing on both Ownership and Management Control.

The skilling of Black people is still below expectations. The support of Black business through procurement and enterprise development is somewhat happening but also below the set targets. Financial Inclusion, through the accessibility and appropriateness of financial products for the low-income segment of the market, is fairly provided for banking products and services but falling short for insurance products. Financing for targeted investments was higher than the targets with more finance provided for infrastructure in underdeveloped areas and lesser for the financing of Black SMMEs and industrialists, Black farmers and for affordable housing.

The FSTC is presently engaged in a process to amend the codes and to align them to the ones recently published by the dti.

The report can be accessed at :

Quick Polls


Is the commission procurement rule introduced via clause 5.14 of the Amended Financial Services Sector Code (AFSSC) an important piece of the transformation puzzle?


The clause’s implementation coincides with an increase in the minimum spend targets, which further complicates matters
Many FSPs still view the AFSSC as a matter of choice and consequence rather than compliance
Transformation represents a great opportunity for growth and penetration by brokers
Brokers are unlikely to find their commission business yanked away from them by insurers looking to influence procurement scorecards
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