On 23 June 2020, the FSCA published a Press Release warning the public against an entity called Crowd1. Crowd1 is not an authorised Financial Services Provider (FSP) or Representative and is not authorised to render the financial services it is providing. There is also no record of a licence application with the FSCA.
Crowd1 is a suspected pyramid scheme that is offered on cellphone apps and has been referred by the FSCA to the Prudential Authority for investigation. The Prudential Authority is investigating specifically into whether Crowd1 is a deposit-taking organisation by acting like a bank or financial services firm in taking and holding people’s money. While the FSCA cannot comment on the status of another agency’s investigation, it urges the public to only do business with financial entities that are registered with the FSCA or are registered under the Companies Act (2008). The Press Release states that any investment or business opportunity that is offered to the South African public (that is not regulated by the Companies Act) must be offered by an authorised FSP.
The FSCA warns that while all investments hold risk, one with an unauthorised FSP should be considered extremely high-risk. It is also often fraudulent in nature, and likely to lead to losses for customers, for which there is little or no recourse. The FSCA urges the public to always be mindful of this whenever approached by an individual or entity offering an investment opportunity. The FSCA encourages financial customers to always be cautious when investing in alternative financial or investment products. It is prudent to first consider financial services and products offered by reputable financial institutions who can be held accountable for your money.