Latest news with #ConductStandard
IOL News
19-05-2025
- Business
- IOL News
FSCA moves forward with COFI Bill as concerns mount over bank account terminations
According to the current regulatory frameworks, banks are obliged to notify customers and provide them with the opportunity to make representations before terminating their accounts. Image: Independent Media / Ron AI The Financial Sector Conduct Authority (FSCA) has confirmed that it is moving forward with the Conduct of Financial Institutions (COFI) Bill, which aims to provide a fair process for bank account closures. Following a series of delays that initially pushed the tabling of the Bill in Parliament to January, the FSCA announced on Monday that it is now set to submit the Bill to Cabinet for approval soon. In response to a list of questions from Business Report, the FSCA said the Bill adopts a principle-based approach, in other words, it contains high-level principles that financial institutions must adhere to, to ensure the desired outcomes in the financial sector. 'However, it reinforces and extends the principles of fairness for termination of financial products and services already contained in the Conduct Standard for Banks (2020). The Conduct Standard deals explicitly with bank account terminations, i.e. financial customers must have access to a fair process when products and services are terminated (this includes account closures),' said the FSCA. 'It falls short of explicitly prescribing a fair hearing, for various reasons, including that this would not be appropriate where there is suspicion of money laundering, terror financing and other criminal activity, and may actually conflict with other legislation that requires no notice.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ According to the current regulatory frameworks, banks are obliged to notify customers and provide them with the opportunity to make representations before terminating their accounts. In South Africa, the Supreme Court of Appeal in Bredenkamp v Standard Bank set the standard for the unilateral termination of the bank-customer relationship on the grounds of reputational risks. John Bredenkamp was a Zimbabwean-based business tycoon suspected of being involved in illicit business activities including tobacco trading, arms trafficking, oil distribution, and diamond extraction. The judgement sets out several principles South African banks have relied on when terminating relationships with their customers. According to the FSCA, the relevant provisions dealing with bank account closures in the Bill are contained in the Conduct Standard for Banks, published under the Financial Sector Regulation Act, 2017. The Conduct provides that banks must conduct their business in a manner that prioritises the fair treatment of their customers; adopt and implement processes and procedures relating to the withdrawal or termination of a financial product or financial service, including closure of a bank account. It also makes provision for reasonable notice of the intention to withdraw or terminate a financial product or financial service, including closure of a bank account by providing reasons for the proposed withdrawal, termination or closure, unless certain circumstances prevail. 'The Conduct Standard furthermore provides that contractual agreements with financial customers must make provisions for circumstances in which the contractual agreement may be terminated or withdrawn by the bank,' said the FSCA. 'This implies that the closure, termination or withdrawal of a financial product must be done as part of an agreed process enforcing contractual obligations and remediating breaches. The circumstances in which terminations may occur must be disclosed to the customer in the contract. 'Both the existing Conduct Standard and the proposed COFI Bill require a fair process for account closures. What constitutes 'fair' and whether this includes the right to be heard will depend on various circumstances that may not be best resolved through further regulatory amendments. 'Instead the FSCA is engaging with the sector to determine a more appropriate way of ensuring consistent understanding and application of 'fairness' based on various scenarios. This will be based on a review conducted by the FSCA of the sector's practices in this regard.' In 2022, lawmakers have hauled the FSCA over the coals about the lax manner in which they were treating the unilateral and arbitrary closure of bank accounts. In his final State Capture report, Chief Justice Raymond Zondo recommended that relevant existing legislation governing banks be amended to introduce a requirement of fairness or, if warranted, a new piece of legislation to be enacted to compel the banks to afford the client a proper opportunity to be heard before their accounts were closed. Visit:
The Citizen
12-05-2025
- Business
- The Citizen
FSCA to investigate due to banks charging different amounts for the same product
The minister of finance answered some written questions in parliament about bank charges and nationalising the Reserve Bank. The Financial Sector Conduct Authority (FSCA) is investigating bank charges after observing several variations in the pricing approaches and structures between different banks. There is also concern about disclosure and how consumers understand these fees, says Finance Minister Enoch Godongwana. Godongwana, minister of finance, says in a written answer to Omphile Maotwe, an EFF MP, that In some cases there are significant disparities in fees between banks for the same or relatively similar products or services. Maotwe asked Godongwana, in a parliamentary question, if National Treasury is investigating exorbitant bank charges. Godongwana says the FSCA is responsible for overseeing the market conduct of banks, including whether the fees and charges banks impose are fair and transparent. ALSO READ: This is how to beat bank fees FSCA spotted several variations in bank charges at banks 'Through its ongoing supervisory activity, the FSCA observed several variations in the pricing approaches and structures of banks. Concerns were also identified about some of the banks' lack of adequate disclosure and customers' poor understanding of these fees. 