African Bank fined R700,000 for misleading advert

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.

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 also found deficiencies in African Bank’s governance and oversight processes relating to the review and approval of the aforementioned advertisement.

The FSCA said the bank was cooperating during the investigation of the matter, including the prompt remedial action taken to date to address the concerns raised.

The bank was fined R700,000 and R200,000 was suspended for a period of 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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