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3.5 The Difference Between Saving and Investment

The difference between saving and investment lies in the aim and time period. Savings are meant to be liquid (easy to convert into cash) and the client should have the ability to withdraw this money immediately or within a short notice period. The returns on savings are usually quite small. Investments tend to be less […]

3.4 Inflation

Inflation is the persistent increase in the general level of prices and is devaluing of the worth of money. Inflation has the following three main negative effects: Distorting the behaviour of households and firms because it obscures relative price signals, i.e. it is difficult to differentiate changes in relative prices and changes in the general […]

3.3 Interest Rates

An interest rate is the price, levied as a percentage, paid by borrowers for the use of money they do not own and received by lenders for deferring consumption or giving up liquidity.  Factors affecting the supply and demand for money and hence the interest rate includes the following: Production opportunities: Potential returns within an […]

3.2 Economic Policy

Recognition that market forces alone cannot ensure that an economy will achieve the economic objectives has resulted in state intervention occurring to some degree in all countries. The intervention can take the form of fiscal policy, monetary policy and /or direct controls, collectively economic policy. Economic policy of a county has an effect on the […]

3.1 Introduction

Cash can be held as notes and coins or deposited with a bank. Holding cash has the advantage of immediate liquidity. However, there are two problems with holding cash. Firstly, cash earns no or little interest and its real value will be eroded by inflation and secondly large cash holdings may attract criminals. A. Returns […]

2.12 The Banking Association South Africa

The Banking Association South Africa is an industry body representing all registered banks in South Africa. This includes both South African and international banks. The Main Board of the Association comprises the Chief Executives of the five largest South African banks, two Chief Executives representing international banks and two Chief Executives representing the other South […]

2.11 The Ombudsman for Banking Services (OBS)

The Ombudsman for Banking Services (OBS) resolves individual complaints about banking services and products in an impartial, quick and confidential way. Any bank client who has a complaint against his bank may approach the OBS for assistance. The service is free and the only requirements that must be met are that: The complaint must be […]

2.10 The Code of Banking Practice

The fundamental principles of the Code of Banking Practice (COBP) cover the following aspects, which primarily relate to how banks deal with their clients. Banks must produce policies and procedures that staff have to comply with, and which are aligned with the Code of Banking Practice. Under this code, banks undertake the following: To act […]

2.9 The Financial Advisory and Intermediary Services ACT (Act 37 of 2002)

The Financial Advisory and Intermediary Services (FAIS) Act promotes consumer protection through the regulation of certain advisory and intermediary services to clients by financial firms, including banks. In terms of the FAIS Act, all financial services providers (FSPs) must adhere to the General Code of Conduct and the code of conduct specific to their industry. […]

2.8 The Financial Intelligence Centre Act (Act 38 of 2001)

This Act (generally referred to as FICA) requires that banks and other financial institutions obtain and retain appropriate information about each client, with the primary motivation of combating money laundering and financial terrorism.