A core element of the responsibilities the FSCA carries is the crucial mandate of protecting consumers, identified as existing as well as potential financial customers. The FSR Act, while outlining a number of regulatory and enforcement measures that can be taken in defence of consumer rights in the financial services sector (such as administrative actions and sanctions, court orders, enforceable undertakings and debarment orders), also sets out responsibilities for the FSCA through which consumer education can become a means of preventive protection.
The FSR Act introduces a world first for financial consumer education in a manner that empowers the conduct authority to write standards for consumer education where it is done by the financial services sector. These standards will be consulted with the sector over the next year and will go mainly to co-ordination; best practice; and monitoring and evaluation.
Further to this, the FSCA has committed to ensuring that towards fulfilling the requirement set out for it in the FSR Act it:
Provides financial education programmes to existing and potential financial customers, making sure to include small businesses and emerging entrepreneurs in the impact of such educational outreach programmes. We have established a dedicated Small to Medium Enterprise (SME) support unit under our Regulatory Policy unit which will look at supporting small businesses from a compliance perspective, feeding into the regulatory framework to remove barriers to entry. It will also put together training programmes, examination support and communication specific to this sector.
Promotes financial literacy to the wider society so that financial customers are equipped with the knowledge and tools necessary to make sound financial decisions that will contribute to securing their financial stability going forward. According to Lyndwill Clarke, Head of Consumer Education department at the FSCA, the FSCA does not solely carry the responsibility of ensuring that financial customers are informed. “All businesses active in the financial services industry are also expected to play a role in the provision of knowledge and education to consumers. This responsibility has its goal which is to protect consumers of financial products”, feeding into the regulatory framework to remove barriers to entry.
Elliot Modisa, a Manager in the Consumer Education department at the FSCA, says that the Authority has undertaken a number of core initiatives aimed at successfully rolling out effective customer education. These include:
“Taking Regulation to the People” an initiative which sees the Authority hosting community events throughout the country to allow consumers and small businesses the opportunity to interact directly with the FSCA.
Participation in the National Consumer Financial Education Committee (NCFEC), which is chaired by the National Treasury and whose mandate is the fostering of consistency and coordination across the numerous financial education initiatives by various stakeholders.
Collaboration with the Consumer Protection Forum (CPF) in each province to have a more coordinated approach
Partnering with the department of Public Works to provide financial education to participants of the Expanded Public Works Programme (EPWP). To this end, a train-the-trainer initiative for coordinators of the EPWP has been instituted.
Other national financial education projects such as the Money Smart Week and the Financial Literacy Schools’ Speech Competition.
Through these comprehensive interventions, the Authority aims to achieve: broader consumer protection; the integration of financial education with regulatory functions; greater coordination of education activities in the financial services industry; improved data on consumer behaviour; and to positively impact consumer behaviour.