It’s National Savings Month and you’ve decided that this year you’re going for it. You have an investment product and a provider in mind. But have you checked whether the service provider is registered with the Financial Services Board (FSB) and what products it is authorised to sell?

It’s imperative that you do, Tamrynne Peyper, a manager in the consumer education department at the FSB, says. By and large, South Africans are far too reticent when it comes to checking the credentials of those we trust with our money, she says. Never entrust your money to a company that is not registered with the regulator.

“Just ask ‘Are you a registered financial services provider (FSP) and what is your FSP number?’ Merely asking that question shows you have some knowledge,” Peyper says. If someone is defensive or intimidated by the question, it’s a red flag, she says.

When you deal with someone who is registered with the FSB, they are subject to the Financial Advisory and Intermediary Services (FAIS) Act. This gives you extensive protection. Most importantly, you have recourse if the advice you are given is inappropriate, or if the person who sold you the product was not authorised to do so, or if they failed to act with due skill and care.

Peyper says the FSB has noticed a proliferation of scams, particularly pyramid and Ponzi schemes in recent years.

She says retirees are an ‘at-risk’ group. (This is because they may find that their pension isn’t enough to meet their monthly expenses or they realise they are going to outlive their retirement capital, which makes them prone to taking big risks.) “But they are not the only ones,” she says. Consumers across the spectrum are falling for scams.

“People are looking for ways to boost their money. They’re desperate, and those who peddle unregistered products appeal to consumers’ desperation. Greed also drives people to make bad decisions.”

Asking for an FSP number is the first step. “You then need to check it with the FSB, by calling our toll-free number, or checking our website.”

As a general rule, she says you need to be suspicious if the offer is spectacular. “If it’s too good to be true, it probably is. Look at the prevailing interest rate and what the banks are offering you for a similar product. Even with your higher-risk investments, you don’t make a fortune overnight. So, if someone is offering to double or triple your money in six months, it’s probably a scam. Ask yourself, where’s the sustainability? Where is this return coming from? And be wary of anything that says ‘guaranteed return’”, Peyper says.

An overly complicated or vague business model is also a tell-tale sign, she says. “If you can’t figure it out, be careful. Consumers are often reluctant to ask questions for fear of being perceived as ignorant. Sharks prey on that,” Peyper says.

“If you’re told you need to recruit others, be wary. And, the moment you feel under pressure, or you’re told ‘this is a once-in-a-lifetime offer’, take a step back,” she says.

“An investment made on the spur of the moment is not a wise investment. Weigh up the pros and cons. Take your time and shop around. Unscrupulous operators are not going to want to give you that.”

Peyper says a registered FSP must display its FSP number. You should be able to find it on its stationery and on its website. If you go to a company’s website and there is no physical address, no contact phone numbers, and no names of key people, it should set off alarm bells in your mind.

* To check whether a provider is a registered FSP, go to, click on “Search regulated entities” and then on “FSP searches”.

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