When Momentum Life insurance company launched its Save Thru Spend
loyalty scheme around four years ago, there were many who thought it was a good
idea, while others had a different opinion altogether.
Save Thru Spend stopped
FSB obtains a High Court declaratory order that brings Moment Life's Save Thru Spend loyalty scheme to a halt.
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The Financial Services Board (FSB) was the group that objected most strongly
to the loyalty scheme that essentially encouraged consumers to save through
endowment products.
The Save Thru Spend scheme created by Momentum Life added a percentage of
every rand spent on products and services that were partnered with the insurance
company into the consumer's Momentum Investment portfolio. Products and services
such as linked-investment service providers, health, endowment and retirement
annuities were all included in the loyalty scheme.
As far back as 2006, Momentum Life bowed to pressure by the Financial
Services Board and halted a significant portion of the Save Thru Spend loyalty
scheme. However, there were still several policies in place, which the FSB
continued to object to.
Recently, the Financial Services Board managed to obtain a High Court
declaratory order against Momentum Life, stating that the Long Term Insurance
Act made it illegal for it to offer this type of scheme on life assurance
products.
This order was obtained after Momentum Life and the FSB mutually agreed to
take the matter up with the High Court after they could not agree on the correct
legal position of the loyalty scheme.
According to the person in charge of insurance matters at the FSB, Jonathan
Dixon, the regulator "will engage Momentum on how to deal with the implications
for existing Save Thru Spend long term insurance policies arising out of the
court's ruling."
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