The plot is thickening in an ugly power struggle between Selfmed Medical Scheme and the industry regulator, the Council for Medical Schemes (CMS). Selfmed has turned to the courts to prevent the regulator from carrying out what it feels is an unfair bid to put the scheme under curatorship. As a precursor, in September the Council for Medical Schemes (CMS) hit Selfmed with a search and seizure that saw its investigators confiscating laptops from the medical aid’s Cape Town head office.
“The leadership will never walk away and surrender the scheme to the CMS,” says Selfmed chief executive officer Leon Bester as he readies for a long haul.
“We inherited a sinking ship with no reserves, a terrible reputation, disastrous membership decline [and pathetic administration], opinion withheld and qualified f inancial statements, no independence [from Sanlam, then administrator],” he says, and describes how Selfmed has transformed into “a little gem”. Then-registrar, Patrick Masobe, was “nowhere to be found”, recalls Bester, to help the minnow recover damages incurred by Sanlam (which administered Selfmed from 1975 to 1997).
“When Selfmed was worth nothing, Where does Online Share Trading (OST) trump BOE or Nedbank’s offering? The crux of the matter is that as a retail investor, you want access to the best quality tools and the opportunity to the best research you can afford.
1: Recognised superior performance: According to the Investors Monthly annual stockbroking awards, the OST platform is the second best platform in 2012. BOE is ranked 6th in the same survey. Its offering is described as “among the most comprehensive in the industry”.
2: Costs: According to a survey con- [CMS] did not want it,” Bester argues. “Now that there are superb reserves and members get quality service, then suddenly the registrar seeks to annex or hijack the scheme!”
Selfmed is a self-administered medical aid with just R270m in annual contributions and 20 000 members. This pales against the Big 3 – Discovery (2.4m members), GEMS (1.6m), and Bonitas (700 000) – which control more than half the 8.5m-strong market.
The latest in the CMS-Selfmed war, arguably triggered by the regulator’s inspection in April, is part of a rather complex and long battle. In 2010, the CMS came second when the North Gauteng High Court concluded it should pay Selfmed and Bester R400 000 for damages as part of a legal tussle. Critically, the court “rejected as untrue” Masobe’s evidence, which it also labelled contradictory.
A subsequent encounter, at the appeals court last year, somewhat eased the council ’s bruised PR image, although not entirely, y, when it was able to p partially y over- ducted by Moneyweb earlier this year, BOE Private Clients charges a minimum of R70 per trade, brokerage commission of 0.7% on trades under R200 000 and R152.76 per quarter for monthly administration fees. In contrast OST charges R50 per trade, a f lat rate of 0.5% and R50 a month. The administration fee is typically waived if you trade more than three times a month.
3: Standard online searchable statistics database: Traders who compare the OST versus BOE offering highlight that OST has some “quite funky” search capability allowing you to filter out stocks fitting a certain profile. Anecdotally, it also appears to be an easier-to-use turn the previous ruling.
In a separate tussle, Sanlam was last year forced to pay Selfmed R458m (a further R129m went to Topmed, under Len Deacon’s watch) in settlement. The threeway lawsuit stemmed from claims that Sanlam’s healthcare unit plundered its clients’ reserves. Despite transferring a massive R587m to the aggrieved pair, CEO Johan van Zyl denied that Sanlam had plundered its former medical aid clients.
Now, as part of yet another protracted round in the never-ending battle, the preemptive Bester wants to stop the regulator from its apparent bid to obtain an ex parte order. He fears the order would prevent Selfmed, much like Medshield, from defending itself against “one-sided litigation” by CMS boss Monwabisi Gantsho, who replaced Masobe in 2010. Pity, Medshield, which Bester cites to support his argument, isn’t such an ideal example.
According to court papers, Medshield trustees embezzled millions of scheme funds meant for members’ health needs. Acting g like “a law unto themselves”, , their trading platform.
4: Quality of research: Each year, there’s a research analyst ranking that highlights the best equity research analysts. In the 2012 survey there were two from SBG Securities (which provides research to OST) – Irina Gavrilova in the Construction, Building Materials & Machinery sector and Jonathan Kennedy-Good in the Telecommunications sector. There were no representatives from BOE or Nedbank who were winners this year.
5: Investor Education Courses: OST is particularly strong in the education space and offers regular education courses.