The South African Reserve Bank’s (SARB) Prudential Authority (PA) has launched investigations into 60 suspected unregistered banking and insurance schemes as it intensifies its crackdown on illegal financial operators.
The PA regulates and controls banks and monitors businesses that operate as banks or insurers without the required licence.
It appoints temporary inspectors to investigate suspected illegal banking activities.
The Financial Sector Conduct Authority (FSCA), under powers the PA delegates, investigates suspected unlicensed insurance businesses.
At the end of the 2025/26 financial year, the regulator identified 56 suspected unlicensed insurance schemes that are under investigation and four suspected illegal deposit-taking schemes. It dealt with 121 suspected unlicensed insurance schemes. Of those, 115 were carried over from the previous financial year and six new cases were opened. At least 65 investigations were finalised and 56 are ongoing.
PA CEO and SARB deputy governor Nomfundo Tshadzibana said a lot of work was carried over from previous years because the process took a long time. The figures also show that the regulator finalised 35 of 39 ponzi schemes.
“One of the reasons we have a larger number of unlicensed insurance businesses is because some had expired and the owners still want to continue, while in other cases we find that some businesses want to expand into the insurance space but have not received their licences, so we ban them from using ‘insurance’ in their advertising because they are misleading people.”
Tshazibana said the growing number of telecoms and retailers had branched into offering financial products.
“The ones that are offering insurance are doing it via another party, which is more important to distinguish. The front-facing side might not be the insurer.
“On telecoms, the model we have is that they have a relationship with the banks. So, if you have a sponsor bank you could participate in other instances. These activities have not been intrusive and have not needed the PA [to intervene]. The PA has been regulating the insurers who are providing the service.”
She said the issue became more serious when things went wrong and customers could not access their money and started gunning for the front company. There was generally a lack of understanding about who was responsible and accountable for the funds.
However, Tshazibana said the PA held the financial institutions they supervised to the highest standards. She said that if someone else used a licence, the licence owner was responsible for what they did. Their customers also fell under that licence, so the owner had to ensure they followed the rules.
However, payment rules were changing, “taking us into a world where you no longer need to have a sponsor bank. You have to do a lot of work thinking about what that means … because this has profound implications for customers,” she said.
The regulator also carried out 1 032 fit-and-proper assessments to determine whether executives, key persons and owners of regulated financial institutions had the skills, experience and integrity to perform their roles.
- The South African Reserve Bank’s Prudential Authority (PA) is investigating 60 suspected unregistered banking and insurance schemes, intensifying its crackdown on illegal financial operators.
- At the end of the 2025/26 financial year, 56 suspected unlicensed insurance schemes and four illegal deposit-taking schemes were under investigation; 65 investigations were completed, including 35 of 39 ponzi schemes.
- Many unlicensed insurance businesses operate either after license expiry or while awaiting licensing, often misleading consumers by using "insurance" in advertising without authorization.
- Telecoms and retailers increasingly offer financial products via partnerships with banks, but the front-facing companies are not necessarily the insurers, complicating accountability when issues arise.
- The PA conducted 1,032 fit-and-proper assessments to ensure that executives and key persons in regulated institutions possess the necessary skills, experience, and integrity.
