The Office of the FAIS Ombud warns consumers to be cautious of funeral service providers offering their services to consumers exclusively on social media platforms.
The Office has received numerous complaints in respect of unpaid benefits on funeral policies that were provided by entities which marketed themselves only through social media platforms. These entities, most of which are unregulated, are setting up Facebook pages, presenting themselves as legitimate Financial Services Providers (‘FSPs’).
It has been found that most of these entities are firstly not registered with the Financial Services Conduct Authority and secondly not underwritten, as required in terms of the Insurance Act. This makes it very difficult for the Office to trace the individuals involved, and very challenging to resolve the matter.
The Financial Advisory and Intermediaries Services Act (‘FAIS Act’) sets minimum standards for the business activities and conduct of authorized financial services providers (FSPs). It requires any person or company that provides financial services to register as an FSP and obtain a license through the FCSA. Members of the public are therefore encouraged to always first check if an entity or individual is registered with the Financial Sector Conduct Authority (FSCA) to provide Financial Advisory & Intermediary Services and what category of advice the entity is registered to provide. The registration can be confirmed by checking on the FSCA website, www.fsca.co.za , using the FSP number or name of the entity.
In addition, a funeral policy must be underwritten by a licensed long-term insurer to ensure that the benefits payable to the policyholder and their beneficiaries will be paid in the event of a valid claim. The Insurance Act prohibits any unlicensed person from conducting insurance business in South Africa. No funeral policy can be sold unless there is a licensed insurer on-risk for that policy. Any policy that is not underwritten by a licensed insurer, is not a legitimate policy in terms of the Act, putting consumers at risk of not receiving their policy benefits should they claim. Therefore, always ask for the details of the insurer who is underwriting the policy and confirm this status with the insurer before entering into such a funeral policy.
The Ombud’s Office reminds consumers to look out for the following red flags:
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- Policy documents are not worded correctly and have spelling errors;
- The FSP number is not included in the policy document or is not provided;
- The company does not have a website or a landline number;
- The office address is not disclosed, or it does not have an existing office; and
- The company’s email address does not work or is not provided.
Consumers who wish to lodge a complaint with our Office can do so by emailing detailed information to enquiries@faisombud.co.za, visiting the complaints portal on our website, calling our Office on (012) 762 5000 or on our Sharecall number 086 066 3274 for further assistance.
For updates and further information, please visit our website at www.faisombud.co.za and our social media platforms:
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