FSTC goes into evasion mode after Sakeliga’s BEE authority probe

• The Financial Sector Transformation Council (FSTC) has responded evasively to Sakeliga’s request that it proves its authority for the recent demand that all financial institutions submit B-BBEE compliance reporting by 28 June.
• Instead of simply pointing Sakeliga and the public to sources of its ostensible authority to make compliance demands, the FSTC instructed its attorneys to neither confirm nor deny anything and to reserve its rights.
• Through our legal team, we have now placed on record with the FSTC that we find no source within positive law for either its ostensible authority to demand compliance with its Reporting Notice 1 of 2024 or its ostensible power to impose sanctions upon 'non-compliant' institutions within the financial services sector.
• Sakeliga now awaits the FSTC’s compliance with our full information request regarding its status as a sector council, its policies and enforcement plans (if any), and more, by 31 May.

The Financial Sector Transformation Council (FSTC) has responded evasively to Sakeliga’s request for proof of its authority to demand B-BBEE reporting.

Instead of simply pointing Sakeliga and the public to sources of its ostensible authority to make its recent BEE compliance demands, the FSTC instructed its attorneys to neither confirm nor deny anything and to reserve its rights. (see letter here, 13 May)

In March, the FSTC demanded that all financial institutions – from individual brokers to large corporates – provide evidence of their Broad-Based Black Economic Empowerment (B-BBEE) status (Reporting Notice 1 of 2024) by 28 June. Several industry role-players appeared to be under the impression that non-compliance with reporting may result in formal or other statutory sanctions against them.

In April, Sakeliga questioned and sought clarification on FSTC’s authority, since no legislation Sakeliga is aware of compels financial institutions to participate in or certify their businesses’ racial profile under the B-BBEE Act. (see original letter here, 11 April)

Given the FSTC’s failure to disclose any statutory authorisation, our attorneys have now placed on record with the FSTC that Sakeliga finds no source within positive law for either its ostensible authority to demand compliance with its Reporting Notice 1 of 2024 or its ostensible power to impose sanctions upon ‘non-compliant’ institutions within the financial services sector. The FSTC appears to be overreaching. (see Sakeliga’s follow-up letter here, 21 May)

We also informed the FSTC that we await its compliance with our request for information under the Promotion of Access to Information Act by 31 May. Our request concerns the FSTC’s:

• status as a sector council under the B-BBEE Act.
• activities, records, decisions, and policies concerning sanctions for non-compliance with FSTC directives, such as financial and professional penalties.
• co-operation with the Financial Sector Conduct Authority (FSCA), the B-BBEE Commission, the Prudential Authority, and the Department of Trade Industry and Competition where it concerns the policing, investigation, enforcement, and imposition of sanctions against financial institutions.

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We intend to share information obtained from the FSTC with financial services providers.

Sakeliga’s position remains that the public interest is best served when businesses employ a strategy of maximum achievable non-compliance with government’s detrimental policy of BEE and its demands for BEE reporting.

As a government policy, BEE professes to seek empowerment, but in fact requires businesses to jeopardise their mission of value-generation for adherence to political directives with a bureaucratic and racial focus. Instead of encouraging value-adding economic co-operation across communities, BEE adds layer upon layer of structural cost to doing business in South Africa, raising the cost of goods and services, and thereby making virtually everyone poorer