The FSCA and National Treasury have called on financial industry stakeholders to support and contribute to the development of the draft South African Financial Education Commitment Charter.
The draft charter was introduced at the inaugural FSCA Financial Education Summit on 28 August. At the summit, FSCA Commissioner Unathi Kamlana (pictured) underscored the urgency of financial literacy, particularly in light of economic pressures, rising living costs, and technological changes. He pointed to the high levels of debt and the lack of emergency savings among South Africans as critical issues that need addressing.
“In 2021, the Human Sciences Research Council reported that 71% of the population did not have emergency savings, leaving them particularly exposed to financial shocks,” Kamlana noted.
He also emphasised that true financial inclusion goes beyond access to financial services.
“Just having an account doesn’t mean people know how to use it effectively,” he said, referencing data from the 2023 Finscope Consumer Survey, which found that 37% of account-holders withdraw all their funds immediately upon receiving a deposit.
Kamlana argued that this behaviour reflects a deeper issue – many individuals lack the knowledge to use financial products and services effectively.
He further highlighted the imbalance in the uptake of various financial products, such as the widespread use of funeral insurance compared to other forms of insurance. He warned that without proper financial education, consumers would remain vulnerable and true financial inclusion would not be achieved.
“The severity of the issues ‘ve highlighted makes it clear that no single entity’s financial education efforts can address them alone. This is why a unified and collaborative approach is essential to ensuring that financial education reaches every South African in a meaningful way,” he said.
The five draft commitments
The draft Financial Education Commitment Charter aims to foster collaboration among industry stakeholders. Katherine Gibson, FSCA deputy commissioner, and Christopher Axelson, acting head of tax and financial sector policy at National Treasury, outlined five key commitments for financial institutions:
- Adopt a board-approved and published financial education plan.
- Deliver targeted financial awareness and education programmes aligned with the plan.
- Ensure financial education follows best practice norms and standards.
- Enhance programme impact through resources, partnerships, and digitisation.
- Prioritise customer financial wellness in a demonstrable way.
Gibson underscored the importance of leadership involvement.
“As the FSCA, we are leading by example. We have our financial education plan, which is relatively new and has been published. Just like all of you, we strive to be accountable and transparent too.”
She also stressed public accountability. “We are challenging financial institutions to publicly demonstrate support for building financial literacy and well-being by outlining their financial education goals in a deliberate and tangible way.”
The second commitment focuses on delivering targeted programmes. “This is about making sure we put our money where our mouth is,” said Gibson, highlighting persistent financial literacy gaps. She advocated for a multi-pronged approach, including workshops, webinars, and community outreach.
Axelson expanded on the third commitment, urging adherence to best practice standards. “There’s no point in having a financial plan that isn’t up to scratch. It must abide by norms and standards to be effective.”
For the fourth commitment, he underscored scalability and impact.
“You’ve got your plan, but how can you make it more effective or reach a broader audience?”
Finally, Axelson stressed the importance of prioritising customer wellness.
“It’s about treating customers fairly, the TCF principles, and asking what is actually in their best interest. It’s not just about yourself as a firm.”
He urged businesses to consider financial wellness holistically, ensuring they provide value beyond mere profit.
Call for industry input
Gibson said the draft commitments were a work in progress. She said the charter, along with the commitments, is designed to drive meaningful and measurable progress in financial literacy initiatives.
She said the process to finalise and sign the commitment charter will span several months. Chief executives and other key decision-makers have until 28 November to review the details and provide feedback. After gathering these inputs, the FSCA will spend three months compiling the final draft, with a target date of 28 February 2025 for its release. The charter is expected to be signed by 28 May 2025. Additionally, the FSCA will create a tool to track how well the charter is being implemented.
Gibson said the process will not be inflexible, and the Authority is open to discussion.
“I would like to challenge each and every one of you to please be very actively a part of this process,” she said.
