From the beginning, the comprehensive implementation of the mandate for consumer education of the Financial Services Board of South Africa (FSBSA) was hampered by limited available funding sources. Given the absence of funding from own sources (besides seed money for consumer education), the FSBSA was able to develop substantial programmes through negotiated partnerships with the private financial sector.
In order to create a formal framework for the collaboration with the private sector, the FSBSA established the Financial Services Consumer Education Foundation (the Foundation) in 2004. The Foundation is an independent trust governed by trustees as a separate entity with assets separate from that of the FSBSA. The function and purpose of the Foundation is to serve as a useful vehicle for donor support to assist the FSBSA in fulfilling its consumer financial education responsibilities.
In particular, the Foundation:
- • funds, promotes or otherwise supports consumer financial education, awareness, confidence and knowledge regarding consumer rights, financial products, institutions and services supervised and regulated by the FSBSA;
- • promotes the use of regulated financial services, by those who do not yet avail themselves of the financial products and services available, including the poor and needy;
- • educates pension fund trustees to promote the responsible management of pension funds and protection of pension fund members;
- • educates financial services providers on consumer protection; and
- • promotes the education and information of consumers, pension fund trustees and financial services providers so as to serve the needs, interests and well-being of the general public in the field of financial services.
The Foundation has been approved as a public benefit organisation in terms of the Income Tax Act. It is also registered as a non-profit organisation. The establishment of the Foundation made available additional funding (albeit limited) in response to proposals submitted to the Foundation by the FSBSA.
Besides this initiative, the approval of the Financial Sector Charter l (FSC) in 2004 further complemented the FSBSA’s efforts to educate consumers. A voluntary charter was signed by key players in the financial sector, committing them to the expenditure of 0.2 percent of their after tax profits for consumer education. More recently, in 2013 the Financial Sector Codes have introduced a mandatory requirement on the financial industry to invest 0.2% of after-tax profits in consumer education activities, with the percentage set to increase to 0.4% by 2015.