WITH illegal financial service providers mushrooming, the country's nonbanking regulatory agency has come down heavily on the illicit business in a nationwide clamp down.

The Financial Services Board (FSB), an independent government body which supervises and regulates the financial services industry, is naming and shaming insurance companies, money lenders and loan sharks operating illegally.

FSB manager Nare Setati warned people this week not to conduct business with illegal organisations such as Mitpo Building Society.

Setati said the company had fallen foul of the law.

He said the unregistered company had been blacklisted because it was illegally selling funeral policies in Mahikeng, North West.

"Mitpo is not underwritten by a registered long-term insurer as is required by law.

"The entity is neither a registered long-term insurer nor a licensed financial services provider in terms of the law.

"Therefore, in its conducting of unregistered insurance business, it leaves policyholders unprotected," he said.

"The board has, on several occasions, requested Mitpo to provide proof of underwriting. But to date the entity and its owner have failed to provide the requested documents.

"We investigate and take action against entities selling funeral insurance policies to the public while such policies are not underwritten," Setati added.

He said such conduct amounted to running an unregistered insurance business and was in breach of the provisions of the Long-term Insurance Act 52 of 1998.

Setati warned that companies not in compliance with the rules and regulations governing the insurance industry might be subjected to a fine or imprisonment upon conviction.

He said businesses were requested to provide proof to the FSB that they were underwritten by a registered long-term insurance company, as required by law.

He added that such companies were given 10 days to respond after the request had been sent.

"The businesses have either failed to respond to this request or have failed to confirm that they are underwritten by a registered long-term insurance company."

"The purpose of funeral insurance is to provide cover to help pay for funeral costs.

"The law requires that all funeral policies must be underwritten by a registered long-term insurance company. This is to ensure that the policyholders and their beneficiaries are paid their benefits when they claim.

"Policyholders must receive a copy of their policy documents, which must bear the name of the long-term insurance company underwriting the funeral policy.

"The board again reminds consumers who wish to conduct financial services transactions with any institution or person to check beforehand with the FSB if such an institution or person is authorised to render financial services," said Setati.

For more information, call the FSB toll-free on 0800 110 443 or visit www.fsb.co.za.

9 SCHEMES UNDER INVESTIGATION

1.Faizel Dollie Funeral Home (Western Cape)

2.Clarinise Funeral Services (Gauteng)

3.Abomelezi Funeral Services (Eastern Cape)

4.Speelman Family Funeral Home (Eastern Cape)

5.City Funeral Fund, trading as City Funerals (Gauteng)

6.Holy Cross (Eastern Cape)

7.Maphutha Dihuswana Funeral Group (Mpumalanga)

8.Tshwaragano Funerals (North West)

9.Omega Funeral Services (Gauteng)

mtshazox@sundayworld.co.za