First Mutual challenges IPEC at High Court
LISTED First Mutual Life Assurance has lodged an application for review with the High Court challenging a Corrective Order issued by the Insurance and Pensions Commission.
The corrective order directs FML’s shareholders to pay significant sums in Zimbabwe dollars and in United States dollars to the policyholders in respect of perceived actual and potential losses, as assessed by BDO Chartered Accountants.
The firm has notified shareholders that to protect FML’s legal rights, an application for review of the Corrective Order has been filed with the High Court.
In 2022, IPEC conducted a forensic audit on FML accusing the company of submitting an unsatisfactory report during an assets separation exercise.
IPEC said the exercise was necessitated by the notable non-compliance by several insurance companies against the FML legal requirements, which had the potential to prejudice policyholders in favour of shareholders.
“Pursuant to various enquiries from stakeholders on the planned forensic audit on First Mutual Life (FML), the Commission wishes to advise stakeholders as follows: The Insurance and Pensions Commission ( Ipec) has been conducting an asset separation exercise in the insurance and pensions industry in line with the provisions of the Insurance Act (Chapter 24:07) and the Pension and Provident Funds Act (Chapter 24:09),” read part of the statement issued in 2022.
The commission said the objective of the asset separation exercise was to enforce compliance with requirements of the FML legal provisions.
In a cautionary statement to shareholders on Monday, First Mutual Life FML noted that it respectfully disagrees with the findings in the BDO report and in the IPEC Corrective Order and believes its submissions were not properly considered.
“Interpretations of fact, accounting standards, legal and actuarial principles, as well as currency conversion issues are in dispute.
“FML is seeking input from independent third-party professionals in a bid to resolve the areas of disagreement. Accordingly, the Boards of both FML and FMHL are exploring all avenues to find a way forward.
It added, “Meanwhile, in order to protect FML’s legal rights, an application for review of the Corrective Order has been filed with the High Court. Notwithstanding the institution of legal proceedings, which has become unavoidable to safeguard FML’s rights, both FML and FMHL will continue to work with the regulator and with the parent Ministry to resolve the issues.”
The firm said it remains committed to the service and protection of its policyholders, and balancing the interests of all stakeholders.
IPEC is a statutory body that was created through an Act of Parliament – the Insurance and Pensions Commission Act [Chapter 24:21] to regulate the insurance and pensions industry in Zimbabwe.
The Commission’s principal function is to protect the interests, rights and benefits of insurance and pension consumers (policyholders and fund members) and to ensure that there is general stability of the insurance and pensions industry.-chronicle
