A recent settlement between the FSB’s Enforcement committee and a direct insurer reads as follows:
The parties agree that the offering of the Travel and Card Cash back benefits that formed part of the … product were not linked to risk, and offering these with the… product constituted an inducement to clients to enter into and continue short-term policies as prohibited by section 44 of the STIA (Short-term Insurance Act)
The complaint related to TV adverts which were flighted for a few months.
An alert compliance officer noted that, apparently, the same offer was still available on the direct insurer’s website last week.
In all fairness, the settlement agreement published on the regulator’s website is merely a summary, and it is difficult to determine the exact facts.
If it should prove that the insurer merely paid the fine and continued with what was regarded as an illegal inducement to take out insurance, then it begs the question about how much credence can be given to promises of ensuring that penalties discourage wrongdoings.
We commented in a previous article about the seeming inconsistency in the determination of penalties. In this instance, it was R50 000, which I am sure bears no relation to the amount of income derived from the transgression.
Are there checks and balances in place to ensure that wrongs are discontinued? If not, it should be implemented. An example should be made of repeat transgressors to demonstrate the serious intent of the Regulator, regardless of the size of the transgressor.