Latest news with #KeFestive
eNCA
28-04-2025
- Business
- eNCA
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.
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
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.
Daily Maverick
22-04-2025
- Business
- Daily Maverick
African Bank fined R700,000 over misleading loan advert
According to the Financial Sector Conduct Authority, the advertisement misrepresented the nature of the loan product by implying it was an investment rather than a credit facility. African Bank — rescued from collapse in 2014 and now rebranded as a diversified retail lender — has been fined R700,000 by the Financial Sector Conduct Authority (FSCA) for a misleading advertising campaign that promoted personal loans as 'investments', in contravention of South Africa's banking conduct standards. The December 2023 campaign was marketed under the hashtag #KeFestive, using the tagline: 'It's not a skoloto chomi! Ke investment' (It's not a debt! It's an investment). The advert was circulated widely on African Bank's social media platforms during the festive season. According to the FSCA, the advertisement misrepresented the nature of the loan product by implying it was an investment rather than a credit facility. This amounted to a violation of the standards for banks' conduct of business under the Financial Sector Regulation Act. Specifically, the FSCA cited breaches of the Act, which requires that advertising of financial products must: Be clear, fair, and not misleading; and Be factually accurate and not include any statements, promises or forecasts that are untrue or misleading. Why the fine print matters As financial institutions lean into viral marketing, they must ensure that slick copy doesn't outpace compliance. The difference between 'investment' and 'loan' is not just semantic, it's regulatory, and African Bank flew a little too close to the marketing. For consumers, the consequences are subtle but real: stronger advertising rules mean fewer financial traps dressed in festive wrapping. '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,' said the FSCA on Tuesday. The regulator's scrutiny extended beyond the ad itself, focusing on governance failures, including the lack of proper internal approval processes for marketing material, which requires advertisements to be signed off by suitably senior and qualified individuals. This suggests a broader compliance gap, not just a one-off messaging failure. On Tuesday, the #KeFestive campaign page on the African Bank website had been removed and returned a 404 error, without notice and with no media releases issued on the website's press portal. Renewed assertiveness This is the latest in a growing series of enforcement actions by South Africa's financial regulators targeting misleading practices, poor governance and non-compliance across the sector. Over the past six months alone: Sasfin Bank was fined R209.6-million for historical failures in anti-money laundering compliance in its forex operations. Old Mutual Life Assurance paid R15.9-million for customer due diligence failures. Ashburton Fund Managers incurred a R16-million penalty for failing to develop adequate risk compliance systems. Prime CIS Managers and Wealth Managers (Pty) Ltd were fined a combined R1.8-million over risk management and compliance programme (RMCP) failures. Mika Finansiele Dienste and individuals Ashley Mphaka and Kabelo Mogale were penalised and debarred for offering financial services without authorisation. The FSCA's renewed assertiveness follows South Africa's greylisting by the Financial Action Task Force (FATF) in early 2023. Since then, regulatory authorities have accelerated enforcement actions to demonstrate alignment with global anti-money laundering and consumer protection standards. The FATF specifically flagged insufficient enforcement as a systemic weakness — and recent penalties show a strong intent to rectify that. 'Misleading advertisements can lead customers to choose unsuitable products, resulting in financial losses or other negative outcomes,' said the FSCA. 'Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system.' Cooperation and consequences African Bank cooperated fully with the investigation and has already paid R500,000 of the fine. The remaining R200,000 has been suspended for two years, contingent on the bank's compliance with the conduct standard. While the penalty is modest compared to past sanctions imposed on larger institutions, the reputational hit is significant. African Bank's marketing strategy, particularly on social media, forms part of its brand rebuild after its 2014 collapse and subsequent recapitalisation led by the South African Reserve Bank. That rebuild includes the integration of Grindrod Bank, the acquisition of Eskom's home loan book and a long-anticipated JSE listing now planned for 2028. But this incident raises questions about the maturity of African Bank's compliance function, especially as it prepares to court public investors. A culture of sharp enforcement forces banks to prioritise clarity over conversion, reducing the risk of customers being sold credit products disguised as something safer. Better governance, in this case, isn't abstract — it's protective. DM