'Therefore, the FSCA recently initiated a dedicated project to undertake a deeper assessment of transactional fee practices across registered banks in South Africa to determine whether further regulatory or policy interventions are needed.' Maotwe also wanted to know if Godongwana found that he and the governor of the South African Reserve Bank (Sarb) have the same policy approach on the role that the Sarb should play in terms of the transformation of the financial sector. Godongwana says in his answers that FSCA published the Conduct Standard for Banks 3 of 2020 which became effective in July 2021 as the responsible authority for supervising the market conduct of banks. The Conduct Standard was issued in terms of section 106 of the Financial Sector Regulation Act. ALSO READ: FSCA finds banks do not handle consumer complaints properly Conduct Standard for Banks requires transparency for bank charges 'The Conduct Standard introduced requirements for banks to conduct business in a manner that prioritises the fair treatment of financial customers. Section 5(1)(d) of the Conduct Standard stipulates that a bank that provides financial products or financial services must ensure that the terms, conditions and requirements in a contract between the bank and its retail financial customer, relating to a financial product or financial service, including fees and charges, are not unfair. 'Section 5(2) further stipulates that a term, condition or a requirement in a contract is unfair if it would result in an unfair outcome (financial or otherwise) to a financial customer if it was applied or relied on.' Godongwana says while the Conduct Standard does not prescribe or stipulate what would constitute an unfair or 'exorbitant' fee or charge, banks must be able to demonstrate that the basis for their fees and charges are reasonable and that these fees and charges do not result in unfair outcomes for financial customers. The FSCA will conduct the assessment of bank charges on this basis. ALSO READ: EFF-initiated Private Members Bill a set-up for ANC, says expert No plans to nationalise the Reserve Bank In another answer, to Nontando Nolutshungu, an EFF MP, Godongwana says government does not have any plans to nationalise the Sarb. 'While 100% ownership of the Sarb by the state would be in line with most countries and jurisdictions across the world, the benefit that would be derived from nationalising the Sarb must be balanced against the likely large fiscal cost that would accompany it. 'The costs would include compensation in terms of section 25 of the Constitution as well as existing bilateral investment treaties. However, the benefits of 100% ownership of the Sarb are minimal, as private shareholders are currently restricted to playing a governance role only and play no role in determining monetary, prudential, regulatory or any other policy, as policy issues are the sole responsibility of the governor and deputy governors of the Sarb who are appointed by the president.' Godongwana says it is more fundamental for the country that the Sarb ensures that it is allowed to independently pursue its constitutionally enshrined mandate of protecting the value of the currency in the interest of balanced and sustainable economic growth in the Republic and its additional objective of protecting and maintaining financial stability as envisaged in the Financial Sector Regulation Act.
Zawya
25-04-2025
- Business
- Zawya
South Africa: FSCA penalises African Bank for misleading 'investment' advertisement
The Financial Sector Conduct Authority (FSCA) has imposed an administrative penalty of R700,000 on African Bank for an advertising campaign that presented a credit product as an investment offering. Investigation The penalty followed an investigation by the FSCA into African Bank's #KeFestive social media campaign, which was found to contain factually incorrect and misleading statements. As part of its ongoing supervisory activities, the FSCA identified and assessed a social media advertisement flighted by African Bank in December 2023. The advertisement, which featured a well-known public figure, encouraged consumers to take out personal loans with the phrase 'It's not a skoloto chomi! Ke investment". It said in a statement: "The FSCA found the above statement to be factually incorrect and misleading as it misrepresented the nature of the loan product that was on offer, implying that it was an investment rather than a credit facility." The FSCA said African Bank contravened sections 6(1), 6(3)(a) and 6(3)(b) of the Conduct Standard, which require the following: - Section 6(1): A bank must ensure that its financial products and financial services are advertised to financial customers in a way that is clear, fair, and not misleading. - Section 6(3)(a): Advertising by the bank must be factually correct; and (b) not contain any statement, promise, or forecast which is fraudulent, untrue, or misleading. Further to the above, the FSCA also found deficiencies in African Bank's governance and oversight processes relating to the review and approval of the aforementioned advertisement. This was a contravention of section 6(9) of the Conduct Standard, which requires the following: - Section 6(9): A bank must have in place processes and procedures for the approval of advertisements and advertising methods by a person of appropriate seniority and expertise within the bank, which must form part of [its] governance arrangements. Fully cooperative The FSCA said African Bank fully cooperated during the investigation of this matter and took immediate action to remedy the concerns raised. "Taking into account the nature of the contravention, as well as the remedial steps implemented by African Bank, R200,000 of the R700,000 administrative penalty imposed on the bank has been suspended for two years, subject to African Bank remaining fully compliant with the Conduct Standard during the suspension period. The FSCA confirms that African Bank has paid the immediately due amount of R500,000. All financial institutions are urged to take note of this sanction and are reminded about the importance of providing clear and accurate information to financial customers regarding the nature of products and services being offered. For many financial customers, decisions about which financial products to purchase are significantly influenced by information conveyed in