South Africa fines Lombard Life for inadequate disclosures

Chris Hamblin

22 February 2017

The Registrar of Long-term Insurance referred the case against Lombard Life Ltd to the Enforcement Committee of the Financial Services Board. Between October 2014 and November 2015, the insurance carrier rejected 114 claims. In 86 notices in which it informed policyholders about the rejection of the claims, it did not comply with rule 16.1(c)(ii) and (iii) of the Policyholder Protection Rules because it did not inform the claimants:

that they could, within a period of not less than 90 days after the receipt of the notices, make representations to Lombard Life in respect of these decisions;
that they had the right to lodge complaints under the Financial Services Ombud Schemes Act 2004 (Act 37 of 2004) (only South Africans refer to ombud-this and ombud-that);
and of the relevant provisions of the Act relating to the lodging of such complaints.

In mitigation, the registrar took into account the fact that Lombard Life admitted to its transgressions, co-operated with the registrar’s investigation and subsequent enforcement action, and promised to take steps to prevent the contravention from recurring. The Enforcement Committee imposed its penalty on Lombard Life last week.

The Enforcement Committee is an administrative body that came into operation on 1 November 2008 and was created under section 10(3) Financial Services Board Act 1990. It can impose administrative penalties, compensation orders and cost orders on respondents who contravene any law administered by the Financial Services Board.