Financial Matters Amendment Bill: public hearings

NCOP Finance

26 March 2019
Chairperson: Mr C De Beer (ANC; Northern Cape)
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Meeting Summary

The Committee held public hearings on the Financial Matters Bill. The Committee had received two written submissions on the Bill, one from Mr George Buthelezi from KwaZulu-Natal and the other from COSATU. COSATU was the only stakeholder present to give an oral submission. 

COSATU welcomed and supported government’s Financial Matters Amendment (FMA) Bill. This was an important Bill that seeks to address challenges that military veterans’ partners have experienced accessing pension benefits when their partners and ex-partners pass away. It helps to resolve matters facing members of the Government Employees Pension Fund when divorcing their partners and needing to settle the separation of assets with their now ex-spouses. The FMA Bill critically provides a legal frame work for the granting of banking licenses to State Owned Enterprises (SOEs). COSATU supports the broad objectives and provisions of the FMA Bill with some critical proposed amendments recommended for the 6th Parliament to consider to further strengthen its public accountability and oversight provisions with regards to its proposed amendments of the Banks and Auditing Professions Acts. It seeks to address problems experienced in the auditing profession as seen recently where some auditors helped cover up corruption in the firms and SOEs they were contracted to be playing an auditing and oversight role in. 

On proposed amendments to the Banks Act, COSATU welcomed and supported the broad objectives of the Bill in providing legal frameworks for SOEs to be granted banking licenses. These are in line with COSATU’s long standing calls to open up the banking sector to competition. There is a critical need to allow for state banks to enter the sector. This will help to inject badly needed competition to a sector that has been heavily characterised by monopolies, collusion, high charges and interest rates, lack of transformation and a general reluctance to support the needs of the poor and workers. COSATU appreciates the need for the Bill to provide for existing state banks e.g. the Post Bank. However COSATU proposed the following amendment:

  • Section 11.4 (b) with the insertion of wording to the effect of the “relevant oversight Minister and the Minister responsible for Finance”.
  • Insert in Section 11.4 (b) wording to the effect of the “and the approval of Cabinet”.

In conclusion, the federation strongly supported proposed amendments to the Military and Government Employees’ Pension Acts. These were in line with the progressive anti-discrimination values and requirements of the Constitution. They are urgently needed to help South African National Defence Forces and GEPF members, their spouses and families in their moments of need. These must be fast tracked. COSATU strongly supports the objectives of the Banks Bill to provide a legislative framework for granting qualifying SOEs banking licenses. COSATU supports the additional provisions in the FMA Bill to provide much needed checks and balances on the granting of banking licenses to SOEs. However COSATU feels that these checks and balances and oversight mechanisms need and must be further strengthened as outline above. COSATU further welcomes the proposed amendments of the FMA Bill to the Auditing Professions Act. However the federation feels that it must be further strengthened as indicated. Lastly, the amendments of the Auditing Professions Act must be considered as a matter of urgency by the sixth Parliament.

National Treasury noted the proposals from COSATU and largely agreed with them. Treasury might have to call for further public comments on the Auditing Professions Act during the next Parliament. Treasury would also call for comments on the Bill Regulations even if the law does not prescribe this as mandatory. On the role of Parliament on the granting of banking licences to SOEs, the legislative body would always have to exercise its oversight role to call to order Ministers if they approve applications for banking licences willy-nilly.

Members welcomed the straightforward presentation from COSATU. They agreed with COSATU that its proposals be considered by the sixth Parliament. The DA would support the amendments to the Insolvency Act, Military Pensions Act and the GEPF Act. However the party had a problem with the proposed amendments to the Banks Act in principle, and would not support them.

The Committee would give consideration to the Bill clause by clause the following day.

Meeting report

term. The Committee had received two written submissions on the Financial Matters Bill, one from Mr George Buthelezi from KwaZulu-Natal and the other from COSATU. He invited the submission from COSATU.

COSATU submission

Mr Matthew Parks, Parliamentary Coordinator, COSATU, said COSATU welcomed and supported government’s Financial Matters Amendment (FMA) Bill. This was an important Bill that seeks to address challenges that military veterans’ partners have experienced accessing pension benefits when their partners and ex-partners pass away. It helps to resolve matters facing members of the Government Employees Pension Fund when divorcing their partners and needing to settle the separation of assets with their now ex-spouses. The FMA Bill critically provides a legal frame work for the granting of banking licenses to State Owned Enterprises (SOEs). COSATU supported the broad objectives and provisions of the FMA Bill with some critical proposed amendments recommended for the 6th Parliament to consider to further strengthen its public accountability and oversight provisions with regards to its proposed amendments of the Banks and Auditing Professions Acts. It seeks to address problems experienced in the auditing profession as seen recently where some auditors helped cover up corruption in the firms and SOEs they were contracted to be playing an auditing and oversight role in. 

Amendments to the Military Pensions Act

COSATU welcomed and supported the FMA Bill amendments to the Military Pensions Act. The federation believes that they are critical in terms of protecting the rights and needs of military veterans, their partners, families and dependents. The proposed amendments are in line with the non-sexist values of the Constitution and the need to prevent discrimination based upon gender and sexual orientation. COSATU believes that the amendments will also help protect the rights of partners, ex-partners and dependents and children of deceased military veterans who have often inadvertently struggled to access the remaining pension benefits due to their lost love one. COSATU supports the FMA Bill’s Military Pensions Act proposed amendment in full

Amendments to the Government Employees Pension Act

COSATU welcomed and supported the FMA Bill amendment to the Government Employees Pension Act. This is important to members of the GEPF during divorces and providing for a fair and clean settlement to both parties in a timeous matter. Divorce settlements are frequently protracted and the settlement of the separation of assets delayed.  This has an inordinately negative impact on spouses who are then in urgent need of finding new accommodation, purchasing furniture etc. in a very short space of time as they seek to build a new life.  It places an unduly harsh burden on wives and children in particular. This amendment will help to speed up such processes and seek to make them less acrimonious.

