‘Business model needs an overhaul’

AN INDUSTRY expert said yesterday that Lewis Stores needed to change its business model and called for a major overhaul of the credit services industry. David Woollam, a director of Summit Financial Partners and a champion of consumer rights, was reacting to the news that the National Consumer Tribunal on Wednesday found Lewis Stores in breach of the National Credit Act for selling loss of employment and disability cover to pensioners as part of credit insurance. Lewis Stores and Monarch Insurance Company were referred to the tribunal following an investigation by the National Credit Regulator (NCR). The National Consumer Tribunal found that Lewis Stores had acted unreasonably by offering or demanding pensioners or unemployed consumers to take out loss of employment insurance. The tribunal also said the group had acted unreasonably by offering or demanding that pensioners take out disability insurance. The tribunal interdicted Lewis Stores from engaging in this conduct in future and ordered that an independent audit be conducted on all credit agreements entered into by the group since 2007. Lewis was ordered to reimburse the premiums paid for this insurance to all affected consumers identified in the audit. Woollam, who has a history of fighting against practices and policies by retailers that exploit under-informed consumers, said the ruling against Lewis was a victory for consumers and a milestone for the industry. “NCR has managed to achieve a significant victory against unscrupulous corporate behaviour, which is unlawful and abusive to consumers. There is a rotten culture to exploit consumers for their lack of understanding,” Woollam said. “The credit industry is greedy as it has no strong regulatory controls, and people are desperate for access to financial services. We need a massive overhaul of the industry.” Lewis Group shares lost 2.02 percent to close at R 41.65 yesterday. – ANA

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