Statement of the National Consultative Forum of the Financial Sector Campaign Coalition

9 October 2003 Yesterday, 8 October 2003, 96 delegates representing more than 40 organisations met in Johannesburg at the Inaugural National Consultative Forum of the Financial Sector Campaign Coalition (the FSCC previously known as the Campaign to Make Banks Serve the People). The agenda of the meeting included:

• 3 year report of the Campaign since it was launched as part of the 2000 Red October Campaign of the SACP
• Progress on the implementation of Agreements reached at the Growth and Development Summit (held in June 2003) and the Financial Sector Summit (held in August 2002)
• The Financial Services Charter and reforms in the financial sector
• Credit Bureau Regulations
• Community Reinvestment Bill and outlawing of redlining
• HIV/AIDS discrimination in the financial sector

Decisions taken by the FSCC National Consultative Forum are summarised below.

FINANCIAL SERVICES CHARTER
The FSCC noted the report on the Financial Services Charter. Whilst welcoming the initiative of the Charter process, the FSCC strongly expressed concern that this Charter process has been an elite boardroom process which did not involve the FSCC, the NEDLAC Community Constituency, labour and the broader South African public.

The FSCC also expressed concern that this Charter must not be seen as an opportunity for narrow reforms which will only benefit a few whilst leaving the fundamental problems in the financial sector intact. In this regard, the FSCC resolved to take action to ensure that the Charter is tabled and discussed by NEDLAC constituencies.

In the view of the FSCC, the major issues that the Charter must address are:

• Effective provision of financial services orientated to the developmental needs of working people and the poor through targeted investment and prescribed assets
• Democratised control and decision-making of all retirement funds
• How HIV/AIDS and other forms discrimination in the financial sector as a whole will be addressed
• Provision of sustainable lifeline banking services for workers and the poor
• Transforming and democratising the concentration of ownership and control in the financial sector
• Increasing the capacity and power of all South Africans to afford credit and to pay for financial services
• A Charter of Consumer Rights in the Financial Sector
• Measures to support and grow alternative institutions, including financial cooperatives
• Ways in which government owned financial institutions, like the DBSA, IDC, Khula, Land Bank and the Postbank can be made more effective in serving the developmental needs of the poor

BUILDING OF A CO-OPERATIVE BANK

In building a Co-operative Bank, the FSCC resolved to take the following steps:

• Lobbying of government to ensure that legislation on co-operative banking is developed and tabled for public discussion
• Building of Savings and Credit Co-operatives by members of the FSCC
• NEDLAC discussions and conferences on Co-operative Banks

COMMUNITY REINVESTMENT LEGISLATION

The FSCC resolved to engage government and other stakeholders to ensure that the process to table and pass the Community Reinvestment Legislation is back on track. The FSCC views this Bill as an important measure to ensure that banks and other credit institutions are obliged to invest in our country’s growth and development. The FSCC noted several weaknesses and omissions in the Bill. The FSCC strongly believes that any community reinvestment legislation must have teeth and sufficient powers to compel financial institutions to contribute to socio-economic development.

The FSCC call on government to ensure that the Bill includes measures such as:

• The practice of redlining must be completely eliminated and made illegal
• Minimum percentages required for community reinvestment by each financial institution in previously disadvantaged areas
• Comprehensive criteria which must be met when financial institutions consider redirecting their investment away from previously disadvantaged areas
• Obligations on the financial sector to promote social and co-operative housing
• Alternative definitions of concepts such as “collateral” and creditworthiness
• Lower interest rates for low-cost housing
• Funding by the private financial sector of public financial institutions which provide housing finance

PUBLIC HEARINGS ON HOW CREDIT BUREAUS AND THE FINANCIAL SECTOR VIOLATE HUMAN RIGHTS

The FSCC will request the South African Human Rights Commission to host Public Hearings in major towns and cities of our country on:

• HIVA/IDS discrimination by funeral insurance companies
• How people blacklisted by Credit Bureaus are denied employment through collusion between some employers and the 11 Credit Bureaus in our country
• How South African banks violate a basic human right through the denial of the right to a banking account to millions of South Africans
• General discrimination and problems consumers have

The FSCC will utilize these public hearings to mobilise public support for the transformation and diversification of the financial sector.

