South African Bank fined R700,000 after determining the institution misrepresented a credit product as an investment opportunity. Following its December 2023 “Ke Festive” social media promotion the FSCA penalized African Bank because it let a famous person recommend personal loans without clearly defining that it was not an investment.
The FSCA determined that African Bank violated key provisions of Conduct Standard 3 of 2020, which mandates fair treatment of customers. The authority concluded that African Bank used the wrong approach for promotional materials because they excluded critical loan details. The inspections showed that African Bank needed to improve its checks and approvals for marketing content. The bank must follow rules properly during two years or pay R200,000. African Bank has already paid the immediate R500,000 portion of the fine and cooperated fully throughout the investigation, implementing prompt corrective measures to address the concerns raised.
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The action highlights to financial providers their obligation of honest product disclosures to their customers. Misleading advertisements in financial products can trick consumers into choosing wrong financial service options that put their money in danger according to the FSCA. By mischaracterizing a credit facility as an investment, African Bank created false impressions about the long-term risks and costs associated with their offering, undermining consumer trust in the financial system.
