The Financial Sector Conduct Authority (FSCA) has fined African Bank R700 000 for a misleading social media campaign that promoted a personal loan as an investment product.
Loan Advert Misrepresented as Investment
According to BusinessTech, the ‘Ke Festive’ campaign ran on the bank’s social media platforms in December 2023 and featured a prominent public figure encouraging consumers to take out loans with the phrase: “It’s not a skoloto chomi! Ke investment.”
The FSCA found the slogan to be misleading and factually incorrect, as it suggested that the loan product was an investment, when it was in fact a credit facility.
This misrepresentation breached several sections of Conduct Standard 3 of 2020, which governs how financial institutions should treat customers.
Breach of Conduct Standard
Specifically, the bank failed to ensure its advertising was clear, fair, and accurate.
The FSCA highlighted breaches of:
- Section 6(1): Requiring truthful and non-misleading advertising.
- Section 6(3): Prohibiting false or fraudulent statements in advertisements.
The FSCA also found governance lapses in African Bank’s internal review and approval processes.
It warned that misleading advertisements can cause consumers to select unsuitable financial products, potentially leading to financial harm.
However, African Bank cooperated with the FSCA and acted promptly to correct the issues.
As a result, R200 000 of the R700 000 fine has been suspended for two years, provided the bank complies with regulatory standards during that period.
The bank has already paid R500 000.
FSCA Warns Against Misleading Ads
The FSCA urged all financial institutions to treat customers fairly and avoid misleading advertising.
“Fair customer treatment is integral to maintaining public trust and confidence in the integrity of the financial system,” it said.
Should stricter penalties apply to banks that mislead the public through advertising?
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