Gearing yourself for the implementation of NAMFISA’s Project New Dawn
Managing Director of Compli-Serve Namibia.
Much was said last year about NAMFISA’s Project New Dawn or the implementation of reforms in the non-banking financial services industry in Namibia, through the planned implementation of three new laws.
These are the infamous Financial Institutions and Markets Act (FIMA); the new NAMFISA Act and the lesser-known Financial Services Adjudicator Act (FSA). We generally find two camps within industry when it comes to these reforms: those who believe, that the FIM Bill in particular, is a myth and will never see the light of day and those who are actively preparing themselves for the changes that they believe are inevitable.
My aim with this article is to assist those entities who are impacted by these reforms in better understanding the implications on their businesses in order for them to better prepare themselves for the inevitable effective date of the legislation. It is coming, whether you believe it or not.
What do these reforms aim to do?
The first point of departure would be to understand the reason for the proposed legislation. NAMFISA and the Ministry of Finance have for many years emphasised the much-needed reform, due to the archaic nature of some of the legislation governing the industry. Emphasis has also been placed on the importance of consumer and industry protection, enhancing regulatory supervision and addressing market conduct by players in the market. These laws have passed parliamentary scrutiny and await the President’s signature and promulgation through publication in the Government Gazette. The effective dates of these laws are also due to be announced, and hopefully this will be soon.
The Financial Services Adjudicator Act will establish the Office of the Financial Services Adjudicator and provides for its functions and duties. The Office of the Financial Services Adjudicator will be tasked with dealing with consumer complaints related to all financial services providers, including banks and microlenders.
The new NAMFISA Act is designed to allow for a move to risk-based supervision and enhances NAMFISA’s powers to better regulate the industry in line with international standards.
FIMA aims to completely overhaul the industry and is considered by some to be the greatest single piece of legislative reform for this industry in the country to date. FIMA aims to, according to its preamble, consolidate and harmonise the laws regulating financial institutions, financial intermediaries and financial markets in Namibia.
The over 400 pages piece of legislation consolidates the laws regulating the following industries: long and short-term insurance (including brokers and advisers); financial markets (including investment managers and the stockbroking industry); collective investment schemes (unit trusts businesses); retirement funds (all pension, provident and retirement annuity funds); friendly societies; medical aid funds; fund and society administrators. It further introduces some general requirements applicable to all sectors and aims to provide a more flexible approach to regulation by introducing standards. It leaves policymaking powers to Parliament and allows the Minister of Finance to issue regulations. It must be noted that there seems to be a moving trend towards this omnibus style of legislation as South Africa has recently issued a similar draft Bill called the Conduct of Financial Institutions (COFI) Bill for comment.
How can you gear yourself for the implementation of project new dawn?
I can understand that for many players in the market, this new road seems daunting. The first step for anyone that will be affected is to not panic. The new compliance obligations won’t destroy your business and as the expression says: how do you eat an elephant? By taking one bite at a time.
Secondly, get an understanding of the key requirements of the legislation and their impact on your specific business. Compli-Serve Namibia is a professional regulatory compliance firm that can assist you in this regard, providing you with an overview of the requirements and their impact on your business.
Thirdly, ensure business-wide awareness and communication of the changes and their implications on your business. It is important to take every single employee on the journey with you and to ensure that they all understand the implications of the changes on their specific work and department. Involving everyone in the business will provide you with the opportunity to identify the positive business and innovation opportunities presented by the changes and enable you to decide on your implementation plan.
Fourthly, participate in industry consultation and awareness sessions with the Regulator. NAMFISA has finalised the informal consultation process on laws and will be undertaking these following the promulgation of the Act.
Finally, remember that we’re all in this together. The new legislation will affect all other players, albeit to a different extent. Fasten your seatbelts, it’s going to be a bumpy ride, and worse so without proper compliance support in place.