The Financial Sector Conduct Authority suspended the licence of a funeral service provider against which the FAIS Ombud has issued three determinations this year.
The determinations against Luvuyo Burial and Consulting (Pty) Ltd disclose a pattern of non-compliance with regulatory and contractual obligations. The complainants faced delays in having their funeral insurance claims paid out and received only partial payments.
In the first determination, which was issued on 22 January 2025, it emerged that Luvuyo did not have an underwriter.
The Office of the Ombud ascertained that Sanlam Developing Markets became the scheme’s underwriter on 1 January 2020, but the relationship was terminated on 1 May 2021.
The Office asked the FSCA whether it had information about Luvuyo’s new underwriter. “It advised that this information could not be provided. The respondent verbally confirmed that it currently has no underwriter,” the determination stated.
The Ombud sent the first determination to the FSCA for further investigation and potential enforcement action.
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In the two most recent determinations, both of which were issued on 8 April, the Ombud, Advocate John Simpson, again flagged that Luvuyo was operating without an underwriter when the claims were lodged and the complaints were filed.
“The respondent is still a registered financial services provider (FSP). It appears to be operating without an underwriter as required and is not fully co-operating with the Office. A copy of this determination will be sent to the FSCA for its attention and possible enforcement action,” Simpson said in his determination upholding the complaint by Maruna Ndeleni.
The FSCA suspended Luvuyo’s licence on 14 April.
Luvuyo, which is based in Khayelitsha in the Western Cape, was registered as a company in 2014 and obtained its FSP licence in 2016.
Nature of the complaints
The two recent rulings addressed complaints from Ndeleni and Nomathemba Oscar Jikwa.
Ndeleni’s wife took out a funeral policy in February 2020, with a cover amount of R20 000. Upon his wife’s death in January 2024, Ndeleni, the listed beneficiary, submitted a claim. He did not receive a payout despite his attempts to follow up with Luvuyo. Ndeleni filed his complaint in May 2024.
Nomathemba Oscar Jikwa took out a funeral policy with Luvuyo in April 2020. The policy covered two family members – each insured for a benefit of R10 000. Following their respective deaths in January 2024 and March 2024, Jikwa submitted claims in February and April. Despite her repeated attempts to follow-up, she did not receive the claim payouts. Jikwa lodged a complaint with the Ombud in August 2024.
Responses from Luvuyo
In Jikwa’s case, the Ombud issued a recommendation on 4 October 2024 that Luvuyo settle the claims. On 18 October 2024, Luvuyo paid Jikwa R2 500 and agreed to pay the remaining balance in monthly instalments over four months.
But, despite various promises to pay the outstanding balance, Jikwa did not receive any further payments.
A draft determination was sent to Luvuyo, offering a final opportunity to settle, but no response was received.
In Ndeleni’s case, Luvuyo acknowledged the claim’s validity on 22 November 2024, agreeing to pay the R20 000 in four equal instalments from November 2024 to February 2025. On 12 March 2025, Luvuyo paid one instalment of R5 000.
The determination states, “The respondent made various promises to pay the outstanding balance, but no payments were made.”
A recommendation to settle was issued on 20 February 2025, and a draft determination was sent, but, as in Jikwa’s case, Luvuyo did not respond.
Ombud’s findings on non-compliance
In both determinations, Simpson found that Luvuyo failed to comply with Rule 2A.8.1 and Rule 2A.8.2 of the Policyholder Protection Rules (PPR) issued under the Long-term Insurance Act.
Rule 2A.8.1 mandates that an insurer must, within two business days of receiving all required claim documents, “(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 further requires that disputed claims be resolved within 14 business days.
In Jika’s case, despite receiving all the required documentation, the claims remained unpaid for months, with only a partial payment made.
Similarly, for Ndeleni, the claim submitted in January 2024 saw only a partial payment in March 2025, with no further action taken to settle the outstanding balance.
These delays and failures to act within the stipulated periods constituted clear violations of the PPR.
Additionally, Simpson found that Luvuyo’s actions contravened the Treating Customers Fairly (TCF) principles.
TCF Outcome 6 stipulates 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”.
In both cases, the complainants faced significant obstacles in securing their rightful benefits.
Jikwa’s multiple follow-ups and Ndeleni’s persistent efforts to resolve the claim were met with delays and unfulfilled promises, creating unreasonable barriers to accessing their policy benefits.
Contractual liability
Simpson determined that Luvuyo was contractually liable for the payment of the claims in both cases. The provider’s failure to process the claims promptly and fully, despite receiving all necessary documentation, breached its obligations under the funeral policies.
Orders issued
The Ombud ordered Luvuyo to pay Jikwa R17 500, plus interest at 11.25% a year from the date of the determination until the date of final payment. This amount represented the outstanding balance of the R20 000 total claim, after accounting for the partial payment of R2 500 made in October 2024.
Luvuyo was ordered to pay Ndeleni R15 000, plus interest. This order addressed the remaining balance of the R20 000 claim, following the partial payment of R5 000 in March 2025.