The Lewis Group indicated that it will refund a total of R69 million in premiums and interest to pensioners and self-employed customers who were sold policies for loss of employment, which would, of course, be of no benefit to them.
According to an article in Business Report, Lewis and Monarch Insurance filed an answering affidavit to a complaint by the National Consumer Tribunal that they had contravened the law by selling such policies.
“…an internal probe that found “human error” was one of the reasons” for this mistake.
Lewis said on Friday that both companies rejected claims by the National Credit Regulator (NCR) to the tribunal that the sale of the policies was fraudulent and deceitful.
“Lewis said its internal investigation had found that a small percentage of pensioners and self-employed people were sold such policies, through human error and contrary to Lewis’ own internal policies.”
It will be interesting to see if the FSB’s Enforcement Committee will become involved in this matter. Whilst an internal investigation may have been conducted, an external forensic probe would test the accuracy of the total amount due, which is calculated as being “…an approximate amount of R46m in premiums, and interest of R23m.”
One would also like to see what steps were implemented to avoid future occurrences of the human error, as well as “other reasons” indicated in the article.
Business Report notes that, on Friday, in response to the announcement by the furniture group, Lewis’ shares climbed the highest of the JSE’s all share stocks, ending the day up 10.32%.
The FAIS Ombud, Charles Pillai, made some damning statements on 29 January 2008 against malpractices in the furniture retail industry. Under the heading “Abuse”, in the Joshua Doore determination, he highlighted some of these, and recommended actions for the Regulator to consider.