ASISA sets out new policies regarding claiming unclaimed assets

04 July 2013 Jonathan Faurie
Jonathan Faurie, FAnews Journalist

Jonathan Faurie, FAnews Journalist

The South African industry is very diverse in that it serves a range of people and access to information in the industry can prove to be a significant challenge, specifically when it comes to accessing necessary information and informing interested partie

In one of the many moves that are being introduced in order to consolidate the industry, which would shift its focus to becoming a data rich industry, the Association for Savings and Investment South Africa (ASISA) is changing its rules regarding the claiming of unclaimed assets.

The new ASISA Standard on Unclaimed Assets came into effect on 1 June 2013 and sets out the tracing process that should be followed by life companies. It also stipulates what should happen to assets when beneficiaries cannot be traced.

ASISA establishes clear guidelines

Speaking to the FAnews, Lize de la Harpe, a legal adviser at Glacier by Sanlam, says that the new standard replaces the Code on Unclaimed Benefits introduced by the former Life Offices' Association and adopted by ASISA in 2008 which was silent on what to do if beneficiaries cannot be located.

“For now, the new standard only applies to unclaimed long-term insurance benefits. However, the intention is to expand it to include collective investment scheme assets, as well as pension fund benefits,” says De La Harpe.

This will undoubtedly have a major impact on the industry. The main elements of the new standard are:

* Prescription will not apply. In terms of prescription law, a debt need not be paid after three years - an unpaid benefit is a debt of a life assurance company to a policyholder.

* A life company may never take ownership of unclaimed assets. However, any money that remains unclaimed by the time the original policyholder is recorded as reaching the age of 100 may be invested in social responsibility initiatives that offer a return on capital.

* ASISA members are required to intensify efforts to trace policyholders or beneficiaries in order to minimise the pool of assets that remain unclaimed.

This will have a number of impacts on the industry. If the rightful owner of the assets cannot be traced, the life company must repeat the tracing process within a three-year period and again within 10 years if the assets remain unclaimed.

If, after 10 years, the life assurance company cannot trace the beneficiaries or policyholder, an external tracing company must be used. The only time this requirement may be waived is if the assets are worth less than R1 000 and the cost of tracing exceeds the amount payable. Any reasonable administrative and tracing costs incurred after the first attempt to trace the rightful owners may be recovered from the unclaimed assets.

Large scale information gathering

In terms of the consumer protection act, companies need to be absolutely clear with clients fully outlining the product or service which they are purchasing. Because of this, policy documents need to inform the policyholder of the following:

* That the client is responsible for keeping their contact information up to date;

* The steps that will be taken by the life assurer to trace the policyholder or their beneficiaries should the assets remain unclaimed;

* That any reasonable direct, administrative, management and tracing fees may be charged on any unclaimed assets, therefore reducing the benefits payable;

* How unclaimed assets will be invested in the case of an investment policy, or what interest will be paid on any unclaimed risk policy benefits; and

- The policyholder will also be asked to consent to the life assurer sharing their personal information with a tracing company to facilitate tracing beneficiaries should their assets remain unclaimed. For existing policyholders the life assurance company should provide the policyholder with this information as part of its regular communication to clients, such as annual benefit statements.

Editor’s Thoughts
The new standard requires member life assurance companies to report to ASISA once a year on statistics of tracing activities conducted and cases that have not been settled within three years. These statistics will be made available to the Financial Services Board. Necessary change that improves the industry is always a good thing, and although this seems like a lot of additional work which needs to be undertaken, if it streamlines the process of claiming existing benefits, there will be no issue from the consumers point of view. However, how much will this improve the industry? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts


Added by Ian Lotter, 09 Jul 2013
Very informative.
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