Medical schemes get stick for brand abuse

The Council for Medical Schemes is taking aim at scheme administrators it says are confusing consumers by sharing branding with the schemes they administer.

It also says some administrators are abusing their access to consumers to sell them services from other companies within their group. Among the firms in the crosshairs are Discovery Health and Momentum Medical Scheme Administrators. JSE-listed Discovery owns Discovery Health, which administers Discovery Health Medical Scheme, while MMI Holdings owns Momentum Medical Scheme Administrators, which administers Momentum Health. Until recently, a similar arrangement was in place at Liberty Holdings. It owns Liberty Health, which in turn owns the administrator Vmed, which until less than a month ago administered Liberty Health Medical Scheme, according to the council.

Liberty Health Medical Scheme changed its name two weeks ago to LMS Medical Fund and is now administered by Medscheme. The three holding companies have subsidiaries selling products such as life insurance and financial services. The medical schemes council's head of compliance, Stephen Mmatli, said many consumers struggled to distinguish between the services offered by their medical scheme and those provided by their scheme's administrator and the associated entities owned by the same group.

Mmatli also said the council was concerned about medical scheme data being abused for the benefit of the group, as it was used to market other products and services to members. A draft undesirable business practice declaration was published in the Government Gazette on August 15 in terms of section 7 of the Financial Institutions (Protection of Funds) Act and section 61 of the Medical Schemes Act.

It proposes declaring it an undesirable business practice for an administrator to use its communications with members to promote products or services that are not directly related to the business of the scheme. It also prohibits administrators from using the same brand as the medical scheme for which it acts without indicating it is the administrator. Interested parties have 21 days to comment.

A copy of the Government Notice in this regard can be found at: http://www.gov.za/sites/www.gov.za/files/40209_gon917.pdf

Business Day, 18 August 2016