Furniture group in breach
Lewis Stores (Pty) Ltd said today they would keep shareholders advised on developments following a finding by the National Consumer Tribunal (NCT) that the company is in breach of the National Credit Act.
In a statement issued to shareholders late yesterday afternoon, they said they had already reimbursed premiums paid plus interest to more than 90 percent of pensioners and self-employed consumers who were sold loss of employment insurance.
The National Credit Regulator (NCR), referred Lewis Stores and Monarch Insurance Company Ltd (Monarch) to the tribunal last year, following an investigation by the National Credit Regulator (NCR) which revealed that loss of employment cover as part of credit insurance was sold to pensioners and self-employed consumers; and disability cover as part of credit insurance was sold to pensioners.
Jacqueline Peters, Manager: Investigations and Enforcement at the Regulator said that the basis of their referral was that the sale of loss of employment cover to pensioners and self-employed consumers was unreasonable and imposed an unreasonable cost on such consumers. The same applied to the sale of occupational disability cover to pensioners where they no longer had an occupation.
In a judgment handed down yesterday, the Tribunal found that Lewis Stores had acted unreasonably by offering or demanding pensioners or unemployed consumers to take out loss of employment insurance; had acted unreasonably by offering or demanding pensioners take out disability insurance; and was guilty of prohibited conduct for breaching the National Credit Act 34, 2005.
In their statement to shareholders issued late yesterday afternoon, Lewis Group Limited said the tribunal had dismissed the Regulator’s application against Monarch, but held that the investigation and referral of the complaints against Lewis by the Regulator was valid.
Lewis reported that the Tribunal had found that the offering of disability insurance by Lewis to selfemployed persons was not unreasonable, and that there is no clear basis on which the unreasonableness of the disability and loss of employment insurance ties to a specific provision in Lewis’s credit agreements which has the effect of deceiving consumers.
In their statement, Lewis also said the Tribunal had found that the Regulator did not submit any evidence of the way in which consumers were allegedly deceived by Lewis and was unable to make a finding that Lewis uses additional or supplementary agreements to circumvent the Provisions of the NCA.
The Tribunal ordered an independent audit of all credit agreements entered into by Lewis since 2007, for purposes of determining whether any pensioners or self-employed consumers were sold loss of employment insurance and whether any pensioners were sold disability insurance.
“If so,” Lewis’s statement explains, “Lewis is to reimburse such consumers with any premiums and any interest charged on their accounts as a result of such insurance premiums.
“Consumers who no longer have open accounts with Lewis are to be traced and reimbursed.”
The independent audit is to be completed at Lewis’s cost within 120 days and the audit report is to be furnished to the NCR within 150 days.
“Thereafter the NCT will set the matter down for hearing on the quantum of the administrative penalty to be imposed.
“In this regard, we remind shareholders that Lewis has already carried out its own investigation in regard to loss of employment insurance sold to pensioners and self-employed consumers, and has to date reimbursed the premiums paid together with interest thereon, to more than 90 percent of such consumers.”
According to a statement from the NCR following the judgment, the tribunal also interdicted Lewis Stores from engaging in such conduct in future.
Peters said the regulator considered this a great victory and would be returning to the tribunal to argue the imposition of a fine on Lewis Stores.
The Lewis Group statement said: “Lewis will be considering the judgment with its legal advisers for purposes of determining the next steps to be taken by it in this matter, and shareholders will be kept advised on developments.”