22-04-2025
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
