Insurance Bill; Venda Pension Matter: finalisation

Meeting report

Insurance Bill deliberations

The Chairperson welcomed everyone in attendance and indicated that as mandated by the Committee and the ANC study group in particular, further changes had been made to the transformation clauses of the Insurance Bill. There was nothing new in terms of policy; amendments were meant to ensure consistency in the entire Bill.

Ms Jeannine Bednar- Giyose, Director: Financial Sector Regulation and Legislation, National Treasury, took the Committee through additional amendments proposed by Treasury.

Clause 1(1)

The clause was amended to insert a new definition:

“Financial Sector Code” means the Financial Sector Code for Broad-Based Black Economic Empowerment (B-BBEE) issued in terms of section 9(1) of the B-BBEE Act.

Clause 30(4)

Amendment was intended to empower the Prudential Authority (PA) to prescribe governance principles and requirements in relation to the achievement and maintenance of stated commitments. This will facilitate appropriate supervisory and regulatory action (including the imposition of penalties) if the stated commitments are not achieved or maintained.

Item 6(3) and (4) of Schedule 3

Amendment was meant to ensure that registered insurers whose registration under the Insurance Acts will be converted to licences under the Bill are subject to the same transformation requirements as new applicants.

Clause 63(2)(d)

The statement “developmental, financial inclusion, and transformation objectives” was added to the clause.

Clause 66(1) (c)

The clause was amended as follows: for developmental, financial inclusion and transformation objectives necessary to facilitate the progressive or incremental compliance of this Act by a specific insurer, including meeting the targets as envisaged by the Financial Sector Code.

The Chairperson noted that the Democratic Alliance (DA) had submitted a proposal to amend the Bill citing procedural flaws. He asked it to take the Committee through its proposals.

Mr D Maynier (DA) queried the procedure and transformation clauses of the Bill. He proposed the removal of the specific provisions surrounding the transformation of the insurance sector before the Bill is adopted on the grounds that: the legislative process was procedurally flawed; promoting, licensing and monitoring financial institutions according to non-prudential criteria, such as transformation, falls outside the scope of the Prudential Authority, which is set out in Section 33 of the Financial Sector Regulation Act; and promoting, licensing and monitoring financial institutions according to non-prudential criteria, such as transformation, risked compromising the independence of not only the PA, but also the South African Reserve Bank (SARB). 

On procedural flaws, the provisions surrounding the transformation of the insurance sector were introduced during a Committee meeting on or about 10 May 2017, more than 12 months after the public hearings on the Bill, which took place on or about 06 February 2016. This means that the specific provisions surrounding the transformation of the insurance sector, which included an amendment to Clause 3, which traverses the “Objectives of the Act”, amounted to expanding the subject of the Bill, which was done without the permission of the National Assembly, in contravention of Rule 286(4)(b) of the National Assembly; and the specific provisions surrounding the transformation of the insurance sector, were never traversed in public hearings on the Bill, in contravention of the same Rule. Hence, the Committee should rethink the process and   remove the specific provisions surrounding the transformation of the insurance sector before voting on the Bill. 

The Chairperson asked for the Parliamentary Legal Advisor’s opinion on the claims made by Mr Maynier, and whether the cited Rule applied under the circumstances.

Adv. Frank Jenkins, Senior Parliamentary Legal Advisor, said the aforesaid Rule referred particularly to substantial policy changes. The Committee had to ask whether the need for transformation of the financial sector was a new issue that had just come up. This would then determine whether the Committee was required to go back to the National Assembly before inserting clauses dealing with transformation. The Rule, however, did not mean that the Committee would have to revert to the National Assembly for each and every amendment it deemed necessary.

Mr F Shivambu (EFF) said the DA’s intervention was opportunistic and problematic. The issue of transformation of the financial sector had been raised far much earlier. To come at the tail end of the discussions and raise procedural issues was problematic. Why would the DA oppose transformation in the first place, when the Constitution clearly compels Parliament to pass legislation which would redress the imbalances of the past? Moreover, during public hearings, the majority of submissions spoke to transformation issues and therefore transformation commitments had to feature prominently. However, if the DA took issue, it could seek redress through a judicial review process.

