Earlier this month‚ the National Credit Regulator (NCR) referred Lewis Stores and Monarch Insurance to the National Consumer Tribunal for alleged breaches of the National Credit Act (NCA) by mis-selling employment and disability cover.

At the time‚ the Lewis Group said it was “committed to co-operating fully with the tribunal to ensure satisfactory resolution of the case”‚ but it appears the mis-selling of credit insurance may be continuing.

When the news first made headlines – it was first case of mis-selling of credit insurance the NCR has referred to the tribunal – the Lewis Group’s share price dropped 5%.

On Thursday night‚ the Lewis Group’s share price was described as “collapsing”‚ and a 702 Money Show report said “David Woollam‚ director of Summit Financial Partners‚ seems to be the catalyst”.

Woollam’s initial investigation in stores led him to conclude that “Lewis is one of the worst examples of exploiting people and taking advantage of their lack of financial literacy”. His probe also led to the NCR referral.

He said he had done a lot of “mystery shops in my life…the one at Lewis was horrifying”.

“I blew the lid on this a month ago yet Lewis is still breaking the law‚” Woolam told the Money Show’s Bruce Whitfield.

He listed examples of different quoted prices being given for cash and credit deals.

Credit insurance is a lucrative avenue of revenue for major retailers‚ as they can legally insist that customers have credit life insurance for the duration of the agreement‚ but Woolam said the “industry has sacrificed sustainability for short-term profit”.

In a statement earlier this month‚ the NCR said it investigated Lewis and Monarch for selling “loss-of-employment cover to pensioners and self-employed consumers…even though those who bought it would not be able to claim the benefits”.

It also‚ the NCR said‚ sold‚ “disability cover as part of credit insurance to pensioners”.

These policies are “meant to settle the pensioners and self-employed consumers’ outstanding balances under their credit agreements with Lewis Stores in the event of their retrenchment or redundancy from employment”.

The NCR said the former is “unreasonable and impose an unreasonable cost to such consumers because they are not employed and cannot claim benefits under this cover”‚ while the “same applies to the sale of occupational disability cover to pensioners where they no longer have an occupation”.

“Pensioners and self-employed consumers are not employed and cannot be retrenched or become redundant from employment. They should not be offered loss of employment cover as part of credit insurance”‚ said the NCR’s company secretary‚ Lesiba Mashapa.

The cost of credit insurance policies is also something that is of concern to the Department of Trade and Industry‚ which intends to regulate this in future.

The NCR at the time requested the tribunal to order refunds to the pensioners and self-employed consumers‚ who bought the policies‚ and that an audit be conducted of such policies sold by the two companies; and impose an administrative fine on Lewis Stores.