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Press Release by The Financial Services Board

FSB to probe Fedsure

The Financial Services Board (FSB) has announced that it will be investigating the problems that occurred at Fedsure Life Assurance Limited (Fedsure Life) between 1998 to the takeover by Investec in 2001.

Given the public concern and the Registrar of long-term insurance’s need to improve the regulation of insurers where it can better protect the interests of policyholders, the Registrar has appointed persons from outside the FSB to conduct the investigation.

FSB spokesperson Russel Michaels says that the investigation needs to determine why various problems occurred at Fedsure Life in the period from 1998 through 2001 that lead to the declaration of zero bonuses.

They will establish why non-vested bonuses on certain lines of business were cancelled, the extent to which these problems were revealed to the FSB, and whether the Long-Term Insurance Act and the associated regulation and supervision should be amended to better protect the interests of policyholders.

Among other issues, they have been mandated to establish whether Fedsure Life's board of directors observed the utmost good faith and exercised proper care and diligence in their duties in managing and administering the company, particularly regarding the management of its policyholder funds in the interest of policyholders.

In addition, they must find out whether the statutory returns required today, on-site visits, and other investigations that are routinely undertaken by the FSB would have revealed Fedsure's financial position.

A tight time-table has been set for the completion of the inspection where after the Registrar will consider the implications.