Following an investigation by the National Credit Regulator (NCR), as well as an internal investigation by the Lewis Group, it was revealed that Lewis had been selling loss of employment insurance to customers not eligible.
In a statement released by the company today, Lewis highlighted that it is refunding the affected customers R44.1 million for the sale of the insurance, together with R23 million worth of interest that was accrued on the amount.
“As a result of human error at our stores, loss of employment insurance products were sold to pensioners and self-employed customers contrary to our company policy. The issue relates to less than 1% of all insurance premiums earned by the Lewis Group since 2007,” said Johan Enslin, chief executive officer of Lewis Group.
The refund to affected customers comes after an extensive internal investigation, according to Enslin. “[The investigation] was triggered by the NCR bringing to the company’s attention three such instances,” revealed the Lewis Group.
The refunds
Pensioners and self-employed customers of Lewis were sold loss of employment cover when they purchase items at the store. Loss of employment cover is designed to cover the cost of the item purchased in the event of retrenchment or redundancy, as a result, pensioners and self-employed people are not eligible to claim against the insurance.
According to Lewis, about 30% of the affected customers are existing customers with the store. In these cases, the refunds will be credited to their accounts. The remaining affected customers will be refunded directly, as their accounts have already been settled.
“We apologise to these customers and are in the process of contacting them to advise of the refunds due to them. In the case of customers who have already settled their accounts, we are using all possible channels to reach them and will make physical house visits if required,” highlighted Enslin.
The error
Enslin explained that the company had measures in place to prevent this type of incident from happening, however, it has implemented further preventative measures to prevent it from happening again.
“Although our IT systems included coded controls which excluded loss of employment insurance cover from being selected as an option to sell for certain categories of customers, our investigation revealed that mistakes occurred during the process of entering the client’s employment status details into the system.
“We take the wellbeing of our customers very seriously and have implemented a number of preventative measures to ensure this type of human error does not happen again,” said Enslin.
Among the measure implemented is an improved and enhanced credit application process. Enslin revealed: “Our credit approval is done on a centralised basis at head office and has been improved in that all customers who are captured as self-employed or pensioner at store level, are re-checked centrally to ensure loss of employment insurance is not being erroneously sold to them. This is further backed up by a monthly exception report on all transactions involving pensioners and self-employed customers, which is again reviewed to ensure that no loss of employment insurance is incorrectly sold to these individuals.”
The changes to be made
In addition to the changes to the credit application process, Enslin pointed out that Lewis will be making other changes.
One of the changes that has been made is that Lewis staff will increase the training, testing and monitoring that their staff go through, including staff training on refined credit processes.
“We have also embarked on a communications campaign to further educate customers around their rights on credit-related issues, which includes insurance. Lastly, we have increased the frequency of our mystery shopping research to identify areas that can be further improved,” noted Enslin.
He added: “We know that our customers are satisfied with our merchandise, levels of service and our credit offering, but this matter has been a clear reminder that we cannot rest on our laurels and we will continue to work tirelessly to ensure that something like this does not happen again.”