Johannesburg - Becoming financially literate is important in today's
world where financial institutions have turned into greedy monsters
chasing profits, Finance Minister Pravin Gordhan said.
He said recent events involving Barclays Bank in the UK
highlighted the importance of being financially literate and showed the
profiteering in financial institutions.
Gordhan was speaking at a conference on financial literacy in Pietermaritzburg on Tuesday,
"What it shows us, ladies and gentleman, is when we
talk about financial literacy in terms of what ordinary people and
members of our community need to be aware of and the skills they need to
learn... they need to be aware of the kind of world we are living in,"
"...financial institutions at the moment have turned
into really greedy monsters who want to chase profit at any cost. And
who don't want to get the right balance between earning profits and
making sure that they do it with the right set of ethics and morality,
and the right principles."
The conference was held by the KwaZulu-Natal Financial Literacy Association in Pietermaritzburg.
Part of the problem was the complexity of financial
products, Gordhan said. He questioned whether people selling the
products were explaining them properly.
South African consumers were vulnerable to unsuitable
offers in terms of buying inappropriate products, and being victims of
fraud and abuse.
"In today's world, which is not that simple, it's very important that we teach ourselves these skills," he said.
Financial literacy was not just about how household and
business finances were managed. It was about empowering families to
demand truth, and to have transparency on fees and costs.
The conference took place at a time when the financial
sector generally, and banks in particular, "are in utter crisis,
morally and ethically, and with a bankruptcy of leadership", Gordhan
"For the Barclays saga of the past few days illustrates
brilliantly the fault lines in the banking sector. It illustrates
dishonesty, manipulation of prices and information, profiteering at any
cost, little regard for ordinary people and the cost to them of all of
these shenanigans, and the shameless disregard for the economic damage
that is done."
The Treasury is in the process of producing a policy document that would contribute to a "safer financial sector", he said.
Through this, the SA Reserve Bank would be responsible
for financial stability and prudential regulation, and the Financial
Services Board and the National Credit Regulator would take greater
responsibility for consumer protection and consumer regulation.
According to a Financial Services Board study conducted
in the second half of 2011, Gordhan said 24% of those surveyed
had personally experienced income shortfall.
To cope, 57% borrowed from family and friends, and 36% cut back or did without.
Forty-eight percent found it difficult to cover bills
or expenses in a typical month, 36% experienced lack of food , 39% went without necessary medication or treatments and 38%
had no energy source to cook their food.
Barclays chief executive Bob Diamond and Barclays chief
operating officer Jerry del Missier resigned over alleged fixing of the
London Interbank Offered Rate and the Eurozone equivalent, the Euribor, the rate at which banks lend each other money.
The bank's chairman Marcus Agius resigned on Monday.
Absa is a subsidiary of Barclays.