Thousands of elderly and frail people in rural Eastern Cape have been left in the dark after a multi-national insurance company dumped 11 provincial funeral schemes.
Last week, Old Mutual published notices informing thousands of scheme members they had stopped underwriting their schemes.
This automatically left thousands, who stand to benefit from schemes worth more than R100-million, at risk of not getting policy payouts when needed.
Old Mutual said some of the reasons for the “abrupt” termination was that some funeral parlour directors refused to stick to regulatory requirements and comply with the Financial Advisory and Intermediary Services Act (FAIS).
According to Old Mutual’s general manager, Thembisa Mapukata, they had engaged with a number of the funeral companies to help them but some, whose names were published, failed to respond.
“To assist funeral providers who place their scheme business with us, Old Mutual actively engaged with industry bodies such as the South African Funeral Parlour Association [SAFPA] and the Financial Services Board,” she said.
The Saturday Dispatch spoke to a number of scheme directors, who were angry and “frustrated” by the move.
They said having Old Mutual as their underwriter was protecting their clients’ money.
Sindiswa Ntsoyana said she did not know who was going to underwrite them “after the embarrassment” of having their business names published by Old Mutual.
Zwelibanzi Faku, of Faku Burial Society in Mount Ayliff, said Old Mutual had dented their traditional way of doing business in the black community.
“People won’t come to my company because Old Mutual say I don’t meet the requirements. They paint me as a crook.”
He said thousands of people would be affected.
“Many rural people depend on us because they can afford our packages and Old Mutual wants to take our business and when we refuse, they say we don’t comply,” he said.
Saturday Dispatch spoke to eight of the 11 affected funeral parlour and policy businesses, which said they had asked Old Mutual about what would happen to the money they had already paid.
Old Mutual’s Mapukata said when they partnered with funeral providers, it was incumbent on underwriters to ensure customers were treated fairly, in line with the Treating Customers Fairly (TCF) regulation.
“This has been an ongoing process in partnership with all our schemes across the country,” said Mapukata.
“We hosted 11 workshops, attended by 900 funeral providers from across the country, to offer assistance to schemes who wanted to register as financial service providers and support them through the process,”
She said that to assist the 11 funeral providers, Old Mutual proposed different options such as appropriate regulatory structures that would better suit their needs.
“Unfortunately certain funeral providers did not comply with the regulatory requirements by the deadline of March 3 2017 and therefore Old Mutual can no longer underwrite their schemes,” said Mapukata.
She said the move was also to protect members of schemes from unscrupulous operators.
Asked yesterday what would happen to funds already paid by the 11 schemes to Old Mutual, the underwriter was not immediately available for comment. — email@example.com