Insurance industry negotiations getting tough!
Recent developments around the Financial Sector Charter confirm that transformation can be a slow and painful progress. Newspaper reports alleged that banks and insurance companies suspended talks due to disagreements over ownership clauses in the charter
“Banks led the walkout because they are dissatisfied that the charter dispute on broad-based black (BBBEE) ownership has not yet been resolved,” they claimed.
What the banks say
Cas Coovadia, chief executive of the Banking Association of SA (Basa) believes that the Financial Sector Charter Council has already aligned many elements in the charter with the department of trade and industry’s (DTI) codes of good practice. The only clause not aligned at this time is the ownership clause. Coovadia is also on record that additional concessions around access to financial services make the “financial sector code, if gazetted, superior in transformation terms to the generic codes.”
In their official response Basa stated that: “The council had agreed, about 6 months ago, to allow government (national treasury) and labour and community constituencies to engage in order to try and resolve the ownership issue. The critical difference between labour and community, on the one hand, and trade associations on the ownership issue is that trade associations want to retain the ownership element as contained in the charter, while the two constituencies want to align this element fully to the codes.
“Trade associations took the view, at yesterday’s meeting that we have gone as far as we can on discussions on a sector code, and we need to resolve the ownership issue before completing discussions on this. We took this view because we are a month away from a 31 August deadline set by the DTI to gazette sector charters, and we have not had any progress from the engagement between government and labour and community.” Basa had not boycotted the negotiation process as claimed by Cosatu. “Instead, we have emphasised the need to resolve the one issue delaying submission of a sector code to DTI for gazetting.” And Basa remains 100% committed to the charter.
The LOA responds
The LOA wasted no time in responding to the allegations (particularly statements by COSATU. “The Life Offices’ Association (LOA) has been a partner of the Financial Sector Charter process for many years and remains absolutely committed to the transformation of our industry as well as the processes and negotiations needed to finalise the gazetting of the Financial Sector Charter as a sector code in terms of the Broad-based Black Economic Empowerment Act,” said LOA chief executive, Gerhard Joubert. He also said that the LOA would never boycott the process or walk out of negotiations...
According to the LOA the ‘stumbling block’ at the latest meeting revolved around the mandate granted the LOA by its members. The LOA and other trade associations present at the meeting insisted “that the most substantive issue, being ownership, still delaying finalisation of the Sector Code is prioritised and addressed, and that discussions are limited to aspects on which they had a mandate to represent the views of members.”
Perhaps Cosatu should cool its heels for the moment instead of firing broadsides at the associations who are working toward finalising the charter. It seems irrational to move the goal posts at this late stage and then object when the various associations find it difficult to continue without further consultation with the members whose interests they represent.
Editors’ thoughts:
Almost 15 years after the country’s first democratic elections business South Africa is still grappling with transformation issues. The pressure is on for companies to comply with employment equity and other black economic empowerment legislation. One question that springs to mind is why these deals need to be legislated when black South Africans are able to freely purchase shares in listed companies on the open market. Do you think the trade union demand to up direct black ownership in financial companies from 10% to 15% is fair? Add your comments below, or send them to [email protected]
