African Bank has drawn the ire of the Financial Sector Conduct Authority (FSCA), which handed it a R700,000 penalty for airing advertising it said was misleading.
The lender ran a campaign in December 2023, advertising loans of as much as R350,000, repayable over 72 months, with the catch line: “It’s not a skoloto chomi! Ke investment,” loosely translated as “It’s not debt, my friend — it’s an investment.”
The FSCA said it was factually incorrect and misleading because it implied the product was an investment rather than a credit facility.
For its troubles, the bank was fined R700,000, R200,000 of which was suspended for two years.
“The FSCA will continue to take firm regulatory action against financial institutions that do not prioritise the fair treatment of customers across their governance arrangements, business processes and procedures,” the regulator said.
“Financial customers who rely on misleading adverts or false impressions are more likely to select unsuitable products, which could result in financial losses or other prejudicial outcomes,” the FSCA said.
“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 wellbeing. Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system.”
Other SA companies have also been found wanting regarding fair and accurate adverts. The Advertising Regulatory Board recently found MTN guilty of misleading consumers about “unlimited” voice calls, and also found DStv had misled customers in an advert about subscriptions.
African Bank emerged from the ashes of African Bank Investments (Abil) in 2016. Abil was placed under curatorship in 2014 due to liquidity problems related to unsecured lending. The collapsed entity was split in two, with the so-called good bank receiving a R5bn bailout from the Reserve Bank, which took a 50% stake in the lender.
The lender is planning to list on the JSE, giving investors an opportunity to buy the 50% stake owned by the central bank, which under normal circumstances is not allowed to own banks.
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