The National Credit Regulator alleged last month that the group’s subsidiaries Lewis Stores and Monarch Insurance had contravened the National Credit Act by selling the policies to certain customers. Since these consumers were not entitled to benefits provided under the policies, the regulator argued, Lewis and Monarch had sold such cover with the intent to defraud the consumers and referred the complaint to the National Consumer Tribunal.
Friday’s statement said that Lewis and Monarch were opposing the referral and had filed a “comprehensive answering affidavit”. The affidavit raised “numerous challenges” to the regulator’s findings, including failure to properly consider the complaint, failure to conduct a proper investigation or to properly engage with Lewis and Monarch. It also raises questions about jurisdiction over Monarch.
The company said Lewis and Monarch had demonstrated in the affidavit that the regulator’s allegation that the sale of certain policies to particular customers was fraudulent and deceitful and was done with the intention to defraud consumers was patently untrue and had no factual basis.
The group said that an internal investigation by Lewis going back to June 2007 had found that a small percentage of pensioners and self-employed people were sold the policies in question through human error and in contravention to Lewis’ policies. The retailer was reported to still be calculating the amount to be refunded to consumers. An estimate from Lewis suggests that about R46 million in premiums plus interest of R23 million would be refunded to consumers.
The group added that Lewis and Monarch reject the NCR’s allegation that the sale of disability insurance to pensioners and self-employed people constitutes a contravention of the NCA. Their affidavit is said to include data showing that claims against these policies by pensioners and self-employed people had been, and continued to be, honoured by Monarch.