Thulani Cele was, very sadly, a victim of low economic growth and the receiving end of retrenchments. While he did the smart thing and started making payment arrangements to cover his loans, especially one he took out to do an MBA, paperwork around an insurance policy that would have helped cover part of this loan somehow got lost in the mix.
While not commenting on this particular matter, Denise Gabriels, Lead Ombud at the Life Insurance Division of the National Financial Ombud Scheme, said it’s important to not only read the paperwork carefully but also to check bank statements.
“There is a general duty on clients to go through their financial statements. This may alert the client that a credit life insurance premium is included in their loan instalment, and prompt them to enquire what the premium is for,” said Gabriels.
In this instance, however, Cele told Personal Finance he never received any information about insurance cover, and it was only when a call centre person asked him why he had not claimed that he realised that this could have been a solution. “After two years of financial strain, two years of scraping by, two years of believing I was completely on my own… I discovered there was supposed to be a safety net all along.”
Gabriels explained that insurance to cover loans in case someone dies becomes disabled, or is retrenched is fairly typical.
Cele’s story goes back to 2019 when he was “fresh with optimism about furthering my education”. To do so, he went to an Old Mutual branch. “The paperwork was signed in good faith – I assumed any important details would be properly disclosed,” he said.
Then came March 2023, and he was retrenched. “I tightened my belt, drew on my savings, and kept up with my loan repayments through sheer determination,” Cele said.
Cele told Personal Finance that he has been battling for ages to try to get this matter sorted out with Old Mutual Finance, as no loan insurance was ever mentioned, and he now wants it to pay out. He said he has had to deal with an “institutional runaround” that he says is a “masterclass in corporate obstruction”.
Documents have been requested numerous times, often by different departments, and a “Kafkaesque experience of being told ‘we don’t have that on file’ about documents I could see were date-stamped in their system,” said Cele.
Cele added that he endured at least eight weeks “of complete radio silence since my formal claim submission” as well as “automated SMS messages blaming ‘missing information’ while internal sources quietly confirmed my claim had already been denied weeks prior”.
“This isn’t simply a case of poor customer service – it represents something far more troubling,” Cele said.
Cele’s argument hinges on what he said is a breach of the Financial Advisory and Intermediary Services Act. This law seeks to protect consumers in terms of financial products and services, with one of its consumer rights being treated with honesty and integrity, transparency, and a culture of discipline when dealing with financial services bodies.
Old Mutual has betrayed its trust, taken premium payments while withholding knowledge of coverage, caused him sleepless nights, and “the psychological toll of fighting a system that seems designed to exhaust you,” said Cele.
Cele has, as a result of being unable to resolve the issue with Old Mutual, lodged a complaint with the National Financial Ombud.
There is a duty on both the client (to know what the loan entails and read the terms and conditions before signing) as well as on the credit provider, said Gabriels. These include telling the client whether credit life insurance is compulsory or optional, allowing the client to choose their own insurance provider, and, if the credit provider arranges the insurance, it must disclose all costs, she said.
Credit providers must also “ explain the terms and conditions of the insurance policy to the consumer and provide the consumer with a copy of that policy, which must include details of the premium, what the policy covers and a special mention must be made of any exclusions or limitations on the cover,” said Gabriels. “The Policyholder Protection Rules also place obligations on insurers to provide certain disclosures to policyholders,” she said.
Old Mutual Finance said that it “is aware of a complaint raised by a customer regarding a credit life insurance benefit, specifically relating to a retrenchment claim that was not submitted following a job loss in 2023”.
Cele acknowledged that he didn’t submit a claim straight after he was retrenched, but said he wasn’t aware he could.
The financial services company added it is “currently engaging directly with the affected customer to fully understand the facts and circumstances surrounding the matter. Facts suggest that the customer was eligible to claim under the retrenchment benefit of the credit life policy attached to their loan but was unaware of this benefit,” it said.
Old Mutual also noted that “this matter is being handled in line with our company claim procedures and in consultation with relevant regulatory standards. We remain committed to resolving the matter fairly, transparently, and with compassion.”
It did, however, say that it would not comment further on “respect for the customer’s privacy and to allow due process to take its course”. Personal Finance did disclose Cele’s name when seeking comment.
Even though Cele confirmed that Old Mutual Finance had contacted him, indicating it would respond to the NFO, he said that there was still no resolution.
PERSONAL FINANCE
