The Financial Services Conduct Authority has imposed an R550 000 penalty on insurer Channel Life for not properly registering intermediaries who collected insurance premiums on its behalf, and for not paying out sufficient funeral service benefits to 33 policyholders.
According to the media release an administrative penalty of R300 000 was imposed on the insurer for contravening section 53 (2) of the Long-term Insurance Act, 52 of 1998 and R250 000 for a contravention of Rule 5.1 (a) (i) of the Policyholder Protection Rules, read with sections 7 (3), (13 (2) (b) and 13 (3) of FAIS Act, 37 of 2002.
When deciding on the R250 000 penalty, the Authority considered amongst other factors that approximately R6.4 million in premiums were collected by the runners, that Channel Life ceased using the runners following the Authority’s investigation and that the Authority had no information at its disposal pointing to actual prejudice as a result of the contraventions. Channel Life co-operated during the entire enforcement process.
In arriving at a penalty of R300 000 for the breach of section 53 (2) of the LTIA, the Authority considered amongst other factors that Channel Life undertook to compensate the affected policyholders by paying the difference between the actual amounts paid and the value of the policy benefits. Moreover, Channel Life undertook to rectify the breach by amending relevant policy wording in line with the relevant provisions.
Click here to download the FSCA media release.