Secondary

Debarment Overturned

Regulator bares its fangs

A penalty of R2 million was imposed on Abangcwabi Myendeki Funeral Parlour CC for contravening sections 7(1) and 8(3) of the Long-term Insurance Act, No. 52 of 1998 (the Act).

“The recommended penalty was mindful of the need to serve as a deterrent to similar unregistered funeral insurance business, given that the failure to deliver a funeral benefit as promised can severely impact vulnerable households.”

The Respondent conducted funeral insurance business without being registered as a long-term insurer. The Respondent collected monthly premiums in exchange for taking responsibility for the funeral costs in the event of the death of a client or the client’s family member. In many instances the Respondent did not actually attend to the funerals because it “repudiated” the claims of its clients.

The Respondent also conducted business as Myendeki Funeral Directors and some of the illegal schemes that it operated were the Masande Burial Scheme, Zuko Burial Scheme and Myendeki Burial Scheme. The Respondent conducted business from at least seven offices in the Eastern Cape.

In arriving at an appropriate penalty the Enforcement Committee took into account, inter alia, as aggravating factors that:

  1. the contraventions occurred for a long period, from at least 2004 up to at least August 2013
  2. the Respondent conducted unregistered long-term insurance business under different names
  3. the member of the Respondent and management refused to co-operate with the investigation
  4. there were significant so-called policies involved, with more than 220 of them being uncovered at just one branch and
  5. some of the reasons provided for “repudiating” claims were callous, such as the fact that the deceased was not kept at the Respondent’s mortuary.

Consequently the Enforcement Committee imposed a R2 000 000 penalty on the Respondent and ordered it to pay for the investigation, legal and committee costs of the FSB. The determination of the Enforcement Committee has the force of a High Court judgment and will be executed accordingly.

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