Justus van Pletzen, CEO of the Financial Intermediaries Association of Southern Africa (FIA).
One of the challenges with South Africa’s Broad-Based Black Economic Empowerment Act (Act 53 of 2003) is that it is viewed as legislation for large companies.
Many small business owners believe that the Act applies only to organisations that employ 50 or more people or that have turnovers in the hundreds of millions of rand. They also dismiss transformation policies and initiatives with the line: B-BBEE and similar legislation do not apply because my company does not conduct business with government.
The Financial Sector Code (Code) – launched on 17 July 2013 and effective from 1 January 2012 – addresses any misconceptions by clearly stating that natural or juristic persons conducting a business, trade or profession in the South African financial sector, including financial services intermediation and brokerages, have a role to play.
The Code commits all participants in the industry to promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of the country and contributes to the establishment of an equitable society by providing accessible financial services to all communities and by directing investment into targeted sectors of the economy.
“Skills development and transformation are critical issues that must be addressed by the South African financial services sector,” says Justus van Pletzen, CEO of the Financial Intermediaries Association of Southern Africa (FIA). “Our participation in the Short Term Insurance sector’s Human Capital Development (HCD) project is just one example of our commitment to achieving the objectives set out in the Code.”
HCD is a joint initiative by the FIA, South African Insurance Association, Insurance Institute of South Africa and South African Underwriting Managers’ Association – with support from the Insurance Sector Education and Training Authority (INSETA) and the Financial Services Board. The project is based on the premise that industry challenges such as skills development and transformation are best addressed through extensive and on-going investment in human capital.
“Transformation is a challenge,” says Arnold van der Linde, President of the FIA. “But it is a challenge that we can only address if we attract new blood to the industry while championing education, skills development and professionalism at every opportunity.”
The shortage of suitably qualified insurance professionals is one of the main obstacles that must be overcome in order for the industry to transform as envisioned in the Code. In this regard the FIA is working closely with INSETA to improve the ‘supply’ of qualified people to the industry.
“There are many opportunities for financial services firms to provide on-the-job training for suitable candidates,” says Van der Linde. “We have actively encouraged our members to open their workplaces to INSETA-subsidised learnerships, and thereby support the transformation and up skilling agenda.”
Financial services providers and brokerages have an opportunity to include transformation in the process and operational reviews that are already underway as part of the pending Treating Customers Fairly (TCF) regulation.
“TCF regulation will go a long way towards achieving the Code’s desire for improved financial access for all,” says Van Pletzen. “And considering the country’s history one cannot have fair treatment of consumers without a transformation component.”
He warns, however, that stakeholders must consider underlying industry trends when implementing the Code: “The number of risk and financial advisers plying their trade in South Africa is in decline for a number of reasons, including an ageing workforce and the rising compliance burden.”
“Transformation objectives will be best met by attracting new entrants to the industry and ensuring that these entrants become employers and owners of intermediary businesses as the old guard steps down.”
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