ATC220901: Report of the Select Committee on Finance on the Financial Sector and Deposit Insurance Levies (Administration) and Deposit Insurance Premiums Bill [B 4B - 2022] (National Assembly- section 75), dated 30 August 2022

NCOP Finance

[The following report replaces the Report of the Select Committee on Finance, which was published on page 42 of the Announcements, Tablings and Committee Reports, dated 31 August 2022]

Report of the Select Committee on Finance on the Financial Sector and Deposit Insurance Levies (Administration) and Deposit Insurance Premiums Bill [B 4B - 2022] (National Assembly- section 75), dated 30 August 2022

 

1.Introduction and background

The Financial Sector and Deposit Insurance Levies Administration and Deposit Insurance Premiums Bill (Administration Bill) seeks to refine the Financial Sector Regulation Act (FSRA) Chapter that deals with fees and administration of levies to ensure that the Chapter is appropriately aligned with the Levies Bill and appropriately provides for the administration of levies. The Bill also imposes deposit insurance premiums.  

In terms of the process followed by the Committee, on 08 June 2022, the National Council of Provinces (NCOP) formally referred the Levies Bill to the Committee for consideration and report. The Committee received a briefing from the National Treasury and the South African Reserve Bank (SARB) on 02 August 2022. As required by the Money Bills Act, the Committee invited comments from the public but no submissions were received. On 23 August 2022, the Committee held a meeting to consider the Bill clause-by-clause and to deliberate on the policy aspects of the Bill, before the adoption of the report, on 30 August 2022.

2.Overview and objective of the Bill

The objective of the Levies Administration Bill is to provide for the collection and administration of levies imposed in terms of the Financial Sector and Deposit Insurance Levies Act, 2022; to amend the Financial Sector Regulation Act, 2017, to provide for the administration of levies imposed in terms of the Financial Sector and Deposit Insurance Levies Act, 2022; to provide for the imposition, collection and administration of deposit insurance premiums; to amend the Pension Funds Act, 1956, the Banks Act, 1990, the Mutual Banks Act, 1993, and the Financial Advisory and Intermediary Services Act, 2002, to align them with the Financial Sector Regulation Act, 2017, in respect of the financing of financial sector bodies; and to provide for matters connected therewith.

The section below summarises the key objectives of the Bill presented by the National Treasury.

2.1Deposit insurance premiums

The deposit insurance premiums will be imposed on members of the Corporation for Deposit Insurance (CoDI), which are licensed Banks, Mutual Banks, Cooperative Banks, and Branches of Foreign Banks which conduct business in South Africa. National Treasury further explained that these premiums would help to ensure that holders of covered deposits will have access to their funds and limit severe financial hardship for depositors.

2.2Calculation of levies imposed

The levies will be calculated by a formula based on the entity’s total liabilities and its variable costs, such that entities with larger liabilities pay more than those with relatively smaller liabilities. Entities are exempt from paying a levy if their total liabilities are less than R2 million.

2.3Collection and administration of levies and premiums imposed

The funding model comprises of levies, fees and deposit insurance premiums. In terms of the Bill, the Financial Sector Conduct Authority (FSCA) will be responsible for the collection and administration of the financial sector levy and the special levy, to provide for funding of the FSCA, the Tribunal, the Ombud Council, and the Office of the Pension Fund Adjudicator and the Ombud for Financial Service Providers. The SARB will be responsible for the collection and administration of the financial sector levy and the special levy, on behalf of the Prudential Authority (PA), to provide funding for the PA. The SARB will also be responsible for the collection and administration of the deposit insurance levy and the deposit insurance premium, on behalf of the CoDI.

3.Committee observations and recommendation

The Committee draws attention to the observations and recommendations in our report on the Finance on the Financial Sector and Deposit Insurance Levies Bill [B3B - 2022] (National Assembly- section 77) for its relevance to our processing of this Bill, especially paragraphs 3.6 to 3.9.

The Select Committee on Finance, having considered and examined the Financial Sector and Deposit Insurance Levies (Administration) Bill [B4B - 2022] (National Assembly – section 75), referred to it, and classified by the JTM as a section 75 Bill, accepts the Bill.

 

The Democratic Alliance (DA) rejected the report.

The Economic Freedom Fighters (EFF) reserved its position report.

The Freedom Front plus (FF+) rejected the report.

 

Report to be considered