Latest news with #ConductStandard3of2020
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
The South African
23-04-2025
- Business
- The South African
African Bank fined R700 000 for misleading loan ad campaign
The Financial Sector Conduct Authority (FSCA) has fined African Bank R700 000 for a misleading social media campaign that promoted a personal loan as an investment product. According to BusinessTech , the 'Ke Festive' campaign ran on the bank's social media platforms in December 2023 and featured a prominent public figure encouraging consumers to take out loans with the phrase: 'It's not a skoloto chomi! Ke investment.' The FSCA found the slogan to be misleading and factually incorrect, as it suggested that the loan product was an investment, when it was in fact a credit facility. This misrepresentation breached several sections of Conduct Standard 3 of 2020, which governs how financial institutions should treat customers. Specifically, the bank failed to ensure its advertising was clear, fair, and accurate. The FSCA highlighted breaches of: Section 6(1): Requiring truthful and non-misleading advertising. Section 6(3): Prohibiting false or fraudulent statements in advertisements. The FSCA also found governance lapses in African Bank's internal review and approval processes. It warned that misleading advertisements can cause consumers to select unsuitable financial products, potentially leading to financial harm. However, African Bank cooperated with the FSCA and acted promptly to correct the issues. As a result, R200 000 of the R700 000 fine has been suspended for two years, provided the bank complies with regulatory standards during that period. The bank has already paid R500 000. The FSCA urged all financial institutions to treat customers fairly and avoid misleading advertising. 'Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system,' it said. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
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.
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The Citizen
22-04-2025
- Business
- The Citizen
FSCA fines African Bank R700 000 for misleading advertising [VIDEO]
By telling customers that a personal loan was an investment—not debt—African Bank prompted an investigation by the FSCA. The Financial Sector Conduct Authority (FSCA) has imposed a R700 000 administrative penalty on African Bank for a social media advert that urged consumers to take out a personal loan as an 'investment'. According to the FSCA, it found that African Bank contravened Conduct Standard 3 of 2020 for banks. The Conduct Standard is a regulatory framework that enables the FSCA to critically and urgently supervise the market conduct of banks according to its mandate as outlined in the Financial Sector Regulation Act. The Conduct Standard establishes high-level requirements that banks must adhere to, aimed at ensuring they treat their financial customers fairly when offering financial products and services. The FSCA imposed the penalty after investigating African Bank's #KeFestive social media campaign from December 2023 and finding that it contained factually incorrect and misleading statements. The advertisement featured a well-known public figure and encouraged consumers to take out personal loans with the phrase 'It's not a skoloto chomi! Ke investment'. This is the advert that was flighted on TikTok: ALSO READ: Most South Africans not happy with financial institutions' handling of complaints FSCA found African Bank advert misrepresented nature of loan product During the investigation, the FSCA found that this statement was factually incorrect and misleading as it misrepresented the nature of the loan product offered, implying that it was an investment rather than a credit facility. The FSCA says that by misleading financial customers and failing to provide clear and accurate information about the nature of the product, African Bank contravened sections 6(1), 6(3)(a) and 6(3)(b) of the Conduct Standard. Section 6(1) requires that banks must ensure that its financial products and financial services are advertised to financial customers in a way that is clear, fair and not misleading, while section 6(3)(a) requires that bank's advertising must be factually correct and not contain any statement, promise, or forecast which is fraudulent, untrue, or misleading. In addition, the FSCA found deficiencies in African Bank's governance and oversight processes regarding the review and approval of the advertisement. This was a contravention of section 6(9) of the Conduct Standard, which requires that banks must have processes and procedures in place for the approval of advertisements and advertising methods. A senior person with expertise within the bank must approve advertisements, and this must form part of its governance arrangements. ALSO READ: FSCA fines 3 financial services providers R1.2 million for Fica non-compliance African Bank cooperated and already paid the FSCA fine The FSCA points out that African Bank cooperated during the investigation and took prompt remedial action to comply with the Conduct Standard. Considering the nature of the contravention, as well as the remedial steps African Bank implemented, the FSCA suspended R200 000 of the R700 000 for two years, subject to the bank remaining fully compliant with the Conduct Standard. African Bank has already paid the remaining fine of R500 000. The FSCA urges all financial institutions to take note of this sanction and reminds them of the importance of providing clear and accurate information to financial customers regarding the nature of the products and services they offer. 