The consumer financial services sectorin South Africa is among the most sophisticated in theworld, yet nearly 40 percent of the population, especiallyblacks, use no formal financial services. The now ubiquitousmobile phones are dramatically changing the landscape ofdigital financial services but weak financial literacy andgeneral literacy of the underserved population remain theAchilles Heel. At the same time, weak competition in theSouth African financial services sector is an issue – just 4banks control over 80 percent of retail banking and over 90percent of personal transactions, maintaining rates and feesabove competitive levels. The 2010 FinScope survey foundthat consumer trust was higher in informal financialinstitutions than in the formal ones such as banks. TheSouth African Government has embarked on a substantiveprogram of improving the financial sector legislation andestablishing a full market conduct regulator. Presented intwo volumes, this World Bank’s review compares the SouthAfrican framework for financial consumer protection (FCP) tointernational practice and provides recommendations tostrengthen it. Volume I summarizes South Africa’s FCPpolicies, describes the recent surveys, and sets out the keyfindings and recommendations of the Review. Volume IIprovides an assessment of banking, securities, insurance,and private pensions segments and discusses the key issuesin retail payments and remittances and financial education.
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