FSCA’s Conduct Standard on financial education

We at Axiomatic have always been passionate about financial education (FE).

In a country where only a small percentage of the population is financially prepared for retirement, financial education has become a critical pillar in ensuring the long-term sustainability and effectiveness of retirement funds. Many members lack a clear understanding of how these funds operate, what benefits they provide, and how their personal financial decisions affect their retirement outcomes.

Financial literacy empowers fund members to make informed decisions about contributions, investment choices, and benefit withdrawals. Without this knowledge, individuals may face avoidable risks such as early withdrawals, inadequate contributions, or poor investment decisions — all of which can significantly undermine their financial security in retirement.

We are therefore pleased that the FSCA has issued FSCA Conduct Standard 1 of 2025: Requirements for Financial Institutions Providing Financial Education Initiatives.

The regulation applies to all financial institutions under the FSCA’s oversight that provide FE programs. These include banks, insurers, retirement funds, and other entities offering structured educational efforts, such as workshops, campaigns, or digital content. Random or one-off actions, like a single article or advertisement, don’t qualify – FE must be deliberate and ongoing to fall under this standard.

When is the Standard applicable to retirement funds?

For most retirement funds, the statement that “Random or one-off actions, like a single article or advertisement, don’t qualify” requires additional scrutiny.

The Conduct Standard implicitly states that it is applicable to retirement funds. Where the fund has a formal FE program run by themselves or a third party, there is no doubt that the fund would be subject to the requirements of the Standard.

However, what if a monthly newsletter were distributed to members? A monthly newsletter could constitute FE if same were a structured, ongoing series of educational content with systematic planning and focus on general financial literacy. Given this, it is unlikely that a single newsletter or a monthly newsletter informing members of the performance of their fund would require adherence to the provisions of the Standard. Even if some education is provided, for example, not to panic and make knee-jerk reactions when market volatility is experienced, this could not be considered a structured and ongoing series of FE.

Our opinion is that monthly newsletters as described above would not be subject to the requirements of the Standard.

The purpose and scope of the Conduct Standard

Published on 26 March 2025, this Conduct Standard seeks to enhance financial literacy and financial inclusion in South Africa. With its implementation set for 26 March 2026, financial institutions, including retirement funds, have a year to align with its requirements.

The Standard clearly elucidates what financial education (FE) is:

Financial education (FE) means the process by which financial customers improve their understanding of financial products, financial product providers, financial services, financial service providers, financial concepts and risks and, through objective basic information, instruction and the like, aim to develop the skills and confidence to:

1. become more aware of financial risks and opportunities.
2. Make informed financial decisions.
3. manage their financial affairs more sustainably.
4. know where to go for financial assistance and recourse, or
5. take other effective actions to improve their financial well-being and the financial well-being of those under their responsibility.

The FSCA’s mandate includes protecting financial customers, promoting fair treatment by financial institutions, and fostering financial literacy. The Standard directly supports these objectives by setting baseline requirements for financial institutions offering FE programs. Unlike promotional or product-specific activities, the standard focuses on systematic, non-commercial initiatives designed to equip consumers with the knowledge to make informed financial decisions.

Key requirements: governance, measurability, and consumer focus

At its core, the Conduct Standard emphasises governance and accountability. Financial institutions must establish clear oversight for their FE initiatives, ensuring they align with consumer needs and regulatory expectations. This includes appointing qualified staff to develop and manage programs, with content tailored to the target audience’s literacy levels, cultural context, and financial challenges.

One of the most debated aspects during the consultation process was the requirement for measurability.

Institutions must track the effectiveness and impact of their FE programs, using metrics like participant engagement, knowledge retention, or behavioural changes (for example, increased savings or better budgeting).

In response to stakeholders who expressed concern that this could raise costs, the FSCA introduced flexibility, allowing smaller institutions to adopt simpler evaluation methods based on their size, complexity, and risk profile. For instance, a community-based credit provider might use basic surveys to measure impact, while a large bank could deploy sophisticated analytics. This proportional approach ensures that even modest players can comply without abandoning their programs.

Yes, the consequence is that larger institutions with more resources may deliver polished programs, while smaller ones might struggle to compete. However, the FSCA argues that raising the overall quality of FE will benefit consumers, even if the playing field isn’t perfectly level. We agree- some education is better than none.

The standard also prioritises consumer-centric education. FE initiatives must avoid marketing or promoting specific products, focusing instead on general skills like understanding credit, managing debt, or planning for retirement. By fostering impartial education, the FSCA aims to build trust and empower consumers to navigate South Africa’s complex financial landscape.

Implications for retirement funds

Funds need to examine the criteria for FE contained in the Standard to decide if their communication with members constitutes FE as described in the Standard. If the answer is YES and/or the fund has a structured, ongoing series of educational content with systematic planning and focus on general financial literacy, then with a 12-month transition period, retirement funds must align their FE programs to comply by March 2026.

You will need to review your existing FE programs, establish governance frameworks, and train staff to meet the standards’ requirements.

Alternatively, request your current consultant to set out a program that meets the requirements of the Conduct Standard.

Conclusion

We are of the opinion that this is a welcome initiative by the FSCA. Retirement funds should be enhancing the financial understanding and literacy of their members so that they understand the importance of planning for their retirement.

Let’s Make Financial Education Meaningful
Make sure you’re aligned with the FSCA’s updated interest rules. Reach out to Axiomatic for expert support.

Services

Payroll

Benefits

Reward

FSCA’s Conduct Standard on financial education

Services

Need Any Consultations

Quick Links

Corporate Governance

Our Location

Subscribe Our Newsletter

COOKIE POLICY

Welcome to our website.

1. Introduction

2. What Are Cookies

3. How We Use Cookies

4. Your Cookie Choices

5. Third-Party Cookies

6. Updates to This Policy

7. Contact Us