The Financial Sector Conduct Authority (FSCA) has issued some essential guidelines to assist South Africans to take greater charge of their finances and be responsible when making financial decisions that will impact their lives during and after the Covid-19 pandemic.
Lyndwill Clarke, the head of department for consumer education at the FSCA, says that with Covid-19 has come a heightened anxiety about people’s current financial situation, their investments and their future earnings. “Many South Africans don’t have savings or investments and may already be heavily indebted. This is a dire situation for hundreds of thousands of South Africans that will only be made worse by the Covid-19 pandemic. People also need to be more mindful during this time about their policy contracts and to not make sudden irresponsible financial decisions out of panic without doing the necessary background checks and assessments.”
The following are some immediate guidelines that the FSCA says can be applied:
Ensure that you understand any new financial product(s) related to Covid-19 being marketed and sold, and whether these suit your actual needs.
1. Read and understand your insurance policy contract, to assess what you are covered for and what is excluded. You may want to clarify the following issues with your insurer:
2. Ensure that you understand any new financial product(s) related to Covid-19 being marketed and sold, and whether these suit your actual needs. Find out if any additional actions, like taking a blood test, are required for the new product and how this will be managed in the lockdown period.
3. Many banks have announced a debt-relief package on loans to persons and businesses during the national state of disaster. Contact your bank to discuss whether you qualify for a so-called “bank holiday” package. Ask questions such as:
4. Check with your bank or credit provider if you have a credit insurance policy and see what it covers. It may cover you if you stop earning an income from your employer, become unemployed or if you are retrenched. You might not have to apply for debt relief if your credit insurance policy covers your debt for a period.
5. Avoid exhausting all your emergency funds in the lockdown period. Be aware of what your needs and wants are during this time and only purchase what is essential. Do not panic buy!
6. Do not make rash investment decisions. Speak to or contact your financial advisor or an authorised financial services provider, before making any decisions about your savings, investments and insurance.
7. If you belong to a retirement fund, look out for communications from the board of your fund or the fund administrator regarding developments and risk management strategies with respect to Covid-19. Be sure that you understand all the risks that go along with premature withdrawal of your benefits.
8. To avoid the risk of further spread of Covid-19, pay your premiums and instalments electronically where possible. Speak to your bank about what options are available, such as mobile apps. Should this not be possible, practice social distancing: stand at least one metre apart when queueing to pay your account. Social distancing should be practised when queueing for any matter.
Money Smart Week (MSWSA), an initiative of the FSCA along with other stakeholders, was due to be held at the end of March, but has been postponed until later in 2020. Look out for more details about this national campaign at aimed at motivating and empowering South Africans to become more educated about their finances. Go to www.mswsa.co.za for more details.