Policyholders/beneficiaries not yet located
Within 6 months of benefit becoming payable
Within 3 years of benefit bec Policyholders/beneficiaries traced Policyholders/beneficiaries not yet located Within 6 months of benefit becoming payable 159 183 119 595 Within 3 years of benefit becoming payable 165 004 331 084 Within 10 years of benefit becoming payable 107 177 307 112 TOTAL (as at 30 June 2015) 431 364 757 791oming payable
Within 10 years of benefit becoming payable
TOTAL (as at 30 June 2015)
22 SEPTEMBER 2015
"Life insurers have reunited 431 364 policyholders and beneficiaries with their unclaimed benefits since the implementation in June 2013 of the ASISA Standard on Unclaimed Assets"
Life insurers have reunited 431 364 policyholders and beneficiaries with their unclaimed benefits since the implementation in June 2013 of the ASISA Standard on Unclaimed Assets.
The Association for Savings and Investment South Africa (ASISA) this week released updated statistics on the tracing activities of its long-term insurance members to the end of June 2015 aimed at locating policyholders and beneficiaries who have unclaimed assets due to them.
Peter Dempsey, deputy CEO of ASISA, says in total some 757 791 policyholders and beneficiaries must still be traced.
“The good news is that just over one third of ‘lost’ policyholders and beneficiaries have already been traced and paid their benefits,” says Dempsey.
He explains, however, that the total number of policyholders to be traced will always be a moving target. “There will always be policyholders who do not update their contact details and beneficiary details. Our Standard on Unclaimed Assets requires life insurers to start the process of tracing policyholders or beneficiaries within six months of the assets becoming payable.”
Dempsey notes that currently the majority of policyholders and beneficiaries not yet traced fall into the three-year category. The same is true for the number of policyholders and beneficiaries already traced.
“This indicates that the tracing efforts of life insurers are paying off. With time, however, we expect the majority of tracing efforts to reflect in the six months category.”
The Standard on Unclaimed Assets requires that life insurers with ASISA membership intensify the level of tracing policyholders or beneficiaries in order to minimise the pool of assets that remains unclaimed.
Dempsey says the reports received from member companies show at least four different tracing initiatives per case, including the use of tracing agencies, private investigators, the Department of Home Affairs and credit bureaus.
He adds that members continue to apply a number of innovative tracing methods, including the use of social media, especially Facebook and LinkedIn, and approaching professional membership bodies.
Dempsey says for some people traced the financial windfall came at a time of great need.
One life insurer traced an 81-year-old policyholder who had forgotten about his investment policy. The grateful policyholder told the insurer that the benefit could not have come at a better time since he required a back operation and did not have medical aid cover.
For an elderly couple the unexpected benefit payment meant that they could visit their children whom they had not seen in more than three years due to financial constraints.
Another client, whose wife died two years earlier, did not know that there was a life cover benefit payable to him. He was left to pay medical bills and raise the couple’s teenage daughter and desperately needed the money.
Another insurer reported that the daughter of a deceased policyholder was able to open her own business after she was traced and paid the death benefit due to her.
Dempsey says the ASISA Standard on Unclaimed Assets exempts unclaimed assets from the Prescription Act, which provides for a three-year period within which a debt must be collected. This means that life insurers who are ASISA members are committed to holding and growing unclaimed policy benefits until the rightful owner is found, no matter how long it takes.
He says while the current Standard only applies to unclaimed long-term insurance benefits, this will change in January next year when the Standard becomes effective for Collective Investment Scheme (CIS) assets as well. ASISA is engaging with the Financial Services Board (FSB) on extending the principles contained in the Standard to cover unclaimed pension fund benefits.
Life insurance companies have, over the past two years, managed to find 431 364 policyholders and beneficiaries due payouts from life policies and investments, according to the Association for Savings and Investment South Africa (Asisa).
