Advertise with fastmoving.co.za
 
 

Tribunal wants audit of all Lewis credit deals
Tribunal wants audit of all Lewis credit deals

Tribunal wants audit of all Lewis credit deals

RETAILER NEWS

bdlive.co.za - Sep 15th 2016, 08:33

IN ITS first substantial ruling against a listed company, the National Consumer Tribunal has ordered Lewis Stores to oversee an independent audit of all the credit agreements it has entered into since 2007. 

Industry sources say the number of agreements could top a staggering 1-million. On Wednesday, the tribunal ruled that Lewis had contravened the National Credit Act.

By the close of trade on Wednesday, the Lewis share price had not reacted to the news, but the ruling’s wide-ranging implications are expected to have a damping effect on the price in coming weeks.

Lewis Group management said on Wednesday evening that it was considering the findings and would respond formally on Thursday.

The unexpectedly tough ruling from the tribunal will not only damage Lewis’s reputation but is likely to tie it up in a potentially unlimited independent audit of the group’s entire base of credit customers.

The National Credit Regulator (NCR) considered this "a great victory", said media relations officer Lebogang Selibi. The NCR would return to the tribunal to argue the imposition of a fine on Lewis Stores, she said.

The NCR has already asked for a R10m fine to be imposed, although the regulations allow for a fine of up to 10% of the company’s turnover.

The tribunal’s ruling deals with the first of three referrals relating to Lewis made by the NCR in the past 15 months. That referral related to allegations that Lewis sold retrenchment cover to pensioners and self-employed consumers. It included allegations that the retailer sold disability cover as part of credit insurance to pensioners.

Following its own investigation into the allegations relating to retrenchment insurance, Lewis undertook to repay R67m to its affected customers. However, it has not investigated the misselling of disability insurance.

Subsequent referrals by the NCR to the tribunal related to warranty charges and club membership fees charged by Lewis. Lewis said these allegations were without merit.

Although the tribunal’s judgment relates to the misselling of insurance, the scope of the independent audit that it has ordered appears to be unrestricted. According to a press statement released by the NCR on Wednesday, the tribunal "ordered that an independent audit be conducted on all credit agreements entered into by Lewis Stores since 2007".

For Lewis, the potential threat of an independent audit is that it might reveal the existence of other contraventions of the National Credit Act, including the issues dealt with in the NCR’s two later referrals.

For Lewis’s directors, the judgment comes at a time when they are already battling to protect their reputation in the high court. David Woollam, an executive director of Summit Financial Partners, launched a precedent-setting section 165 derivative action against four directors in August.

Woollam wants the company to declare CEO Johan Enslin, chief financial officer Les Davies, board chairman David Nurek and chairman of the audit and risk committee Hilton Saven delinquent.

Woollam has argued that the directors have indulged in questionable practices that have prejudiced uninformed consumers.

On Wednesday Woollam said the tribunal’s ruling validated the concerns of Summit Financial Partners. "We believe this is only the tip of the iceberg."From DFM Publishers (Pty) Ltd 

Read more about: south africa | retail | lewis

Related News

The changing UX and CX landscape
13/09/2019 - 16:16
An exceptional customer experience (CX) builds a foundation of loyalty and trust. Similarly, a positive user experience (UX) encourages brand connections with people wanting to come back for more. And yet, local organisations must learn to embrace these more effectively to differentiate themselves from their competitors.

Footgear gets go-ahead to buy Edcon's footwear brands
13/09/2019 - 09:24
Footgear, the South African retailer of branded and non-branded footwear, on Thursday received the green light to purchase the assets and business associated with Edcon Limited’s Edgars Active and High Key brands.

Ackermans launches A-list Summer collection
12/09/2019 - 11:08
With winter’s icy grip on the country, it's hard to believe that summer is around the corner. The onset of warmer days means that it’s almost time to ditch the winter wardrobe and embrace a lighter, brighter one. However, selecting a summer wardrobe can be a daunting experience, as consumers are spoilt for choice and simply don’t have the time to sift through the top trends - particularly when on a budget.

Online shopping business to shake up retail sector
12/09/2019 - 09:40
Allsale Club is a members-only online shopping business that aims to save consumers money on everything from everyday branded items to luxury items.

UK retailers bristle at demand of no-deal Brexit
10/09/2019 - 14:52
A British demand for supermarkets to prepare for a potentially chaotic no-deal Brexit by stockpiling food is stoking anger in the industry, with bosses saying they should not be blamed if people can't find everything they want on the shelves.