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FSB rules against Hippo

13 May 2013 Financial Services Board

The Registrar of Financial Services Providers (Registrar) referred a case against Hippo Comparative Services (Pty) Ltd (the Respondent), FSP number 16357 to the Enforcement Committee of the Financial Services Board.

The referral related to a contravention of regulation 3(A)(1)(b)(i) of the General Code of Conduct for Authorised Financial Services Providers and Representatives. The Respondent, during the period 19 April 2011 to 7 September 2012, rendered financial services through its call centre by selling short term insurance policies on behalf of various short-term insurers to clients.

The Respondent’s call centre agents failed to consistently provide clients with a complete list of quotations. Instead, in some cases, they only provided clients with the cheapest quotation. In doing so, the Respondent followed an approach that gave preference to quantity of business over quality of service rendered to clients.

The referral also related to a contravention of section 15(1) of the General Code of Conduct, in that the Respondent, during the period December 2008 to August 2010, rendered financial services through its call centre and in some cases failed to disclose to clients that the Respondent was an FSP, details of the financial services the Respondent was authorised to provide, whether it held professional indemnity and its legal status and relationship with product.

The Registrar took several mitigating circumstances into account, including:

• The Respondent accepted full responsibility for the contraventions, fully cooperated with the Registrar’s staff and processes, and displayed a sincere intention to comply;

• There is no evidence of any prejudice resulting from the contraventions;

• The Respondent promptly addressed all the compliance issues relating to this matter and amended its processes where it was required.

Consequently, the Registrar agreed to a penalty of R1 million, which penalty was imposed by the Enforcement Committee on 9 May 2013. The Respondent also tendered all costs incurred by the Registrar in dealing with the matter.

The order is available on the FSB website at www.fsb.co.za.

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