Check your statements for hidden funeral policy deductions in store accounts
7 mins read

Check your statements for hidden funeral policy deductions in store accounts

The Financial Services Providers Ombudsman (Fais Ombud) has warned consumers to check their clothing store account statements for insurance policy deductions they may not remember, especially funeral policy deductions.

The Ombudsman received a number of complaints about the clothing retailer over questionable funeral rules. In some cases, deductions took years before being noticed by the consumer.

READ ALSO: Growing number of funeral insurers operating outside the law

Fais Obud spokesman John Simpson said on Monday that monthly deductibles are typically between R60 and R100 per policy, and refunds can run into thousands of rands in some cases.

Consumers claimed they were unaware of the funeral policy or were told it was a free benefit for account holders.

The Office of the Ombudsman advises consumers:

  • Listen carefully to what the seller says and be especially careful when selling products or adding them to your account;
  • Not be pressured or misled into adding products to your account that you do not need or want;
  • If they have any doubts, do not agree to any added product or policy, as they can always add products and policies at a later stage;
  • The financial services provider must be able to prove that the consumer has agreed to the policy and the monthly premium; AND
  • If the financial services provider is unable to provide this proof, the policy should be canceled and the premiums returned to the clothing account.

Simpson said his office has received a variety of complaints about different retailers, but has seen a few specific complaints about a particular retailer’s funeral policy – with the numbers being relatively low and not indicative of any systemic problem at this stage.

READ ALSO: Are you considering purchasing a funeral policy? Here’s how not to get scammed

He declined to name the specific retailer mentioned in the complaints.

“According to our policies, all complaints submitted are confidential. We do not disclose the identity of the parties involved in any settlement or closing… We also do not disclose any information regarding respondents in our annual report. The only exception is when we issue an order that has the effect of a court order.”

Complaints

Simpson said his office received 62 complaints about retail stores in the 2023/2024 financial period, of which 47 were not recorded as substantiated (able to be resolved by a court).

Most of the latter were referred to the National Consumer Commission (NCC) or the National Credit Regulator (NCR) as they related to account-specific complaints and credit or loan inquiries.

READ ALSO: In 2021, Bidvest Life paid the highest number of claims in 27 years

Simpson said the remaining 15 complaints involved claims that the nature of the policy was misrepresented to the consumer or that the consumer did not approve the policy.

He added that such complaints are sent to his office by the National Financial Ombudsman, as well as directly by consumers.

“We try to help consumers wherever possible. In most such cases, the matter is resolved when it is referred to the defendant (store) as a premature complaint, i.e. when the complainant has not yet submitted a formal complaint to the defendant.

“We are sending the complaint to the respondent and giving them a six-week period to review the complaint before it is forwarded for formal investigation.”

Simpson said responses to these referrals come from policy issuers who are registered financial services providers.

READ ALSO: FSCA warns insurers against unfair increases in funeral policy premiums

“We are always open to working with any regulatory entity to expedite dispute resolution.”

Policy transactions

Simpson said that based on the complaints he has received, policies are sold either in person at the store, which requires the customer’s signature, or over the phone, where verbal confirmation is made during a recorded conversation.

He said that most of the complaints where the transaction was concluded in the store are resolved in favor of the complainant and the full premium is refunded to the store’s account.

These refunds include accrued interest that was credited to the store’s account.

READ ALSO: Funeral homes are feeling the pinch of the pandemic

However, claims where the transaction took place over the telephone are often rejected because the recorded calls tend to confirm the defendant’s version of events.

Simpson said policies sold over the phone appear to be post-sale transactions after opening an account in a store and sold by salespeople who act as intermediaries rather than representatives.

These sellers do not provide any form of financial advice or financial expertise, but only perform an administrative function of offering specific financial products which the consumer can accept or decline.

Generic products, not financial advice

These transactions do not require the advice register that financial service providers are required to keep.

Simpson said his office’s experience is that intermediaries offer specific financial products, such as funeral policies, but only the basic elements of the product will be explained for informational purposes.

READ ALSO: Life insurance claims show Covid death toll may be under-reported

“The intermediary is not allowed to give advice, recommendations or compare products.

“Overall, these products appear to be generic and relatively cheap.

“It would be difficult to justify the additional costs that an agent would charge to review each person’s financial situation and prepare a complete proposal of advice under the Code (General Code of Practice for Authorized Financial Services Providers).”

Funeral rules: Stay vigilant

The Office of the Ombudsman encourages consumers to:

  • Review your statements regularly to detect any discrepancies in amounts, especially those related to insurance policies they have not approved;
  • Check your balances and their purchases and amount to make sure there are no hidden fees;
  • Dispute suspicious charges by contacting the retail store for clarification; AND
  • In the event of a dispute or dissatisfaction with the response received, please submit a formal complaint to the store.

READ ALSO: Funeral homes are facing backlash over demands for inflated prices

Consumers are urged to submit a written complaint directly to the service provider if they believe they have been financially harmed by the provision of financial services to them under a regulated financial product.

If a complaint remains unresolved after six weeks, consumers are advised to visit the Fais Ombudsman Complaint Portal Office or submit a complaint to [email protected].

This article has been republished from Moneyweb. Read the original here