Financial regulator warns against Be Strong Funerals
A funeral service provider cannot conduct insurance business without an underwriter
As the coronavirus pandemic takes its toll on lives and livelihoods, more people turn to informal savings instruments such as burial societies in case tragedy strikes.
But Covid-19 has opened another door that allows unscrupulous entities to prey on consumers’ vulnerabilities.
In the latest incident, the Financial Sector Conduct Authority (FSCA) warns against Be Strong Funeral Services (Be Strong Funerals), which it says is breaching various financial sector laws.
The FSCA says it received a complaint for an unpaid funeral claim against Be Strong Funerals, which operates in the Thabo Mofutsanyana district in the Free State. The funeral provider was also conducting insurance business without an underwriter.
It wasn’t clear whether Be Strong Funerals was operating as a funeral parlour or burial society.
Some burial societies have contractual agreements with funeral insurers that entails collecting premiums from members and then paying them to the funeral insurer.
If funeral insurers don’t regulate the burial society’s premium collections from members it can very risky. However, the Long-Term Insurance Act does provide protection if you, and not the burial society, is the policyholder.
Funeral parlours must be registered in terms of the National Health Act as well as with the local authority. If they also distribute funeral insurance they must be a registered underwriter that collects the premiums and issues you with a policy.
Any policy you take out, even if it offers services from a particular parlour, should also offer a cash benefit. To safeguard yourself, you need to check if both the parlour and the insurer are registered.
The FSCA confirmed that Be Strong Funerals is not authorised in terms of the Financial Advisory and Intermediary Services Act to render any financial advisory and intermediary services.
The caution follows a string of warnings in recent weeks from the FSCA against fraudsters using well-known brands such as Stanlib and Allan Gray, promises of huge returns and low to zero-interest loans to scam consumers out of their money.
The regulator urges you to always check if an entity or individual is registered with the FSCA by phoning toll free on 0800-110-443 or visiting its website www.fsca.co.za.
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