ACHIEVEMENTS OF THE CAMPAIGN SO FAR

The Campaign to Make Banks Serve the People was launched in October 2000 and the Financial Sector Campaign Coalition was constituted in May 2001. Since the Campaign started, the following has been achieved:

• Holding of the NEDLAC Financial Sector Summit in August 2002 which reached significant agreements on the transformation and diversification of the Financial Sector in South Africa
• the publication of draft regulations to govern Credit Bureaus in May 2003 by the Department of Trade and Industry
• the discussion by cabinet of a new Co-operatives' Bill and Community Reinvestment Legislation
• The Reserve Bank and government have begun a discussion on access to credit for the poor including the consideration of legislation for co-operative banks
• initiatives by some banks to introduce a charge-free banking card for recipients of welfare grants
• discussion on the Financial Services Charter which is now at advanced stages
• the AVBOB announcement to remove HIV/AIDS discrimination in its funeral insurance policies following mass pressure
• initiatives by workers to form savings and credit co-operatives including announcements by the SACP, SAMWU and NEHAWU to form their own SACCOs
• Agreement reached at the June 2003 Growth and Development Summit on co-operatives

SUMMARY OF AGREEMENTS REACHED AT THE NEDLAC FINANCIAL SECTOR SUMMIT

Following many delays and postponements the Summit was eventually held in August 2002. The Summit was preceded by extensive negotiations involving all NEDLAC Constituencies (government, business, labour and community). In the engagements, all the parties agreed on the need for commitments by all the participants to ensure that the financial sector contributes more to development. At the same time, the parties agreed on the need to maintain the long-run viability of the financial sector, and recognised that the problems identified were in large part due to external constraints.

Part of the framework of the agreement identifies commonly agreed aims, strategies, context and way forward. In summary the agreements reached were as follows:

• The regulation of credit bureaux to ensure that they provide reliable and appropriate information to lenders – the agreement provides a detailed framework on credit bureau regulation including the envisaged regulatory framework, accuracy and consumer pection and the need for efficiency
• The establishment of enabling legislation for co-operative banks, and proposals on support for co-operative banks and not-for-profit micro-lenders – the agreement details elements for legislation ion co-operative banks including powers of a registered operative bank; requirements for registration; membership and shares; prudential requirements; deposit insurance and loans; the role of the envisaged registrar; registration issues; and the establishment of the co-operative bank forum and support for co-operative banks and non-profit micro-lenders
• The need for legislation on so-called second and third tier deposit-taking financial institutions
• Measures to end unfair discrimination in the financial sector – the agreement identifies the critical areas as the envisaged overarching framework, redlining and HIV/AIDS
• Measures to extend basic financial services
• Proposals to guide capital markets and investment into developmental projects – the parties agreed to conduct research and further negotiations following the Summit. In this context the private sector, government and labour made commitments to invest identified projects, disclose investment activities, transformation of retirement funds including the training of trustees of retirement funds, and the investigation of a socially responsible pension fund administration company
• A joint analysis of the state-owned financial institutions to see how they can contribute more to developmental aims in particular Postbank
• A framework for the regulation of the financial sector including the regulation of the micro-lending sector
• Proposals for an initiative to increase savings
• Ensuring that all South Africans have access to training programmes that empower them to deal with financial institutions and processes.

To monitor implementation of the above agreements and related developments, the parties also agreed that the NEDLAC financial sector task team will meet once a month or as necessary to review progress and consider new results. The parties also committed themselves that an annual high-level meeting of the NEDLAC constituencies in the financial sector should review progress, analyse problems and agree on new initiatives where appropriate.

The only area of disagreement was on targeted investments, which would have included prescribed assets. It was agreed that research would be undertaken after the Summit and no prescribed percentage would go into the agreement dealing with targeted investments, however a voluntary approach will be encouraged.

MEMBERS OF THE FINANCIAL SECTOR CAMPAIGN COALITION

Black Sash
SACP
ANC
COSATU
AIDS Consortium
AIDS Law Project
Treatment Action Campaign
SA Council of Churches
National Co-operative Association of South Africa
Savings and Credit Co-operatives' League
Women on Farms Project
Disabled People South Africa
Young Communist League
Eco-Trust-Care
Gauteng Paralegal Association
Motlisi Construction Co-operative
People’s Dialogue
SANCO
SASCO
SA Youth Council
Self-Employed Women’s Union
South African Homeless People Federation
STREETNET Association
Ukukhanya Org For the Unemployment
Women’s National Coalition
Young Christian Students

CONTACT
Mazibuko K. Jara (surname Jara)
Tel: 27 11 339-3621/2, Fax: 27 11 339-4244
Cell: 083 651 0271
Email - mazibuko@sacp.org.za