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South Africa’s African Bank penalised by regulator for misleading ad
Financial Sector Conduct Authority (FSCA), South Africa’s market conduct regulator for financial institutions, has penalised African Bank for false advertising.
The bank was penalised US$38,000 (R700,000) for an advertising campaign it ran on its social media pages presenting a credit product as an investment product. The advertising campaign was run in December 2023.
The advertisement, which featured a well-known South African public figure, encouraged consumers to take out personal loans, stating “It’s not a skoloto chomi! Ke investment”.
According to FSCA, this statement misrepresented the loan, suggesting it was an investment rather than a credit facility. FSCA says the bank thereby contravened sections 6(1), 6(3)(a), and 6(3)(b) of the Conduct Standard, which mandates that financial advertising must be clear, fair, and factually correct, avoiding misleading statements, promises, or forecasts.
“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 FSCA said in a statement.
“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,” it added.
The FSCA says it also 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 US$38,000 (R700,000), but part of the penalty has been suspended for two years, subject to African Bank remaining fully compliant with the FSCA’s Conduct Standard during the suspension period.
