Bruce Cameron
14 July 2007
A retired Supreme Court of Appeal judge, Peet Nienaber, has been called in by the life assurance industry to conduct a comprehensive inquiry into credit life assurance following an exposé by Personal Finance last week of abuses in the industry.
The Personal Finance exposé focused on how Regent Life, the life assurance subsidiary of JSE-listed bluechip Imperial, sidestepped various laws which saw Imperial's nationwide car dealership conglomerate being paid excess commissions.
In the process, credit life premiums for periods as long as five years were charged as one lump sum to finance agreements costing policyholders thousands of rands in additional interest payments.
The commissions, which were as high as 50% of premiums, were also a contravention of a code of conduct of the Life Offices Association (LOA), which represents most life assurance companies.
Senior executives of life assurance companies took urgent action after publication of the Personal Finance exposé and decided at a special meeting this week to appoint Nienaber to conduct a comprehensive investigation into most aspects of credit life assurance.
The LOA is conducting a separate internal investigation into the alleged contravention of its code of conduct on commission limits by Regent Life.
The National Treasury and the Financial Services Board are to be kept informed of the progress and results of the inquiry. The credit life industry is also being investigated by the Financial Services Board.
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