B3 Funeral Services, one of the oldest funeral homes in SA, is being investigated for reducing the cover amount of policies of at least 6,000 of its clients allegedly without their consent.
The Financial Sector Conduct Authority (FSCA) and the Office of the Ombudsman for Financial Services Providers (FAIS) confirmed to Sowetan that the 30-year-old company is being probed following complaints from customers who raised the alarm about their cover amounts that had been reduced by as much as by 30% even though their premiums remained unchanged.
Many of them had taken policies that were being sold by Bryte Life, B3’s former underwriter. Bryte terminated its contract with B3 this year and was replaced by African Unity Life.
“The Office of the FAIS Ombud is aware of such matters against B3 Funerals after having received a number of complaints in this regard. This Office is at this moment unable to comment on the legality of this transaction as we are still currently investigating these matters. We have, in accordance with the rules on proceedings of this office, directed the required correspondence to the respondent to provide the required feedback. The investigations in respect of these responses are, as mentioned above, still ongoing,” said Marc Julio Alves from the FAIS office.
He did not want to divulge how many complaints they had received related to the B3 and Bryte funeral policies.
Bryte told Sowetan Consumer that they did everything by the book following the breakdown of their relations with B3.
“In keeping with our business philosophies, we engaged extensively with B3 Insurance and Funeral Services (B3) in 2020 to remediate the portfolio. We proposed different options but could not reach mutual agreement with B3. In 2021, we therefore had no other option but to terminate the partnership, which we did by following due process and providing the required notice to the affected parties, including policyholders. We continue to honour all valid claims timeously. Keeping customers top of mind, we also extended the option of a standalone policy to any policyholder who may want to maintain their cover with Bryte — an alternative that remains available,” said Nkululeko Dhlamini, Bryte spokesperson.
B3 said it was not aware of the investigation against it.
“As far as B3 is aware, none of our entities have received any form of correspondence from the FAIS Regulator, that pertains to B3 or any of its entities being the subject of an investigation. The communication that went out to all affected policyholders by the underwriter, which is public information, confirms the reason for client’s policies being cancelled,” said B3 spokesperson Andre Cass.
Jacky Huma, from FAIS’ head of micro and access product providers, said although Bryte was the insurer and took the financial risk, B3 could not be exempted from the problem as it was getting commission from the insurer for bringing in the clients.
“We became aware of the problem with B3 and Bryte policies about a month ago when we heard their clients complaining on radio about delayed payments. However, we have since received some complaints from their clients about their reduced cover amounts and we have engaged with all stakeholders concerned about this, and this is still an ongoing investigation,” said Huma.
She was, however, unaware about the clients’ premiums being either unchanged or having gone up despite their downgraded policy amount.
“We will look into that because nobody has made us aware. We only knew about the cover amount and not the premiums. Clearly someone has been generous with the truth here and we will need to dig even deeper into this issue,” said Huma.
Busiswa Fani from Westonaria took out Bryte policy for five relatives in 2017. She was covered for R75,000 per person with a premium of R445. When her grandmother passed away in July she had to wait for five weeks for her pay-out.
“I was shocked when I was told that I’d only get R30,000 instead of the R75,000 I had signed up for. In January my premium went up to R635. They told me that my policy had been amended but I was never alerted to this. I then went to complaint with the Ombudsman and I’m still waiting for the outcome,” said Fani. She also showed Sowetan Consumer a copy of her complaint email to FAIS.
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