On Business Report:

“Cape Town – The Life Offices’ Association is launching an urgent enquiry into whether some companies have been contravening consumer credit insurance practices, the association announced on Thursday.

In a press statement the LOA said that they noted with concern media reports last weekend that some consumer credit insurance member companies were allegedly breaking remuneration and commission regulations set out in the Long-term Insurance Act.

LOA chief executive officer Gerhard Joubert said that their association decided at a meeting this week to launch an enquiry into the consumer credit insurance market.

Former Long term insurance ombudsman, Judge Peet Nienaber, will head the investigation.

Joubert said companies active in consumer credit insurance had pledged their full co-operation to help better protect consumers.

He said their investigation would be running concurrently with a Financial Services Board investigation into compliance with existing regulatory requirements.

“At this stage it is envisaged that the enquiry will cover all consumer credit insurance marketing and distribution practices, including incentivisation strategies, which may drive behaviour that impacts negatively on consumer protection, and will seek to identify any gaps in the regulatory environment,” said Joubert.

He said the consumer credit insurance market “largely services the more vulnerable consumer…where fair and transparent practices are thus of utmost importance”.

The LOA is also embarking on several other initiatives aimed at protecting consumers when it comes to credit life insurance.

These include the launch of an educational campaign informing consumers what credit life cover is and what their rights are.

A committee is also looking into how to solve the problem of beneficiaries often only discovering the existence of a credit life policy after the three months in which claims have to be lodged. – Sapa”