Ms T Tobias (ANC) said Mr Maynier had always been opportunistic by attempting to block transformation on the basis of procedural concerns. The Committee would not vacillate when it came to transformation objectives. However, the beneficiaries of the imbalances of the past were expected to resist transformation. Notably, the DA has been consistently arguing that transformation of the financial sector would result in the collapse of the economy.

The Chairperson said Mr Maynier’s suggestions were stunning. The submissions during public hearings were clear about the urgent need for transformation. Therefore, Mr Maynier’s assertions were fundamentally untrue. The same attempt to block a transformative Bill was made by the DA in 2016.  Procedure had been followed and the DA was being dishonest. Mr Maynier was opposed to transformation and his suggestions were attempts to defer transformation objectives. In any case, the SARB clauses do not temper with its mandate. The Committee should be unapologetic.

Mr Maynier said the sloganeering and allegations being levelled against him by Members were totally untrue. The points being raised were about the independence of the PA and SARB, not against transformation. He maintained that specific clauses on transformation which were now being introduced were never traversed during public hearings on the Bill.

Ms Tobias said Members had no reason to sloganeer during Committee meetings. The ANC held the view that Mr Maynier is neo-racist and this had been raised officially on two occasions. His arguments were misplaced. Public hearings were a consultative process but the buck stops with the Committee in terms of the pace and tempo of processes. Mr Maynier was advancing narrow technical arguments to downplay the transformation agenda and policy objectives held dearly by the majority.

Ms P Kekana (ANC) was not clear how transformation could possibly compromise the independence of the PA as suggested by Mr Maynier. He must be fair to the Committee in the process of advancing his arguments. 

Mr Shivambu agreed that specific and concrete submissions on transformation were made by people who participated during the hearing process. Clearly, transformation was a major theme during Insurance Bill hearings.  

Ms D Mahlangu (ANC) said the Committee has been very tolerant and accommodative. However, Mr Maynier’s behaviour was unacceptable and abusive to the Committee. Each time the Committee dealt with issues of public interest, the DA would choose not to partake during discussions and only decide to delay processes at the eleventh hour. Mr Maynier should not be allowed to disrespect the Committee.

The Chairperson sought clarity as to whether the Committee had done anything that was not procedural as suggested by the DA.

Adv. Jenkins, in response, said there had to be synergy between Parliament and issues in the public discourse. The issue of transformation is a constitutional one which permeates into every work of Parliament and public service. Being development orientated means redressing imbalances of the past and, therefore, transformation was not a new policy issue at all. It was not necessary to get back to the National Assembly as suggested by the DA. 

The Chairperson asked for SARB’s view on the proposals by the DA.

Mr Unathi Kamlana, Deputy Registrar of Banks: South African Reserve Bank, said SARB was not of the view that any of the clauses sought to undermine the role of either the PA or SARB. The construct of the Financial Sector Regulation Act already encompasses transformation clauses and was broader in scope and emphasis.

Therefore, there was nothing untoward about the amendments.

The Chairperson suggested that the Committee approve the Bill informally then give Committee personnel and himself 24 hours to go through the Bill before voting. The Committee report on the Bill and the Bill itself would also be considered on the next day.

Venda Pension matter

The Chairperson said the Committee shares the view and concerns of the Public Protector expressed in the Special Report of the Public Protector on the implementation of remedial action on maladministration during the privatisation of the Venda Pension Fund. It is unacceptable that the claimants in this matter had to wait almost 20 years without a resolution of their plight and further delays will not be tolerated. The recommendations in the reports of the Public Protector must be given effect to as a matter of urgency. The Committee will exercise vigorous oversight of the implementation of the recommendations and ensure that necessary relief to restore the dignity and ensure the fulfilment of the right to social security of the concerned Vhembe Pension Fund Group. The implementation plan submitted by the Minister of Finance sets clear timeframes for the implementation of the recommendations of the Public Protector and the Committee will hold the Minister and the Department to account in this regard.  

The Committee report on the Maladministration during the privatisation of the Venda Pension Fund was adopted.

The meeting was adjourned.