Something amiss about Absa Money Market closure

Many South African investors were surprised this week when Absa wrote to them out of the blue to inform them that it was closing down its Money Market Fund of about R80 billion.

Why do something like that so suddenly?

Absa tried to explain why with references to research about what consumers want, saying the bank is simply responding to that. Not so fast. What?

There were also hints that customers were using it as a bank account instead of an investment account and therefore the fund had to go. Again: what?

My parents had put all the money they had after selling their house into an Absa Money Market Fund account before they moved to an old age home. Yes, they did have a card and did draw money at the ATM and used it to pay for whatever they needed. That was more than a decade ago. What has changed?

ALSO READ: Investors in Absa MMF warned not to make hasty decisions

Answers to questions about the decision did not yield much. The Banking Association South Africa said it did not want to comment at this time about one of its members. OK? Then let’s try the Ombudsman for Banking Services, Reana Steyn.

She only knew what she read in the media and said the role of her office was primarily to deal with complaints from bank customers. If she gets complaints about the fund closure, her office will investigate and deal with each matter on its own merits. She does not regulate the banks.

No answer from the Prudential Authority at the SA Reserve Bank. Let’s try the Financial Services Conduct Authority (FSCA). At last some answers from the media office.

Did the FSCA put pressure on Absa to close its Money Market Fund? No. Did the FSCA object to the structure of the fund? No. Did the FSCA have any specific concerns about the fund? No.

Was Absa not supposed to issue a public announcement about the closure?

“A manager [of a fund] is required to communicate to all investors when closing a portfolio and there is no requirement to issue a public announcement. Absa Fund Managers dealt with the closure of the fund in terms of section 102 of CISCA and communicated to all the investors in the fund as required.”

Apart from some investment experts saying that the move has led to speculation that can harm the public’s faith in Absa as an institution, nobody wanted to say anything. The voice of the little man has been shut down effectively.

Where are the people who are supposed to ensure that we as consumers do not get blindsided by corporates? Where is the transparency when something that works for years is shut down so that big companies can make more money?

Consumers are so punch-drunk from the epidemic and all the financial troubles that started pre-Covid and got even worse after Covid with job losses and unpaid bills. And there seems to be very few people in their corner who can watch out for them.  No sentries on the walls.