Two of Old Mutual subsidiaries found guilty of unconscionable conduct by CFTC in under 8 months

* Old Mutual Pension Services Company Limited determined in April, 2022

* This time around involves Old Mutual Life Assurance Company — both fined K500,000

* 9 service providers have been punished that include Wella Medical Society (Wemas); Southern Region Water Board

* Others are Capital Foods Limited DAAM Project; Pep Stores shop in Mangochi; SMB Electronics and Yellowman Machines

* Habitual offenders need to be given stiffer punishments in order to address the malpractices by most public service providers

Analysis by Duncan Mlanjira

Early this month, the Competition and Fair Trading Commission (CFTC) appealed to the public not to relent in monitoring and reporting offenders — who have previously been found guilty in unfair trading practices and unconscionable conduct — but are continuing their unfair practices.

After investigations the Commission made that led to determination made in April this year under the Competition and Fair Trading Act (CFTA), one complaint was against Old Mutual Pension Services Company Limited that alleged that terms and conditions of its Protektor account included that after two years, would allow the one who complained to withdraw 50% of the account’s total amount upon maturity in September, 2021.

However, the company informed the client that he could no longer withdraw the 50% as to do so would violate the Pensions Act 2011 and following deliberation by CFTC, found that Old Mutual Pension Services explanation was correct.

But CFTC found that the insurance company erred in not providing the client with the information of the Pensions Act after it was enacted in 2011.

But the government consumer watchdog went on to order Old Mutual Pension Services to pay a fine of K500,000 “for engaging in unconscionable conduct”.

Eight months later, another Old Mutual subsidiary, Old Mutual Life Assurance Company, has also been fine K500,000 again for unconscionable conduct following a complaint accused by its client that he bought a policy in 2010 which was expected to mature in 2020.

He further alleged that as of March 2021, he had invested a total sum of MK9,801,430 and also submitted that he made three part withdrawals totaling to MK4,968,000; and received about MK2,288,000 as the final fund value despite his expectation to receive a benefit of about K15,233,180 as per agreement, and a further upward adjustment of the fund value as a reflection of the depreciation of the Malawi kwacha.

In total, the complainant received a sum of K7,256,000, which is far lower than the nominal amount invested/saved of K9,801,430, but when the complainant approached the respondent for redress, he was not assisted.

“The Commission found that there were incorrect deductions that had been made and that a refund was only made to the customer following the Commission’s interventions and not when the complainant approached the respondent on the same.”

Other service providers that were punished in April included the folded up Peoples Trading Centre (PTC); King Steel Limited; Central Poultry (2000) Limited; Chipiku Plus; Suncrest Creameries Limited; Vanguard Life Assurance Company; and 15 private schools.

This time around, the CFTC punished 9 service providers, Wella Medical Society (Wemas); Southern Region Water Board; Old Mutual Life Assurance Company; Capital Foods Limited; DAAM Project; Pep Stores shop in Mangochi; SMB Electronics and Yellowman Machines.

The call for the public to be on high alert was made by was made acting Executive Director, Apoche Itimu when CFTC engaged members of the media asking the Fourth Estate to also be on high alert.

Itimu said if found, such habitual offenders need to be given stiffer punishments in order to address the malpractices by most public service providers.

Unfair trade practices — as defined in Section 2 of the Consumer Protection Act (CPA) — is carrying out a trade or business practice which adopts unfair method or unfair or deceptive practice for the purpose of promoting the sale, use, supply or provision of goods and services.

Section 43 of the Competition and Fair Trading Act (CFTA) prohibits unfair trading practices that include hoarding/withholding products; excluding liability for defective goods; goods once purchased are not returnable; misrepresentation of products; sale of counterfeit products; misleading conduct; shelf price different from till price; unclear wholesale/retail price details.

Others include unconscionable conduct; unfair consumer contracts; taking undue advantage of power imbalance; supply of harmful products and goods that do not meet standards as well as expired; substandard and uncertified products.

Malawi developed Competition Policy in 1997 and in 1998, Parliament enacted the CFTA while the Commission (CFTC) was established, in 2012-13, under the CFTA.

Over the years, the Commission has recorded over 1,000 cases and rising with some businesses found guilty more than once —  thus CFTC asking the public to continue reporting for possible habitual offenders.

Apoche emphasized that while they also conduct market surveillances in markets to ensure that the law is being followed, the public can alert CFTC through Toll free line 2489.

She also said they do engage people, that include those in rural areas through business clinics as well as utilising community radios, to sensitise the public on need to be checking products before they buy.

One of the cases bright before the Commission was on Pep Stores shop in Mangochi, which was found guilty of selling products at a higher price than displayed on the shelf and thus ordered to refund K600 which was over and above the displayed price and to cease and desist from engaging in misleading and unconscionable conduct.

The case of shelf price different from till price is common amongst supermarkets managed by Malawians of Asian community, who justify their actions, saying prices of products keep rising on daily basis due to the current economic situation the country is facing.

In May last year, Consumers Association of Malawi (CAMA) also warned consumers to be alert when they go shopping, saying some unscrupulous traders are charging different prices at the till than those displayed on shelves.

In a public notice CAMA contended that most traders had taken advantage of the current economic downturn — coupled with the effects of CoVID-19, which have created scarcities and price increases on some goods and services.

CAMA Executive Director, John Kapito observed price increases were “unjustifiable and pure theft with no better economic explanations and some are tampering with weights and contents of their packages”.

Thus Kapito said it is “important and incumbent upon every consumer to seriously carry out a market surveillance on prices and quality of the goods”, adding that it is the consumers’ “responsible to aware of the prices and quality of products that they are buying from the market”.

Just like CFTC, Kapito emphasised that the public must check the shelf prices and contents and compare them when paying at the till as most shops charge different prices on the till than those displayed on the shelves.

He had observed that most consumers do not bother to be assertive or being alert and thus some traders taking advantage of that.

At the media engagement, CFTC also highlighted what CAMA had warned the consumers on, that there is a growing tendency among certain shops that do not give back change.

CFTC also emphasized what Kapito also told consumers — that they must insist to always demanding the change back — “no matter how small it might be”.