Pay Back The Money

Lewis to Pay Back over 69 Million Rand

The National Credit Regulator (NCR) recently took Lewis Stores (and Monarch Insurance) to task for making consumers who were on pension or receiving a grant take insurance on their work income. Lewis have 444 shops country wide in SA and many more in neighboring states. The NCR referred Lewis to the National Credit Tribunal (NCT) and asked that they be fined around R10 Million and face serious censure from the Tribunal.

The Roller Coaster Ride Begins

Following the announcement of the findings of the NCR investigation Lewis Shares took a sudden downturn. They lost around 40% of their value in a short time span as investors grew nervous. It was reminiscent of the African Bank fall from heights which saw the company put into curator-ship. Investors held their breath…

Lewis Defend Themselves

Recently Lewis and Monarch handed in their affidavit to the NCT defending what had happened and continuing to deny that this was actual purposeful fraud as claimed by the NCR. They have blamed it on human error and said that it goes against company policy. They have also issued a statement to the effect that in the wake of their own internal investigation they expect to pay back effected consumers around R46 Million in premiums and R23 Million in interest. They have identified the problem as being a human one. Staff were to blame and not the companies policies.

Bouncing Back

In the wake of the affidavit and announcement Lewis shares shot up by around 11% (the biggest JSE climb of the day). Even though the figures mentioned are huge and the threat of a looming fine is still real, it seems that the plan put investors minds at rest that something was being done and there was not going to be an African Bank repeat.

Not Guilty?

Interestingly Lewis are saying, in their affidavit, that they do not feel that the sale of that type of cover (particularly disability cover) to pensioners is a contravention of the National Credit Act. At the same time Lewis and Monarch say they are planning to pay back the money anyway. This will no doubt make investors, politicians and effected consumers happy.