The FSB has issued a press release on an administrative penalty of two million rand imposed by the Enforcement Committee on a funeral parlour that sold funeral insurance without being registered as a long-term insurer.
The Enforcement Committee imposed a penalty of two million rand on a funeral insurance business after discovering that it had been conducting business as a long-term insurer without being registered to do so. The funeral parlour had received monthly premiums from clients who paid the funeral parlour to take responsibility for the funeral costs in the event of the clients’ or their family members’ deaths. The problem however arose when the respondent did not always attend to the funerals stating that it had repudiated its clients’ claims.
The Enforcement Committee is an administrative body that has the authority to impose administrative penalties and cost orders on offenders of legislation administered by the FSB and their orders have the force of a High Court judgment and will be executed accordingly. The Enforcement Committee found that:
- these contraventions had continued for a period of at least nine years
- unregistered long-term insurance business had been conducted under different names and from different offices
- the member of the funeral parlour was uncooperative
- some of the reasons given to clients for rejecting their claims were unsympathetic
The funeral insurance business was therefore ordered to pay the investigation, legal and committee costs of the FSB.
In this case, the Enforcement Committee stipulated that the amount of the penalty was also aimed at serving as a deterrent to similar unregistered funeral insurance businesses owing to the impact they can have on vulnerable families. The FSB is therefore sending a very clear message that it will adopt a zero-tolerance approach to contravention of Acts and regulation.