Think twice about giving your employer the right to deduct money from your salary for the repayment of debt – in other words, giving your employer permission to pay one of your creditors before paying you your salary. I’m not talking about an emoluments attachment order (EAO), which is a court order compelling your employer to deduct from your salary money you owe a creditor who has obtained default judgment against you. I’m talking about you choosing to have your salary docked – by your payroll department – to pay a creditor. It seems a crazy thing to do, but apparently it’s not uncommon, particularly among state employees.
“Approximately 30 percent of First National Bank’s affordable housing book comes from payroll deductions,” Lee Mhlongo, the chief executive of housing finance at FNB, writes in a blog post on the bank’s website.
“Arranging a payroll deduction simplifies one’s life, as you do not have to agonise about the debit order coming off the account. Instalments are paid directly by the employer to the service provider (the bank) on behalf of the employee. The employer then pays the balance of the salary to the employee/client’s account.”
Making use of a payroll deduction to service a home loan has benefits, Mhlongo says, including a better risk profile with the bank, owing to there being less chance of default.
That may be so, but getting your payroll department to stop a monthly deduction from your salary can be a nightmare.
confused hr department
A Gauteng consumer who was paying her Standard Bank bond instalment via a payroll deduction became over-indebted and went into debt review. As soon as she was under debt review, she instructed her employer, the Gauteng treasury, to stop paying Standard Bank. (When you go into debt counselling, your debt counsellor will stop payments to all credit providers in order for them to be paid via the debt review process.) But the instruction was not followed, and the consumer’s employer continued to pay her home loan instalments to Standard Bank. When the consumer challenged this, her employer asked her to obtain a letter from Standard Bank issuing the instruction to cancel payment. But since the instruction to pay the creditor via payroll deduction did not originate with Standard Bank, it refused to issue a letter.
And it happened again. When the consumer’s debt counsellor warned the employer that its failure to carry out the employee’s instruction was placing her in danger of defaulting on her debt review, the employer asked for proof that the consumer was under “debt administration” – something quite different to debt counselling.
The debt counsellor pushed back, asking that since the deduction from the payroll was not court ordered, nor instigated by Standard Bank, but by the employee herself, what gave Persal (the government’s personnel salary system) the right to refuse to take the written instruction of the employee? “Be that as it may, please find attached documentation which confirms that the consumer has applied for debt review,” the debt counsellor said.
The employer’s response is telling: “The staff in human resources are just trying to ensure that they are covered should there be any repercussions from any financial institution.”
As the debt counsellor says, the employer’s over-zealous endeavour to protect itself put the employee at risk.
It took the consumer and the debt counsellor three months to get the employer to stop paying Standard Bank.
“It raises the question of whose interests are being served: the consumer’s or the credit provider’s?” consumer acitivist Simon Lapping says.
A Port Shepstone traffic officer, who had an existing loan from a microlender, obtained a R5 000 payday loan from the same lender. She was repaying her loans via payroll deduction. When she went under debt review, the microlender managed to get her employer to deduct R9 000 of her salary in one fell swoop – almost half of her gross income.
“It’s equivalent to the government doing debt collecting against its own employees,” Lapping says.
What these consumers have experienced also reveals ignorance on the part of payroll staff. Clearly, they don’t understand how debt review works.
There’s a lot of misinformation being disseminated about debt counselling, and some of the biggest offenders are microlenders.
The following is published on microlender Boodle’s website as an answer to the question “What is debt review?”:
“We are a responsible lender and will also not even consider giving you Boodle if you are already debt stressed. We also take fraud very serious [sic] and if you abuse our goodwill and apply for administration and debt review after we have given you Boodle we will be very disappointed and may even open a case of fraud with the South African Police Services. If you are in fact debt stressed we suggest you seek counselling and approach a debt counsellor to assist you.”
I get that Boodle is trying to dissuade “debt-stressed” consumers from acquiring credit with the intention of then going under debt review. But consumers who are debt-stressed wouldn’t be able to get credit if credit providers did proper affordability assessments, which they are legally obliged to do. Their failure to properly assess affordability is what the National Credit Act defines as “reckless lending” and there’s no excuse for it.
Lapping says Boodle is also seeking to discourage consumers from applying for debt review – by threatening them that they will be sued for fraud. He has lodged a complaint with the National Credit Regulator (NCR).
