Submission to Parliament (SCOF) TRANSFORMATION OF THE FINANCIAL SECTOR PARLIAMENT, CAPE TOWN 14 March 2017

Agenda Introduction to Actuaries Lekgotla (AL) Major Transformation roadblocks: Unequal pay across gender and race Unequal opportunities across race and gender Comments on Charter Legislative roadblocks Actuaries Lekgotla

Introduction to Actuaries Lekgotla (AL) AL is a forum for actuaries, formed 2016. AL is made up of actuarial professionals working in the South African financial services sector. The vision of AL is to empower, celebrate and encourage black actuaries in South Africa. AL frustrated by the slow pace of transformation (or deracialisation) experienced by black people and women in the financial sector. Deputy President Cyril Ramaphosa said of actuaries recently that: “Your work is at the centre of our financial ecosystem. It is critical to its performance, its sustainability and ultimately its survival. It informs how we deploy our resources, how we manage risk and how we prepare for the future.” Mr Ramaphosa’s words encapsulates what actuaries do. Actuaries Lekgotla

Major Transformation Roadblocks There’s a lack of a deliberate attempt to transform across the board. Senior leadership in companies and ASSA mostly white. Evidence - lack of a black Chief Actuary, Statutory Actuary, Alternative Statutory Actuary or Head of Actuarial (under SAM rules) for major insurance companies. AL actions so far: Engagements with black actuaries – gaining insights. Submission to the Actuarial Society of South Africa (ASSA) regarding the slow pace of transformation. Submission to ASSA outlined the matters needing attention. We have not received any positive news from ASSA. Suggested solutions: Engage with FSC Council to find solutions through the Charter Actuaries Lekgotla

Major Transformation Roadblocks(cont) Unequal pay across gender and race. Black and women actuaries underpaid v peers - 21st Century Salary Survey, 2013. (A microcosm of the biases within the financial services industry in general - as per research done on salaries.) No action from senior actuaries and management despite being aware of issues. Suggested solutions: Companies should justify pay discrepancies by gender and race - standard statutory submission. Salary audit every year. Similar legislation done in Iceland*. * Iceland Requires Gender Salary Equality Actuaries Lekgotla

Major Transformation Roadblocks(cont) Unequal opportunities/exposure across race and gender AL forum notes that black actuaries and women have generally been denied opportunities to grow into senior positions. Excuses range from “not being a culture fit” or “there isn’t black actuarial talent around”. Evidence of “fear of the blacks taking over” aspect of the past? Stunted growth - slows down transformation. Frustration hence high turnover for black actuaries – slows down transformation. AL would like to suggest that the FSC adopt more stringent measures to remove these twin stumbling blocks for the good of transformation. Actuaries Lekgotla

Major Transformation Roadblocks(cont) Lack of effective mentorship for black actuaries The majority of black actuaries come from disadvantaged backgrounds. Senior management is white and male so natural gap/disconnect between management and black actuaries in general. We suggest a targeted, formal and effective mentorship programme for black and female professionals to bridge the gap. Actuaries Lekgotla

Specific Comments on Charter Low Level of engagement at the 2013 review Disappointing 5% participation level in the 2013 review of progress of FSC. Companies hiding failures to meet FSC targets? Suggested solutions: Name and shame those who do not participate. Require companies to say publicly if they comply with Charter. Promote the FSC to create awareness and push compliance. Fine those who do not comply. Definition of management based on salary Use of the salary band to categorise staff as management is open to fronting. A better definition must be sought which links with the influence the individuals have on decisions and resourcing. Actuaries Lekgotla

Legislative Roadblocks for SMEs (SAM) Economic capital requirements too high (R15m v R10m). Inhibits entry to the industry for SMEs. Research has shown that the SMEs are a great contributor to job creation and economic growth. Promote SMEs run by black people. Suggestions: AL believes that without regulations, organizations have refused to change so legislation has been seen in the past to be the only effective way. Capital level be kept at R10m. Targeted funding programmes for black SMEs Enforce audit rotation for actuarial consultants to help smaller consulting firms. Actuaries Lekgotla

Conclusion Oliver Tambo: "Racial discrimination, South Africa's economic power, its oppression and exploitation of all the black peoples, are part and parcel of the same thing.” We view pay disparities and bias on availing opportunities on racial and gender lines amounts racism and sexism and it has no place in our financial services industry. Actuaries Lekgotla Contact: Melusi Baloyi Melosi.baloyi@gmail.com 076 645 1378 Olusheye Matlala mistersheye@gmail.com 072 394 6796 Thank you and Questions? Actuaries Lekgotla