NRC refers two Lewis subsidiaries to tribunal

Lewis Stores, Monarch accused of mis-selling insurance products

THE NATIONAL Credit Regulator (NCR) has referred two subsidiaries of Lewis Group to the National Consumer Tribunal for breach of the National Credit Act.

The regulator announced yesterday that it referred the furniture group’s subsidiaries, Lewis Stores and Monarch Insurance Company, to the tribunal following an investigation which revealed that Lewis Stores and Monarch sold loss of employment cover as part of credit insurance to pensioners and self-employed consumers and sold disability cover as part of credit insurance to pensioners.

The loss of employment cover sold was meant to settle the pensioners’ and selfemployed consumers’ outstanding balances under their credit agreements with Lewis Stores in the event of their retrenchment or redundancy from employment. The disability cover sold was meant to settle the pensioners’ outstanding balances under their credit agreements with Lewis Stores in the event they became disabled.

The basis of the NCR’s referral is that the sale of loss of employment cover to pensioners and self- employed consumers was unreasonable and imposes an unreasonable cost to those consumers as they were not employed and could not claim benefits under this cover.

The same applied to the sale of occupational disability cover to pensioners where they no longer have an occupation.

Lesiba Mashapa, company secretary at the NCR, said pensioners and self-employed consumers were not employed and could not be retrenched or become redundant from employment.

“They should not be offered loss of employment cover as part of credit insurance. This is the first case of mis-selling of credit insurance in South Africa which the NCR has referred to the tribunal to obtain redress for the pensioners.”

The regulator has requested the tribunal to order refunds to the pensioners and selfemployed consumers, order an audit to be conducted and impose an administrative fine on Lewis Stores.

Clif Johnston, vice-chairman of the South African National Consumer Union (Sancu), said the union was pleased that this matter has been taken to the tribunal. “Consumers need protection against this sort of mis-selling and misrepresentation.

“We hope that the tribunal will impose a hefty administrative fine (if they find the company guilty) to serve as an example in order to discourage others from this sort of practice.”

In response, the Lewis Group said in a statement : “The NCR has referred two of Lewis Group’s operating subsidiaries, Lewis Stores and Monarch Insurance Company Limited, to the National Consumer Tribunal for alleged breach of the National Credit Act.”

The group added that the NCR has requested the tribunal to order refunds to the customers impacted by the sale of these insurance products, to undertake an audit and to impose an administrative fine of R10 million on the company.

“The directors and management of Lewis Group are committed to co-operating fully with the tribunal to ensure satisfactory resolution of the case.

“The group undertakes to keep investors updated on developments relating to the tribunal’s investigations.”

Mashapa advised consumers they have the right to decline policies offered by credit providers and to obtain their own. “They should compare the premium, cover and benefits amongst different providers.”

‘CONSUMERS NEEDS PROTECTION AGAINST THIS SORT OF MIS-SELLING AND MISREPRESENTATION’