The Financial Sector Conduct Authority has withdrawn the licence of a Western Cape funeral provider against which the FAIS Ombud has to date issued 12 determinations.
The Ombud for Financial Services Providers this week released four more determinations made against Luvuyo Burial and Consulting (Pty) Ltd – three of them in July and one in August.
The FSCA withdrew Luvuyo’s licence on 25 August after suspending it in April, following the Ombud’s referring the determinations. Luvuyo was registered in 2014 and obtained its FSP licence in 2016.
As with the previous determinations issued this year, the Ombud’s latest rulings found that the Khayelitsha-based funeral service provider did not honour valid claims despite policyholders having paid their premiums. Luvuyo’s failure to render a financial service with due skill, care, and diligence were in violation of the Policyholder Protection Rules (PPR) and the Treating Customers Fairly (TCF) principles.
No underwriting
The Office of the Ombud issued its first ruling against Luvuyo in January. While addressing that complaint, the Office discovered that Luvuyo did not have an underwriter.
The Office ascertained that Sanlam Developing Markets became the scheme’s underwriter on 1 January 2020, but the relationship was terminated on 1 May 2021. Based on responses received from the FSCA and Luvuyo, the Ombud concluded that a new underwriter was not appointed.
The funeral policy in question was taken out in October 2020, and the claim was submitted in October 2023.
The Ombud, Advocate John Simpson, sent the determination to the FSCA for further investigation and potential enforcement action.
Read: Burial society ordered to pay after failing to inform policyholder of premium hike
The Ombud issued four determinations against Luvuyo on 8 April. Simpson again flagged that Luvuyo was operating without an underwriter when the claims were lodged and the complaints were filed. These determinations were also sent to the FSCA.
The FSCA suspended Luvuyo’s licence on 14 April.
Read: FSCA suspends FSP’s licence after third Ombud determination
Read: More FAIS Ombud determinations against funeral provider
Three more rulings were handed down in favour of policyholders in June.
Read: Luvuyo Burial hit with three more Ombud rulings over unpaid funeral claims
Latest determinations
The latest four determinations concern:
- a policy taken out in October 2018 and on which a claim was made in September 2024;
- a policy held since December 2018 and a claim in September 2024;
- a policy held since September 2019 and a claim in August 2024; and
- a policy incepted in May 2020, on which a claim was made in June 2024.
In each case, the benefit claimed was R10 000.
The complainants received no response from Luvuyo, which also ignored “multiple correspondence” from the Ombud’s Office.
In all these cases, Simpson found that Luvuyo failed to comply with Rules 2A.8.1 and 2A.8.2 of the PPR.
Rule 2A.8.1 requires that: “An insurer must, within two business days after all required documents in respect of a claim under a microinsurance policy or a funeral policy have been received, (a) assess and make a decision whether or not the claim submitted is valid, and (b) (i) authorise payment of the claim; (ii) repudiate the claim; or (iii) dispute the claim and notify the claimant of the dispute.”
Rule 2A.8.2 provides that: “If a claim is disputed as referred to in rule 2A.8.1(b)(iii), the insurer within 14 business days after expiry of the period referred to in rule 2A.8.1 (a) may further investigate the claim; (b) must make a decision whether or not the claim submitted is valid; and (c) must pay or repudiate the claim.”
The claims procedure outlined in Rule 2A.8 had expired without the claims being settled.
Furthermore, Luvuyo’s failure to process the claims appropriately reflected non-compliance with TCF Outcome 6, which states that “customers do not face unreasonable post-sale barriers when they want to change a product, switch providers, submit a claim, or make a complaint”.
As in his previous rulings, the Ombud ordered Luvuyo to pay each complainant R10 000 (the amount of their respective claims), plus interest, calculated from the date of the determination until the date of final payment.
Orders ignored
Simpson told Moonstone that, as far as his Office is aware, Luvuyo has not made any payments to the complainants cited in the 12 determinations. All the determinations have been made court orders, and the complainants can enforce the orders through the sheriff of the court.
The company has not lodged any reconsideration applications with the Financial Services Tribunal.
“Luvuyo stopped responding to any correspondence we sent to it,” Simpson said.