advertising and marketing material." According to the FSCA, financial customers who rely on misleading advertisements or false impressions are more likely to choose unsuitable products, potentially leading to financial losses or other adverse outcomes. In this case, by presenting a credit product as an investment, African Bank misled customers about key aspects of the offering, including the long-term risks and potential costs associated with taking up the product. The FSCA said financial institutions must have robust internal governance and approval processes to ensure compliance with all requirements of the Conduct Standard, including in respect of the development and publication of marketing material and other key information disclosed to customers. "The administrative penalty imposed in this case serves as a reminder that misleading advertising will not be tolerated, particularly as financial customers increasingly find themselves under pressure to make important decisions regarding their future financial resilience and well-being. Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system," it concluded. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
IOL News
23-04-2025
- Business
- IOL News
African Bank Limited faces R700,000 penalty for misleading advertising
Discover how the FSCA imposed a R700,000 penalty on African Bank Limited for misleading advertising practices that could affect consumer trust in financial institutions. The Financial Sector Conduct Authority (FSCA) says it has imposed a R700,000 administrative penalty on African Bank Limited for misleading advertising, which was found to violate Conduct Standard 3 of 2020 (Banks). The regulation aims to ensure banks uphold fair customer treatment when marketing financial products and services. According to the FSCA, this decision follows its investigation into African Bank's #KeFestive social media campaign, where advertisements were deemed factually inaccurate. One such ad, flighted in December 2023, featured a well-known public figure encouraging consumers to take out personal loans, stating: 'It's not a skoloto chomi! Ke investment.' The FSCA ruled that this statement misrepresented the loan, suggesting it was an investment rather than a credit facility. The bank thereby contravened sections 6(1), 6(3)(a), and 6(3)(b) of the Conduct Standard, which mandate that financial advertising must be clear, fair, and factually correct, avoiding misleading statements, promises, or forecasts. The FSCA says this further investigation uncovered governance deficiencies in African Bank's internal review and approval processes for advertisements. This violated section 6(9) of the Conduct Standard, which stipulates that banks must have robust oversight mechanisms, ensuring advertisements are approved by suitably qualified individuals. Despite the regulatory breach, the FSCA acknowledged African Bank's cooperation during the inquiry, including its swift remedial action. Given these efforts, R200,000 of the R700,000 penalty has been suspended for two years, conditional on African Bank's compliance with the Conduct Standard. The bank has already settled R500,000 of the fine. Financial institutions are urged to take heed of this ruling, as misleading advertising can significantly influence consumer decisions, potentially leading to financial losses or unsuitable product selections. The FSCA emphasised the need for banks to adopt strong governance in their marketing processes, ensuring customers receive accurate, transparent information. 'Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system,' the FSCA stated, warning that it will continue taking firm regulatory action against financial institutions that fail to uphold these standards. PERSONAL FINANCE
TimesLIVE
22-04-2025
- Business
- TimesLIVE
African Bank fined R700,000 for a misleading advertisement
African Bank has been fined R700,000 for a misleading advert encouraging people to take out loans under the guise of 'investment'. The Financial Sector Conduct Authority (FSCA) imposed the administrative penalty after it found the advert to be in contravention of Conduct Standard 3 of 2020 (Banks). According to the FSCA, the December 2023 advert was part of the bank's #KeFestive social media campaign which the regulator found to contain an incorrect and misleading statement. 'The advertisement, which featured a well-known public figure, encouraged consumers to take out personal loans with the phrase ' It's not a skoloto chomi! Ke investment'. The FSCA found the statement to be factually incorrect and misleading as it misrepresented the nature of the loan product that was on offer, implying that it was an investment rather than a credit facility,' said FSCA. The body further said by misleading financial customers and failing to provide clear and accurate information about the nature of the product, African Bank contravened sections of the Conduct Standard. The law requires the bank to ensure that its financial products and financial services are advertised to customers in a way that is clear, fair and not misleading. All financial institutions are urged to take note of this sanction and are reminded about the importance of providing clear and accurate information to financial customers regarding the nature of products and services being offered Financial Sector Conduct Authority The law further says the advert must be factually correct and not contain any statement, promise or forecast which is fraudulent and untrue. The FSCA found deficiencies in African Bank's governance and oversight processes relating to the review and approval of the advertisement. The FSCA said the bank was co-operating in the investigation of the matter, including the prompt remedial action taken to date to address the concerns raised. The bank was fined R700,000 of which R200,000 was suspended for two years subject to African Bank remaining fully compliant with the Conduct Standard during the suspension period. 'The FSCA confirms that African Bank has paid the immediately due amount of R500,000. All financial institutions are urged to take note of this sanction and are reminded about the importance of providing clear and accurate information to financial customers regarding the nature of products and services being offered,' said the regulator.