'For many financial customers, advertising and marketing material significantly influence their decisions about which financial products to buy. Financial customers who rely on misleading adverts or false impressions are more likely to select unsuitable products, which could result in financial losses or other prejudicial outcomes,' the FSCA says. ALSO READ: FSCA finds banks do not handle consumer complaints properly Banks must be careful not to position credit as investments In this case, positioning the product as an investment rather than a credit product, financial customers were misled about the longer-term risks and potential costs associated with taking up the product. 'Financial institutions must have robust internal governance and approval processes to ensure compliance with all requirements of the Conduct Standard, including the development and publication of marketing material and other key information disclosed to customers.' The FSCA states that it will continue to take firm regulatory action against financial institutions that do not prioritise the fair treatment of customers across their governance arrangements, business processes, and procedures. '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,' the FSCA says.
IOL News
22-04-2025
- Business
- IOL News
FSCA slaps African Bank with R700 000 penalty for misleading advertising
The Financial Sector Conduct Authority (FSCA) has imposed an administrative penalty of R700 000 on African Bank due to misleading advertising that violated the Conduct Standard 3 of 2020 (Banks). This follows an extensive investigation into the bank's festive season social media campaign, dubbed #KeFestive, which featured misleading financial statements that could misrepresent vital information to consumers. 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 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. Next Stay Close ✕ In December 2023, the FSCA identified a social media advertisement that encouraged potential borrowers with the phrase 'It's not a skoloto chomi! Ke investment'. This misleading representation suggested that the personal loans on offer were investment products rather than credit facilities. Such mischaracterisation could significantly mislead customers about the nature and risks associated with the financial product. The FSCA determined that African Bank had contravened essential sections of the Conduct Standard, namely sections 6(1), 6(3)(a), and 6(3)(b), which mandate banks to ensure that advertisements are: Clear, fair, and not misleading, Factually correct, and Not containing fraudulent or untrue statements. Moreover, deficiencies were noted in African Bank's governance protocols, particularly the approval processes for advertisements. The lack of oversight in this regard was a further violation of section 6(9) of the Conduct Standard, which necessitates a review mechanism involving senior personnel of appropriate expertise within the bank. "Taking into account the nature of the contravention, as well as the remedial stepsimplemented by African Bank, R200 000 of the R700 000 administrative penalty imposedon the bank has been suspended for a period of two years subject to African Bankremaining fully compliant with the Conduct Standard during the suspension period," it said. "The FSCA confirms that African Bank has paid the immediately due amount of R500 000." The FSCA reminded all financial institutions regarding the importance of delivering clear and truthful information to customers. It said that decisions about which financial products to purchase were significantly influenced byinformation conveyed in advertising and marketing material for many financial customers. The financial sector watchdog said financial customers who relied on misleading adverts or false impressions were more likely to select unsuitable products, which could result in financial losses or other prejudicial outcomes. It said that in this matter, by positioning the product as an investment rather than a credit product, financial customers were misled about, among other things, the longer term risks and potential costs associated with taking up the product. The FSCA reiterated its commitment to enforcing stringent regulatory standards among financial institutions, aiming to nurture a financial sector characterised by transparent governance and ethical customer treatment. The developments surrounding African Bank's case highlight the critical need for robust internal governance and thorough review processes in shaping marketing material that reflects the true essence of financial offerings. As customers increasingly look for clear guidance in navigating the complexities of financial products, the integrity of the financial system depends on the unambiguous, fair representation of information. The FSCA's stance against misleading advertising underscores the vital necessity for public confidence and trust in financial services.
