Personal Finance news update
First-time debt defaults reach R16.8 billion
Experian South Africa has released its Consumer Default Index for the third quarter, which records first-time defaults on consumer debt in South Africa. The overall index increased from 3.76% in the second quarter to 3.93% in September, amounting to R16.8 billion in first-time defaulting balances in the quarter. This is mainly due to a rise in first-time defaulters across unsecured banking products (credit cards and personal loans). Personal loans showed the biggest increase year-on-year, from 8.03% in 2018 to 8.84% in 2019, amounting to R6.2bn. First-time credit-card defaulters increased from 6.58% to 6.63% year-on-year. Total consumer debt is R1.72 trillion.
Single Ombud for short - Long-Term Insurance
The Short-term (non-life) and long-term (life) insurance industries will have a single ombudsman from the beginning of 2020, when Judge Ron McLaren, the Ombudsman for Long-term Insurance, will also assume the adjudicative role in the office of the Ombudsman for Short-term insurance. Deanne Wood, the Ombudsman for Short-term Insurance, will leave the office on December 31. Amid changes in the regulatory environment, the boards of both insurance ombud schemes decided to enter into a shared services agreement and have a single ombudsman for the adjudication of both short-term insurance and long-term insurance complaints. The two offices will continue to operate independently.
SA private equity funds outperform listed equity
The latest RisCura-Savca SA Private Equity Performance Report shows that private equity outperformed listed equity over the short and medium term to the end of June. The report, which tracks a basket of South African private equity funds, showed outperformance across all three listed benchmarks over three years and five years. Over 10 years, private equity underperformed listed equity across all benchmarks. Outperformance by private equity relative to the FTSE/JSE All Share Total Return Index, the Financial Total Return Index and the Shareholders Weighted Total Return Index was 1.6%, 4% and 4.2%, respectively, over three years. Tanya van Lill, chief executive of the SA Venture Capital and Private Association (Savca), says the “sustained outperformance demonstrates the value that the private equity asset class is able to bring to a portfolio amid extreme market volatility and lagging economic growth”.
FNB pays out R50 million life claims pre-emptively
FNB LIFE has paid out nearly R50 million in pre-emptive life insurance claims over the past year. Instead of waiting for claimants to come to them, FNB Life routinely checks the National Population Registry to see whether any of its policyholders are deceased. If a policyholder has died, the insurer processes a pay-out to the beneficiaries, many of whom have no idea that the policies existed. This process has paid an average of R2.9m worth of claims a month over the past year. Chief executive Lee Bromfield says FNB Life is the only life insurer in South Africa paying out claims pre-emptively.