Media Statement: Standing Committee on Finance Demands Attendance of Its Oversight Visit From Regulatory Bodies

Parliament, Wednesday, 4 September 2024 - The Standing Committee on Finance has resolved to reject an apology to attend a crucial oversight visit to Ithala Bank from the National Treasury's Prudential Authority and the Financial Sector Conduct Authority (FSCA) to address the challenges at Ithala Bank that have led to the suspension of the bank's Financial Services Provider (FSP) licence.

The committee is of the considered view that the matter deserves urgent attention in light of the continued viability of the bank and the possible negative consequences on the bank's depositors if the challenges are not resolved. The committee had scheduled a two-day oversight in Durban and received a letter of apology on Monday, 2 September 2024 from the FSCA.

"The letter forwarded to the committee is unacceptable and has the potential of undermining the important oversight work of the committee. Furthermore, the reasons provided are inadequate and should have been raised in the meeting of 27 August 2024 where the resolution to undertake the oversight was taken," said Dr Joe Maswanganyi, the Chairperson of the committee. As a result, the PA and FSCA are expected to attend today's session in Durban.

Meanwhile, the committee has mandated the Board and Management of Ithala to tabulate issues behind the suspension of the license and remedial measures they intend taking to resolve those triggers. The committee acknowledged the presentations made yesterday but noted that they don't address the key challenges faced and how they will be resolved.

"To ensure effectiveness of the oversight we are undertaking we need scientific outputs that talk to the challenges and how they will be resolved. While the committee acknowledges that the matter is emotive and has the potential to affect millions of depositors mainly in rural areas, it is important that the response of the bank must be meticulous and detailed to ensure effective resolution," Dr Maswanganyi emphasised.

Meanwhile, the committee has noted with concern the breakdown in trust and cooperation between the regulatory bodies and the bank, and it has cautioned that the lack of collegiality will delay the implementation of corrective measures necessary to ensure the continued existence of the bank.

The committee is concerned that the suspension of the FSP licence has long term implications for the viability of the bank as it is unable to onboard new clients. The inability to take new clients will also have a dire effect on new the South African Social Security Agency (SASSA) grant beneficiaries in deep rural areas because they will not be able to access the bank to receive their grants.

The committee has also called for the bank to ensure effective communications around the current challenges to allay fears and avoid mass withdrawals as the bank addresses the challenges it currently faces.

Today, the committee will reconvene and receive briefings from the Prudential Authority and the Financial Sector Conduct Authority (FSCA) as well as detailed plans from Ithala on how it will resolve current challenges.

Details of the visit

Date: 4 September 2024

Time: 08:00

Venue: Moses Mabhida stadium

ISSUED BY THE PARLIAMENT COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE STANDING COMMITTEE ON FINANCE, DR JOE MASWANGANYI.

For media enquiries or interviews with the Chairperson, please contact the committee's Media Officer:

Name: Malatswa Molepo (Mr)

Parliamentary Communication Services

Tel: 021 403 8438

Cell: 081 512 7920

E-mail: [email protected]

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