South Africa’s financial regulator is planning to require financial institutions to unveil their plans for boosting spending on customer education. <\/p>\n\n\n\n
The regulator seeks to improve the lives of consumers in a nation where a majority of people live paycheck to paycheck.<\/p>\n\n\n\n
Unathi Kamlana, the commissioner of the Financial Sector Conduct Authority (FSCA), said in an interview that the Financial Education Commitment Charter will also require institutions to commit in writing to adhere to international standards for consumer education and prioritise customer protection.<\/p>\n\n\n\n
Already, financial institutions across South Africa are expected to spend at least 0.4% of their after-tax profit on financial education. <\/p>\n\n\n\n
Under the new charter, which will apply to the country\u2019s insurers, banks, and other financial services providers, they\u2019ll be expected to outline in writing how they allocate that spending.<\/strong><\/p>\n\n\n\n The moves come as data show that, according to Sanlam\u2019s 2024 Financial Confidence Index, less than half of South Africans can withstand a financial setback. <\/p>\n\n\n\n Consumers across the nation have also fallen victim to the rampant scams that have bedevilled the country, costing them billions of dollars in losses.<\/p>\n\n\n\n \u201cWe have a particular problem of pyramid schemes, Ponzi schemes, scams, and it seems that our society is particularly gullible to this kind of problem<\/strong>,\u201d Kamlana said. <\/p>\n\n\n\n \u201cThese are people who have worked their entire lives, and they meet someone, they convince them of a story, and they can actually go and withdraw their life savings and invest on a thing that doesn\u2019t exist, and they lose their life savings. It\u2019s really shocking.\u201d<\/p>\n\n\n\n The number of scams in South Africa have jumped over the past decade and the country has been hit by several high profile scandals, including one in which a pair of South African brothers vanished along with Bitcoin worth $3.6 billion from their cryptocurrency investment platform called Africrypt.<\/p>\n\n\n\n At the same time, South Africa\u2019s savings rate has been on a downward trajectory, declining to a record low of 12.7% of gross domestic product in recent quarters.<\/p>\n\n\n\n \u201cWe are quite aware that many financial institutions invest quite a bit in financial education programs,\u201d Kamlana said. \u201cBut we don\u2019t always get a sense that it is impactful.\u201d<\/p>\n\n\n\n
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