Banks should not be in denial about the need for transformation, but we should also be careful to not adopt a “reckless populist approach” that could put the country at risk.
The Chairperson of the Standing Committee on Finance, Yunus Carrim, made these comments ahead of day one of the public hearings on the transformation of the financial sector at Parliament today.
Carrim appealed for cool heads and dialogue at the hearings, which will be held during a joint meeting of his committee and the portfolio committee on Trade & Industry, chaired by Joan Fubbs.
“We hope the hearings are as open and free as possible. But let us also listen to each other. The aim is to encourage an understanding, and to find some kind of consensus on how we go forward.”
Carrim urged the financial sector to participate and to engage, saying that transformation was imperative, and it tied in with the drive for radical economic transformation.
“The banks say that they have transformed while others say they haven’t, and there are complaints of discrimination. The banks must come to the party, it can’t be business as usual.”
“But it is not as if you can make an immediate demand overnight for an overhaul of banks. The financial sector is a crucial part of the economy. We cannot adopt a reckless populist approach that undermines the interests of the country, particularly the poor and disadvantaged”.
Issues that would be raised include how far the Financial Sector Charter has been implemented and reviewed, the banks’ reluctance to fund small businesses, and lack of access for historically disadvantaged South Africans.
The hearings follow mounting pressure on the banks following the outcome of an investigation of collusion into the manipulation of the value of the Rand by the Competition Commission last month, a case which has now been referred to the tribunal for prosecution. The commission found price-fixing and market allocation in the trading of foreign currency by 17 banks.
The joint committees will compile a report and make recommendations to the executive, in particular National Treasury. Its findings could act as a guideline when drawing up legislation affecting the financial services sector.
“These hearings are being held to ensure that the bills that Treasury brings to Parliament are actually more attuned to the needs of a cross section of society,” said Carrim.
The hearings would also guide the committee on oversight responsibility over National Treasury and the financial sector as a whole.
He acknowledged that the hearings came on the back of emotionally charged and divisive conversation about transformation in the sector, and targeted accusations against Treasury.
“That is the role of Parliament, to bridge gaps in the national interest,” he said.
Although the Competition Commission’s investigation had given impetus to the hearings, Carrim said they had been on the cards since last October during deliberations on the finalisation of the Financial Sector Regulation Bill (otherwise known as the Twin Peaks Bill).
DA shadow minister of finance David Maynier was sceptical about whether there would be an an honest and constructive conversation about the challenges in the financial sector.
“My impression is that ruling party members are desperate to establish their radical economic transformation credentials and are likely to work themselves up into a banker bashing frenzy,” he said.
“What I fear is that these hearings are driven by a deep crisis within the Left and are in fact an invitation to a mugging and will go down as the first radical economic transformation ‘show trial’ in Parliament. I hope I’m wrong,” said Maynier.
Finance committee member and IFP MP Mkhuleko Hlengwa appealed for less political rhetoric and more discussion. He hoped there was not a repeat of the heated exchanges during the recent Financial Intelligence Centre Amendment Bill hearings.
“Those hearings were very unpleasant. I am hoping it doesn’t become one of those acrimonious exchanges. There is an opportunity for discussion around transformation, and to find each other on common ground. I hope the dialogue is not about sound bites, but about substance,” said Hlengwa.
A total of 22 back-to-back submissions are expected today, including the Banking Council of SA, Treasury, individual banks, Cosatu, SACP, Black Business Council, the Association of Black Securities and Investment Professionals and SA Development Foundation.
The hearings will continue over at least another two days later this month.
The hearings begin in the Old Assembly at 9.30am.