The regulatory entities in the banking sector have all briefed the joint meeting of the Portfolio Committee on Trade, Industry and Competition and the Standing Committee on Finance (SCOF) on Tuesday.
The entities and all the major banks were invited to come and brief the committees on their practices in the banking sector and the regulatory framework.
In the morning, the discussion centred around the lack of transformation, discriminatory practices and account closures. Co-Chairperson Dr Joe Maswanganyi indicated that the committees had decided to engage the banking sector to discuss transformation and consumer concerns.
He said: “SCOF and the Portfolio Committee on Trade, Industry and Competition resolved to convene this meeting to address pressing matters within the sector.” He said transformation of this sector is not merely an option but a constitutional requirement.
The regulatory bodies that appeared before the committee comprised the Reserve Bank, Prudential Authority, the FSCA, and the BASA, and all indicated that transformation was happening in the banking sector.
Co-Chairperson and Chairperson of the Portfolio Committee on Trade, Industry and Competition, Mr Mzwandile Masina, wanted to know why major banks still own African Bank. He raised concerns about the ownership patterns of all the banks, which he said were all still white and male.
“Why is the Reserve Bank allowing these kinds of reports (on transformation) to go through as a tick box? You are the best banking institution in Africa, but you are not transformed,” he asked.
Members sought clarity on several issues, including unimpactful legislation regarding consumer protection, greylisting and what is being done about it, and the banks refusing to give reasons when they shut customer accounts.
Committee member Mr Brian Molefe said discrimination remained practised mainly in the banking sector. “The fundamental problem of the South African economy is two economies in one, constituted of marginalised blacks and privileged whites.”
“Banking practices are discriminatory and favour the smaller white economy than it does to the large black majority. How much investment do you have in the black economy relative to those who put money into the banks as investments?”
The Banking Association of South Africa (BASA) representative, Ms Bongi Kunene, told the joint meeting that none of the BASA members had been found wanting or guilty of racism. “The law and the code of good practices prohibit members from engaging in discriminatory behaviour.”
Ms Kunene said that regulations were clear on discrimination and that the account closure processes were clear. She said BASA was not aware why the public did not know the processes followed when bank accounts were closed.
She explained the process that was followed before an account was closed. “If a client disagrees, the client can invoke the intervention of the finance Ombuds. This is a question of financial education, and we all ensure that the public is aware of it.”
Committee member Mr Soviet Lekganyane raised concerns about presentations narrowly reporting on numbers of black managers when, in fact, the expectation had been on transformation of the sector, including ownership patterns, not the mere targets of black managers.
“We are not interested in whether there is a black CEO, or their number is growing; we have to amend the law to make things happen. If we are to achieve inclusive economic growth, we want you to help us resolve ownership patterns and not how many black managers are there in the system.” He cautioned that there would be a serious uprising in the future if ownership patterns remained untransformed. “We could not continue like this,” Mr Lekganyane said.
Members also sought clarity on the manipulation of the rand, which was admitted to in the early 2000s, the liquidation of Ithala Bank, and whether legislative policy to govern associations in the banking industry was needed.
Responses will be provided in writing on a number of the issues that were not answered. Banks will present in the afternoon.
By Sibongile Maputi
4 February 2025
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