South African Insurance Association

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Financial Sector Receives First Report on Transformation

Following a lengthy year in which the financial sector was under scrutiny for its transformation progress and or lack there of, by the joint sitting of the Standing Committee on Finance (SCOF) and the Portfolio Committee of Trade and Industry, 2017 ended on a more positive note with the release of the first report on transformation of the financial sector, giving a rather balanced view of the transformation agenda within the sector.

It is therefore worth noting that although the sector received very strong criticism for lagging behind in terms of driving transformation, the report did provide a very balanced view in terms of the reporting and monitoring challenges faced by the financial sector. . The report further acknowledged that there had been somewhat progress in the sector, although not considered to be enough to drive meaningful impact to society.

Looking back at 2017, the short-term insurance industry received the most criticism as it showed the least transformative results. However, the criticism came in tandem with the recognition of the huge potential opportunities that the sub-sector could undertake to change the current narrative. The sub-sector is seen as the strongest to potentially drive transformation on the small black business through Preferential Procurement and; Enterprise and Supplier Development initiatives.

The report therefore concluded by the joint committees provided a list of recommendations aimed at improving the sector’s participation in accelerating transformation and encouraged the players to also start showcasing successful transformation stories already achieved. Below is a summary of some of the recommendations made that will or could impact our industry directly.

  • The short-term insurance industry to phase out the panel system for panel-beaters and towing services and; at least 50% of the work within the value chain to be allocated to black owned suppliers by 2021;
  • Support of the Department of Labour’s proposal to introduce penalties for entities not complying with management control and employment equity requirements/targets;
  • Reporting to the council and BEE Commission to be considered as a requirement for licence to operate;
  • Report back from the Nedlac Financial Sector Summit on the future of the FSC and tangible deliverables to be met within specific timelines, including the review of ownership, particularly with regard to market concentration and monopolisation of the sector.

While these are recommendations, it is in the industry’s best interest to critically review them and devise a positive response where possible. The preparation for the second Nedlac Financial Sector Summit scheduled for the 5th and 6th April 2018 is also underway, with an expectation that the sector responds to some of the recommendations from the joint committees.

It is envisaged that there will be a follow up report from the joint committee. This is expected to follow the sector’s responses to the committees’ first report recommendations

For more information contact:
Themba Palagangwe
SAIA GM: Governance and Transformation

Zanele Gigaba
SAIA Manager Transformation