Lewis stores and Monarch Insurance face possible fine for ‘mis-selling of credit insurance’

In what is claimed to be “the first case of mis-selling of credit insurance in South Africa”‚ the National Credit Regulator (NCR) has referred Lewis Stores and Monarch Insurance to the National Consumer Tribunal.

The NCR said in a statement that it investigated Lewis Stores 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.

Reuters Africa reported on Thursday that the Lewis Group’s share price dropped 5% following the release of the NCR statement.

The wire service also said the group is facing an audit and potential fine.