FSB to investigate KZN scam
The Financial Services Board (FSB) yesterday said it will assist the thousands of pensioners and other residents of the Amajuba district in Newcastle in northern KwaZulu-Natal who allegedly fell prey to a funeral policy scam.
The FSB is a unique independent body established by statute to oversee the South African non-banking financial services industry in the public interest.
The FSB's action comes after Sowetan highlighted the plight of vulnerable pensioners last week.
The man at the centre of the alleged scam has refused to address the concerned community or even speak to Sowetan .
Jacky Huma, head of insurance compliance at the FSB, said the institution was concerned. She said if any of the parties involved fail to give a satisfactory explanation or have broken the law in any way, they will be prosecuted.
"We contacted the concerned members of the association after reading the story in Sowetan. We are going to write a letter to the people involved to provide an explanation," said Huma.
She said the FSB would also contact Old Mutual, who the community claims are the underwriters of the controversial policies.
"This is a serious matter. It has been given priority. We need to get the facts from all concerned parties," said Huma.
More than 13000 pensioners allege that they have been contributing up to R400 a month to a funeral scheme associated with the Madadeni Funeral Association but do not receive any payouts or benefits as promised.
The funeral scheme was established by the late Patrick Gumede, a local businessman. After his death the business was declared insolvent and taken over by a new owner. The scheme was originally designed to help the poor in the Madadeni area. The area also has a high unemployment rate.
Edward Mngadi, one of the victims of the alleged scam, welcomed the FSB's intervention. He said: "We have been contacted by the FSB. We are happy that we are now in a position to get clarity on this issue. We have not had any explanation from the new owner. Hopefully, we will now."
Mngadi said any assistance would help those who have contributed large sums of money to the scheme over many years.
"Most people here depend on government grants," he said.