LOBAMBA – Members of Parliament yesterday grilled Financial Services Regulatory Authority (FSRA) Chief Executive Officer Ncamiso Ntshalintshali over the delay in resolving an insurance claim by Tesco Cash and Carry following a fire that caused an estimated E30 million in damage.
The business, which is now based in Matsapha, was engulfed by flames two years ago, prompting questions over whether it would receive compensation from its insurer.
Ntshalintshali told MPs that FSRA had been summoned to explain the conduct of insurance companies, particularly concerns surrounding claims that had not been settled.
He said the regulator had examined repudiated claims – cases in which insurers and policyholders disagreed on whether the requirements for payment had been met – and found that insurers licensed by FSRA had generally remained within international benchmarks over the past three years.
However, he said the Tesco matter had been specifically referred to the regulator for scrutiny.
Ntshalintshali explained that, under the Financial Services Regulatory Authority Act of 2010, consumers who have complaints against financial service providers have access to an independent ombudsman. He said engagements between Tesco and the insurer had eventually been referred to the ombudsman.
He said FSRA had deliberately avoided interfering with the ombudsman’s process because disputes between insurers and policyholders could ultimately end up in court.
According to Ntshalintshali, the complexity of the Tesco claim had required the ombudsman’s investigation to be sufficiently comprehensive to ensure that any subsequent challenge would be based on disagreement with the decision, rather than allegations that the process itself had been flawed.
He said there had been delays because information had been submitted by the parties in stages.
The fire had destroyed a significant amount of the company’s documentation, he said, meaning that some of the information had to be reconstructed through affidavits from the business owner. The information was then expected to be shared with the insurer and intermediary.
Ntshalintshali told MPs that, as of Friday, some information was still outstanding, but he had received an update before appearing before Parliament that the missing information had been submitted the previous night after the parties had been given a deadline.
He said FSRA had been assured that the ombudsman’s determination would be issued within 48 hours, which would have been Wednesday.
The CEO warned, however, that the size and nature of the claim created a possibility that the matter could eventually be taken to court.
He explained that an insurance policy generally consisted of the insurance schedule, which specified details such as the insurer and the insured amount, as well as the policy wording, which set out the responsibilities of the insured when making a claim.
The policy wording had become a contentious issue in the Tesco case, particularly regarding when the complainant had received it and whether the client understood the requirements contained in the document.
Ntshalintshali said the claim also involved technical issues requiring expert valuations and supporting reports.
He further told MPs that the tax component was another complication. FSRA could not independently verify certain information relating to the tax position because the Eswatini Revenue Service (ERS) could not disclose confidential taxpayer information to the regulator.
He said there had also been difficulties reconstructing the size and nature of the stock destroyed in the fire because supporting evidence was unavailable from the complainant.
Ntshalintshali said FSRA could not venture into matters involving confidential ERS information and believed that such issues would ultimately have to be determined by the courts if they remained disputed.
Mafutseni MP Sabelo Mthethwa questioned why the business was being expected to produce documents when its premises and records had been destroyed by fire.
He accused the situation of portraying the insurance sector and its regulator in a negative light and suggested that Parliament might need to consider changes to FSRA’s leadership if the authority was failing to perform its duties effectively.
Kubutha MP Masiphula Mamba asked when the ombudsman’s process would be completed, noting that the matter had already taken a considerable amount of time.
Mamba said MPs were not seeking to influence the ombudsman’s decision but wanted to ensure fairness and questioned why an ombudsman should take almost a year to issue a ruling.
Deputy Speaker Madala Mhlanga also questioned the prospects of a fair resolution after the CEO indicated that the matter could end up in court.
Mhlanga asked whether duplicate files existed, particularly because important documents appeared to have been lost in the fire. He also questioned whether ERS had suspended any penalties against the business, given its size and the number of emaSwati it employed.
MP Allen Vilane asked what FSRA would do if the ombudsman failed to meet the Wednesday deadline.
MP Marwick Khumalo questioned whether Tesco had previously been offered a specific settlement amount and whether the expected Wednesday determination would constitute a new decision.
Khumalo also questioned why the matter had taken so long and asked what happened to policy documents and duplicate records that would ordinarily be retained by insurers or intermediaries.
In response, Ntshalintshali acknowledged that the matter had taken too long to resolve and said FSRA had used the opportunity to engage Parliament on how the regulator could improve its handling of such cases.
He said FSRA had a consumer education and financial inclusion department that regularly engaged the public, including through social media, to educate consumers about financial services.
Ntshalintshali said FSRA had powers to sanction institutions that failed to meet regulatory requirements and could ultimately revoke their licences. However, he said institutions were first given an opportunity to show cause why their licences should not be revoked and had rights to challenge such decisions.
Regarding the Wednesday deadline, he said FSRA had contacted the ombudsman to establish the progress of the matter and determine whether there were any remaining bottlenecks.
He maintained that the ombudsman’s process was intended to provide consumers with a fair avenue for resolving disputes without having to pay for the service.
MP Charles Ndlovu asked who the directors of the insurer were and whether the company conducted its banking activities locally, expressing concern that an insurer could potentially leave the country.
Mhlanga further asked whether there was an avenue for appealing to the Minister if a complainant was dissatisfied with the ombudsman’s determination.
Ntshalintshali explained that the ombudsman’s determination could be made an order of the court, although there were circumstances in which such determinations could still be challenged.
He disclosed that the ombudsman had dealt with 58 cases since 2022
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