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FSCA warns against The Prosperity Grid

Published Jun 16, 2022

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In light of several complaints received from the public, the Financial Sector Conduct Authority (FSCA) says it has conducted a preliminary investigation into the activities of an entity trading as The Prosperity Grid.

According to the complaints, The Prosperity Grid claims to be a rotational savings network made up of a community of individuals from all over the world. The FSCA says in a statement: “In South Africa we know these rotational savings schemes as ‘stokvels’. However, The Prosperity Grid does not appear to be a true stokvel. Members within the network receive payouts from new members who are introduced into the network. The FSCA points out that this therefore appears to be a pyramid scheme, which operation is illegal. The FSCA has referred the matter to other relevant regulators and authorities in South Africa, for them to consider and take further action if necessary.”

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As pyramid schemes do not fall within the jurisdiction of the FSCA, the authority says it has closed its investigation. But it warns you to take care and exercise caution.

You should always check that an entity or individual is registered with the FSCA to provide financial services and what category of advice it is that the entity is registered to provide. The FSCA says there are instances where a company is registered to provide basic advisory services for a low-risk product and then offers services of a far more complex and risky nature.

The FSCA reminds you to check with the FSCA on either the toll free number (0800 110 443) or on its website, www.fsca.co.za, as to the authenticity of anyone you want to deal with regarding investments, insurance, or other financial services.

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