Amendments to the Banks Act

COSATU welcomed and supported the broad objectives of the Bill in providing legal frameworks for SOEs to be granted banking licenses. These are in line with COSATU’s long standing calls to open up the banking sector to competition. There is a critical need to allow for state banks to enter the sector. This will help to inject badly needed competition to a sector that has been heavily characterised by monopolies, collusion, high charges and interest rates, lack of transformation and a general reluctance to support the needs of the poor and workers. COSATU appreciates the need for the Bill to provide for existing state banks e.g. the Post Bank. However COSATU proposed the following amendment:

  • Section 11.4 (b) with the insertion of wording to the effect of the “relevant oversight Minister and the Minister responsible for Finance”.
  • Insert in Section 11.4 (b) wording to the effect of the “and the approval of Cabinet”.

Mr Parks pointed out that the FMA Bill is silent about an oversight role for Parliament. COSATU believes that Parliament, as the elected representatives of the public, must and can play an oversight role. This is critical in the fight against corruption and the collapse of SOEs. COSATU believes that such an oversight mechanism is critical and must be included. COSATU therefore proposed a further amendment as follows:

  • Insert in Section 11 e.g. an 11.5 wording to the effect of the “the relevant oversight Minister and the Finance Minister must submit to Parliament notification of the intent for the SOE to apply for a banking license for Parliament’s comment.  Parliament should be provided with a reasonable timeframe within which to comment e.g. 30 days.”

Furthermore, the FMA Bill is silent on a provision for public comments and participation. Whilst one may appreciate that the public is not involved in banking license applications normally, state banks will be covered by taxpayers’ funds if they collapse. The public has a vested interest in such a matter. Practise across the state as provided in all legislation is for the public to be given opportunities to comment on key state policies, decisions and actions e.g. bills, regulations, board appointments, codes of practise etc. COSATU believes that such an oversight mechanism is critical and must be included. COSATU therefore proposed it be included as follows:

  • Insert in Section 11 e.g. an 11.6 wording to the effect of the “the relevant oversight Minister and the Finance Minister must gazette and advertise for public comment notification of the intent for the SOE to apply for a banking license for Parliament’s comment.  The public should be provided with a reasonable timeframe within which to comment e.g. 30 days.”

In conclusion, the federation strongly supports proposed amendments to the Military and Government Employees’ Pension Acts. These are in line with the progressive anti-discrimination values and requirements of the Constitution. They are urgently needed to help South African National Defence Forces and GEPF members, their spouses and families in their moments of need. These must be fast tracked. COSATU strongly supports the objectives of the Banks Bill to provide a legislative framework for granting qualifying SOEs banking licenses. COSATU supports the additional provisions in the FMA Bill to provide much needed checks and balances on the granting of banking licenses to SOEs. However COSATU feels that these checks and balances and oversight mechanisms need and must be further strengthened as outline above. COSATU further welcomes the proposed amendments of the FMA Bill to the Auditing Professions Act. However the federation feels that it must be further strengthened as indicated. Lastly, the amendments of the Auditing Professions Act must be considered as a matter of urgency by the sixth Parliament.

Discussion 

Mr M Monakedi (ANC, Limpopo) welcomed the straightforward presentation. He agreed with COSATU that its proposals be considered by the sixth Parliament.

Mr F Essack (DA, Mpumalanga) commented on the proposal to amend Section 11.4 of the Banks Act. He asked why COSATU would want the Minister to have some influence in the granting of banking licences to SOEs.

Ms Z Ncitha (ANC, Eastern Cape) appreciated the presentation by COSATU. She supported the federation’s proposals.

Mr Parks appreciated the support from Members. COSATU would follow-up on the Bill in the sixth Parliament. In response to Mr Essack, he pointed out cases of SOEs that were almost run aground due to looting by politicians and private business persons. He emphasised that SOE operations going forward should not be on the basis of trust, friendships or comradeship. For COSATU, it was about maximum checks and balances which might help to reduce the possibility of corrupt practices and anarchy down the road. The Bill must be made a watertight as possible. The proposal that there must be ministerial and cabinet approval before the granting of banking licences to SOEs was common practice.

Ms Empie Van Schoor, Chief Director: Legislation, National Treasury, noted the proposals from COSATU and indicated Treasury largely agreed with them. Treasury might have to call for further public comments on the Auditing Professions Act during the next Parliament. Treasury would also call for comments on the Bill Regulations even if the law does not prescribe this as mandatory. On the role of Parliament on the granting of banking licences to SOEs, the legislative body would always have to exercise its oversight role to call to order Ministers if they approve applications for banking licences willy-nilly.

Mr Essack said the DA will support the amendments to the Insolvency Act, Military Pensions Act and the GEPF Act. However the party had a problem with the proposed amendments to the Banks Act in principle, and would not support them.

The Chairperson appreciated the engagements and indicated the Committee would give consideration to the Bill clause by clause the following day.

The meeting was adjourned. 

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