Financial services litigation—South Africa—Q&A guide
Financial services litigation—South Africa—Q&A guide

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Financial services litigation—South Africa—Q&A guide
  • 1. What are the most common causes of action brought against banks and other financial services providers by their customers?
  • 2. In claims for the mis-selling of financial products, what types of non-contractual duties have been recognised by the court? In particular, is there scope to plead that duties owed by financial institutions to the relevant regulator in your jurisdiction are also owed directly by a financial institution to its customers?
  • 3. In claims for untrue or misleading statements or omissions in prospectuses, listing particulars and periodic financial disclosures, is there a statutory liability regime?
  • 4. Is there an implied duty of good faith in contracts concluded between financial institutions and their customers? What is the effect of this duty on financial services litigation?
  • 5. In what circumstances will a financial institution owe fiduciary duties to its customers? What is the effect of such duties on financial services litigation?
  • 6. How are standard form master agreements for particular financial transactions treated?
  • 7. Can a financial institution limit or exclude its liability? What statutory protections exist to protect the interests of consumers and private parties?
  • 8. What other restrictions apply to the freedom of financial institutions to contract?
  • 9. What remedies are available in financial services litigation?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to financial services litigation in South Africa published as part of the Lexology Getting the Deal Through series by Law Business Research (published: June 2020).

Authors: Herbert Smith Freehills LLP—Jonathan Ripley-Evans; Fiorella Noriega Del Valle

1. What are the most common causes of action brought against banks and other financial services providers by their customers?

Customers have historically lodged complaints alleging unfair contractual terms or treatment, breaches of fiduciary duties (in the context of financial advisors) or other practices prohibited by statute with one or more of the relevant industry regulators, whose remits overlapped. On 1 April 2018, the Financial Sector Regulation Act 9 2017 (the FSR Act), came into force. There has not been much of a shift in terms of the most common causes of action brought by consumers since the FSR Act came into force.

All financial institutions are now ultimately regulated under the FSR Act, which establishes a regulatory and supervisory framework for the industry.

The FSR Act established the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) as regulatory bodies in the following manner:

  1. the Prudential Authority is required to:

    1. promote and enhance the safety and soundness of financial institutions’ market infrastructure; and

    2. protect financial customers through, inter alia, cooperating with its counterparts in other jurisdictions; and

  2. the FSCA is required to:

    1. enhance and

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