Hobson’s Choice – The growing intersection between human rights and business stemming from the Momentum case
Momentum’s initial refusal to pay out Mr Nathan Ganas’ life insurance policy to his widow (due to him not disclosing his pre-existing condition of diabetes) has been largely condemned. The fact that Mr Ganas was shot and killed during a violent attack (a hijacking), which was unrelated to his health condition, caused particular outrage on social media.
Many commentators have viewed this case primarily from a private law lens, emphasising that the insurer’s decision was in fact, legally sound. The emphasis has been placed on the fact that the insurer would not have provided the policy if the pre-existing condition had been disclosed. Clients have also been reminded of their responsibility to fully disclose existing health conditions. While a private law lens supports legal certainty and represents one important aspect of the case, the human rights implications of the case should not be ignored.
From a human rights perspective, Momentum’s decision negatively impacted upon the socio-economic rights of a vulnerable widow. Given the context of South Africa’s high levels of violent crime, poverty and socio-economic inequality, the social impact of the case should have been addressed. The backlash experienced by Momentum has further emphasised that companies can no longer completely ignore public policy or human rights when developing business practices and decisions.
The importance of ethics and the best interests of clients is something that financial advisors are familiar with. For example, under the General Code of Conduct amendments, financial advisors are now required to demonstrate that they have applied their minds to the unique needs and circumstances of their clients. Advisors are also required to prioritise the best interests of their clients over and above the need to ‘make a sale’. This ethos should be carried through in all decisions.
The importance of human rights is further emphasised by South Africa’s progressive Constitution, which describes South Africa as a democratic state founded on human dignity, the achievement of equality, the advancement of human rights and freedoms and non-racialism and non-sexism. The Constitution specifically provides that the rights in the Bill of Rights apply to all law and that they bind the “legislature, the executive, the judiciary and all organs of state”. Section 8(2) of the Constitution further states that a provision in the Bill of Rights binds both natural and juristic persons. The Constitution’s commitment to founding a society based on “human dignity, equality and human rights and freedoms”, therefore extends to private relations. While the provisions of sections 8 and 39(2) of the Constitution justify transcending the public/private law divide, the courts have not been consistent in their application of these provisions and uncertainty remains as to the extent to which they apply.
While the private law aspect of Momentum’s decision was sound, their failure to fully engage with the social impact of their decision was problematic. What is clear is that, advisors should not only encourage their clients to disclose their pre-existing medical conditions. Going forward, organisations should also consider their social responsibilities and how these duties factor into policy and decision making.
Article written by Dr Tarryn Bannister – Legal Researcher, Moonstone Compliance and Risk Management.