ATC190327: Report of the Select Committee on Finance on the Financial Matters Amendment Bill [B 1B - 2019] (National Assembly – section 75), dated 27 March 2019
Report of the Select Committee on Finance on the Financial Matters Amendment Bill [B 1B - 2019] (National Assembly – section 75), dated 27 March 2019.
The Financial Matters Amendment (FMA) Bill proposes amendments to the Insolvency Act, 1936, (Act No. 24 of 1936—‘‘the Insolvency Act’’), the Military Pensions Act, 1976 (Act No. 84 of 1976—‘‘the Military Pensions Act’’), the Banks Act, 1990 (Act No. 94 of 1990—‘‘the Banks Act’’), the Government Employees Pension Law, 1996 (‘‘Proclamation No. 21 of 1996—‘‘the GEP Law’’) and the Auditing Profession Act, 2005 (Act No. 26 of 2005—‘‘the Auditing Profession Act’’).
- Objectives of the Bill
2.1 Amendments to Insolvency Act
The Insolvency Act is to be amended to provide for a process to be followed when a creditor realizes his or her security and also to provide for a power for the Master of the High Court to deal with disputes regarding preference by trustees.
2.2 Amendments to Military Pensions Act
Section 9(1) of the Constitution of the Republic of South Africa Act, 1996 (‘‘the Constitution’’), provides that everyone is equal before the law and has the right to equal protection and benefit of the law. In terms of section 9(3) of the Constitution the State may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth.
The Bill seeks to amend the Military Pensions Act, 1976 by introducing gender neutrality and recognising various forms of legal marriages for purposes of benefits for all military staff in accordance with the right to equality in section 9 of the Constitution.
2.3 Amendments to Banks Act
Under the Companies Act, 2008 (Act No. 71 of 2008), state-owned companies are no longer classified as public companies. Currently, the Banks Act only allows for public companies to establish a bank. As a result, state-owned companies meeting the prudential and other requirements of the Banks Act are unable to apply for authorisation to establish a bank.
The Banks Act, 1990 will enable qualifying SOEs to apply for banking licenses subject to executive approval.
2.4 Amendments to Government Employees’ Pension Law
. Non-member spouses were denied the enjoyment of their share of the pension benefit immediately upon divorce or on dissolution of a customary marriage. Instead, they had to wait until their former spouses became entitled to their own benefit, whereas the Pension Funds Act, 1956 (Act No. 24 of 1956), entitled non-members spouses to immediate enjoyment of their pension interest in other funds, governed by the Pension Funds Act, upon divorce or dissolution of a customary marriage.
The Bill seeks to amend the Government Employees Pension Law, 1996 by introducing a principle of “service reduction approach” to ensure that member’s pension pay-outs to former spouses upon divorce are not converted into debt obligation as is case under current approach.
- Committee process
3.1 On the 13 March 2019, the National Council of Provinces (NCOP) referred the Financial Matters Amendment Bill [B 1B - 2019] (National Assembly – section 75) to the Select Committee on Finance for consideration and report.
3.2 The Committee called for public submissions on the Financial Matters Amendment Bill [B 1B - 2019] (National Assembly – section 75).
3.3 On 19 March 2019, the Committee received a briefing on the Financial Matters Amendment Bill [B 1B - 2019] (National Assembly – section 75), from the National Treasury.
3.4 The public hearings on the Bill were held on 26 March 2019, and the Committee received written and oral submission from the Congress of South African Trade Unions.
3.5 The following stakeholder made written submissions but did not make oral submission (the content of the submission does not relate to the Bill): Mr. Mali George Buthelezi.
- Inputs from stakeholder
4.1 Congress of South African Trade Unions (COSATU)
The Congress of South African Trade Unions made the following submission on the Bill:
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. The act seeks to address problems experienced in the auditing profession as seen recently where some auditors helped cover up corruption in the firms and State Owned Enterprises (SOEs) they were contracted to be playing an auditing and oversight role in.
The federation strongly supports its proposed amendments of 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 the South African National Defence Force (SANDF) and the GEPF members, their spouses and families in their moments of need. These must be fast tracked.
The federation supports the additional provisions in the FMA Bill, that would provide much needed checks and balances on the granting of banking licenses to SOEs. However, COSATU feels that this checks and balances and oversight mechanisms need and must be further strengthened as outlined in their proposed amendments by the 6th Parliament.
5.1 The Committee will continuously engage with the National Treasury to ensure effective monitoring of the implementation of the Financial Matters Amendment Bill, an approach that should facilitate an envisaged phased approach and to ensure government’s commitment to transformation of the financial sector.
The Select Committee on Finance, having considered the Financial Matters Amendment Bill [B 1B - 2019] (National Assembly – section 75), referred to it, and classified by the JTM as a section 75 Bill, reports that it has agreed to the Bill without amendments.
DA support the amendments on Insolvency Act, Military Pensions Act, Government Employees Pension Law, but are having a challenge with the amendments on the Banks Act.
Report to be considered.
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