LEWIS GROUP LIMITED - Settlement order in the matter between the National Credit Regulator and Lewis Stores

Settlement order in the matter between the National Credit Regulator and Lewis Stores

Lewis Group Limited
Registration number 2004/009817/06
JSE share code: LEW
ISIN: ZAE00058236


SETTLEMENT ORDER IN THE MATTER BETWEEN THE NATIONAL CREDIT
REGULATOR AND LEWIS STORES (PTY) LTD IN RELATION TO LOSS OF
EMPLOYMENT AND DISABILITY INSURANCE

Shareholders are referred to the announcement released on SENS of 15 September 2016
regarding the judgment by the National Consumer Tribunal (NCT) in the matter between the
National Credit Regulator (“NCR”) and Lewis Stores (Pty) Ltd (“Lewis”), which the NCR
initiated in 2015 in relation to the issues of offering loss of employment insurance by Lewis to
pensioners or self-employed consumers and the offering of disability insurance by Lewis to
pensioners amongst other matters as contained in the SENS announcement referred to
above.

Shareholders are advised that today, 2 May 2018, following discussions between Lewis and
the NCR the parties reached agreement that they would seek an order by consent from the
High Court setting aside and replacing the judgement of the NCT with an order from the High
Court. At the request of the parties the High Court granted the following order:

1.    The determination of the NCT is hereby set aside and replaced by the orders set out
      below:

           a. It is declared that by offering loss of employment insurance to consumers who
              are retired or self-employed, the Appellant (“Lewis”) has contravened the
              provisions of section106(2)(b), as read with section 106(1) of the National
              Credit Act 34 of 2005 (“NCA”);

           b. Save insofar as is permitted by law, Lewis shall not offer or demand that any
              pensioner or self-employed consumer pay for loss of employment insurance;

           c. Lewis shall, within 30 calendar days of this order, pay an amount of
              R5 000 000. 00 (five million Rand) as a fine (in terms of section 151 of the
              NCA);

           d. Lewis shall engage an independent firm of auditors to review the
              methodology applied in the conduct of the audit carried out by
              PriceWaterhouseCoopers Inc (“PWC”) dated 19 August 2015 (“the PWC
              audit”) and will procure a second audit only if and to the extent that the
              independent review concludes that there were material irregularities in the
              methodology adopted by PWC;

           e. Lewis will complete the repayment of the premiums paid by the retired, and
              self-employed consumers in respect of Loss of Employment Insurance
              policies, in accordance with the recommendations and findings of the PWC
              audit or any subsequent audit as referred to in paragraph (d) above and will
               provide the Regulator with the detail of such repayments, including the names
               of consumers.

2.   Lewis will, in respect of all future credit agreements concluded with pensioners take
     reasonable steps to establish that such pensioner has an insurable interest in respect
     of the cover provided under any policy offered by Lewis.

3.   There shall be no order as to costs.

With reference to paragraph 1(e) above, shareholders are advised that Lewis is in the final
stages of completing the process of refunding the amount of R67.7 million to its pensioners
and self-employed customers in respect of the cost of loss of employment insurance
mistakenly sold to them together with interest accrued. There is approximately R4 million
still to be refunded. As reported previously, the R67.7 million above has been fully provided
for in prior years. The court order provides certainty in this long outstanding matter and will
result in an additional R5 million charge.

A copy of the court order can be requested from Ms Diane Rafferty by email on
diane.rafferty@lewisgroup.co.za.




Cape Town
2 May 2018
Sponsor: UBS South Africa Proprietary Limited

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