Early this year, the NCR referred to the National Consumer Tribunal a case of reckless lending against Boodle. Lesiba Mashapa, the company secretary at the NCR, says the case was settled, with Boodle agreeing to pay an administrative fine of R500 000 and write off the loans.
The trade association I represent, DBA International and its 575 member companies, play a critical role in keeping America’s economy moving forward. We purchase and collect defaulted receivables. It’s important to note that only a small fraction of consumers wind up defaulting on debt and an even smaller percentage wind up in court. While efforts to collect this defaulted debt may be an unpleasant topic of conversation, attempts to do so are nevertheless important to all of us.
America’s economy has been chugging along and the recent improvement in the unemployment rate is certainly welcome news. When America’s economy works efficiently, consumers are able to access and use credit to purchase goods and services. America has a credit-based economy and, when used responsibly, it works well for families, farmers and small businesses. Whether it’s a family taking out a loan to buy a home, a farmer borrowing money to purchase equipment, or a small business using a credit card to acquire a new printer, access to affordable credit is what makes America’s economic engine hum.
It is also important that consumers, farmers and small businesses repay their debts. The system falters when consumers default on loans. We all suffer when those who use credit fail to live up to their obligations. When this occurs, the costs to borrow increase and prices rise because businesses that provided goods and services have to recoup money lost due to default. Access to credit is then greatly reduced.
As typically occurs, actions by unscrupulous debt collectors make headlines – unfortunately there are “bad apples” in every profession. Reacting to these stories, legislators often look for a “quick fix” and reporters attempt to target the entire debt collection industry and paint it with broad, unflattering brush-strokes.
One recent example of a “quick fix” in the California State Legislature is the Economic Equity and Financial Stability Initiative, a three-bill package introduced by a former bankruptcy attorney, purporting to reform California’s bankruptcy and debt collection laws to help low-income families get back on their feet. These bills would have unintended and negative consequences for California consumers.
While SB 641 claims to provide low-income consumers with legal recourse to set aside a default judgment, what it effectively does is require companies who successfully obtained a judgment in court to reproduce evidence already provided for up to six years from the date of judgment—well beyond any legal requirements for document retention. The issue the bill attempts to address is ensuring the debtor receives proper notification of a lawsuit filed against them—which represents only one percent of all complaints received by the Consumer Financial Protection Bureau. The stated problem involves the process serving profession, yet the bill focuses only on judgments obtained by debt purchasers.
By raising the homestead exemption, SB 308 would allow wealthy donors to shield assets prior to filing for bankruptcy and then walk away with hundreds of thousands of dollars of unrestricted cash. Likewise, the wage garnishment restrictions outlined in SB 501 favor higher income debtors and may unduly penalize low-income wage-earners with assessment fees multiplied by the extension of repayment terms. The imbalance these bills create will be detrimental to the vast majority of consumers who are fiscally responsible.
Equally true, various columnists and reporters writing for publications in California and nationwide frequently paint inaccurate, misleading pictures of the debt collection industry. Efforts to scapegoat an entire industry by focusing on the unfortunate actions of one entity usually ring hollow. It is often forgotten or conveniently ignored that the debt buying industry is already heavily regulated by multiple government entities at the federal and state level – with more regulations being proposed all the time. Equally true, DBA International member companies have instituted an industry-leading Receivables Management Certification Program that exceeds state and federal regulation.
The responsible use of credit is an integral part of a fully functioning economic system. While the collection of debt is an unpleasant subject, it is nevertheless critical in a credit-based economy. On behalf of DBA International’s member companies – who collect debt professionally and ethically, comply with a bevy of federal and state regulations and interact with consumers in a transparent manner – we understand the desire for the legislative “quick fix” and the desire by some to create “bad guys.” Hopefully cooler heads will prevail. Decision-makers will realize that such “easy solutions” usually have unintended consequences and efforts to demonize an entire industry don’t pass the sniff test.
Jan Stieger is the executive director of Sacramento-based DBA International.