African bank fined for misleading advertising
JOHANNESBURG - The Financial Sector Conduct Authority has imposed a 700-thousand rand penalty on African Bank for misleading advertising.
This advert was part of the bank's # KeFestive social media campaign in December 2023.
READ | African Development Bank chief warns of tariff 'shock wave'
It was found to contain factually incorrect and misleading statements on the use of personal loans.
Sindiswa Makhubalo, the head of Banks and Payment Providers at the FSCA spoke to eNCA.
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These requirements are tailored to balance innovation with consumer protection. US: The Consumer Financial Protection Bureau has classified BNPL loans accessed via digital accounts as 'credit cards', triggering protections under Regulation Z. Dispute resolution, refunds and chargeback rights are now part of BNPL transactions, although industry litigation may reverse this. These models demonstrate that proactive regulation, coupled with flexibility, is essential for managing BNPL risks. Comparative legal analysis of South Africa South Africa's current dual-regulator model (the NCR and FSCA) is ill-equipped for the digital fragmentation of modern finance. The lack of a clear BNPL regulatory framework stands in contrast with jurisdictions where regulators have already expanded definitions of credit to include BNPL explicitly. Key takeaways include: The UK's reliance on disclosure and licensing. Australia's focus on credit licenses and suitability assessments. The US approach of function-over-form classification (if it behaves like a credit card, it is regulated like one). The hope is that the Conduct of Financial Institutions Bill will reconcile institutional gaps and avoid regulatory arbitrage by expanding statutory definitions and enforcing consistency. Fintech partnerships and platform liability BNPL services are frequently integrated directly into online retail platforms via application programming interface partnerships. This embedded finance model raises questions of liability, especially when the BNPL provider operates outside the regulatory net. In South Africa, it is unclear whether a platform offering BNPL at checkout could be deemed to be providing or facilitating credit under the NCA. Retailers and marketplaces must consider whether they are indirectly exposing themselves to liability or reputational risk, especially if their BNPL partners engage in misleading conduct, impose unlawful fees or collapse without notice. Globally, regulators are beginning to scrutinise not just BNPL providers, but also the platforms and merchants who offer such services. The UK's Financial Conduct Authority, for example, has signalled that contractual and operational accountability may extend beyond the primary credit provider. South African platforms should pre-emptively assess their BNPL partnerships through the lens of operational risk, consumer protection and reputational resilience. Digital identity and affordability in a credit-light economy One major challenge for effective BNPL regulation in South Africa lies in consumer verification and affordability assessments. Without a robust credit history or consistent income documentation, many consumers who use BNPL services remain invisible to traditional risk models. This opens the door to over-indebtedness, particularly among the underbanked. 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Lerato Lamola & Anél de Meyer are partners at Webber Wentzel.
