Johannesburg - Shares in Lewis Group [JSE:LEW] fell more than 5% as SA's credit regulator asked the National Consumer Tribunal to impose a fine on the furniture retailer for allegedly mis-selling credit insurance.
The retailer allegedly sold loss of employment cover to pensioners and self-employed consumers even though those who bought it would not be able to claim the benefits, the regulator said in a statement.
The regulator is seeking refunds for the consumers involved and wants the consumer tribunal to conduct an audit of Lewis and its insurance partner Monarch Insurance.
With about 70% of its sales on credit, especially when selling furniture and appliances to lower-income consumers, Lewis and Monarch offer credit insurance to customers to cover their outstanding balances should they lose their jobs or become unable to work.
“Pensioners and self-employed consumers are not employed and cannot be retrenched or become redundant from employment. They should not be offered loss-of-employment cover as part of credit insurance”, National Credit Regulator company secretary Lesiba Mashapa said.
Lewis shares were down 5.94 percent to 84.65 rand at 0819 GMT.
The retailer was not available for immediate comment, but indicated to Fin24 that it would be issuing a statement on the matter.
Fin24 reported on Wednesday that a mystery shopping experience by Summit Financial Wellbeing, a company which fights for consumer rights and lobbies for change in the financial services industry, has seemingly uncovered breaches of the National Credit Act (NCA) by Lewis Group regarding certain delivery/handling fees and extended warranties.
In its response to the allegations, Lewis told Fin24 that all its fees or charges are within the NCA. It said there are, however, variable elements in any contract, including the term of the contract and additional services selected by the customer.