Windhoek - The Namibian government through the Financial Institutions and Markets (FIM) Bill is aiming to consolidate and modernise the regulatory framework of the non-banking financial sector.
This was said by Finance Minister Calle Schlettwein during the re-tabling of the FIM Bill in parliament last week.
Schlettwein said the aim is to consolidate and upgrade the various standalone laws under the mandate of the Namibia Financial Institutions Supervisory Authority (NAMFISA).
This is the third tabling of this Bill since the first introduction in the House in June 2019 and the subsequent re-tabling on the 17 September 2019. On both instances, the considerations on the Bill could not be exhausted, owing to cited time limitations and the Bill had to lapse due to effluxion of time.
This Bill is one of the three interconnected pieces of legislation, namely the Namfisa Bill 2019 and the Financial Services Adjudicator Bill 2019. Due their cross-referencing, the three Bills were tabled simultaneously for concurrent consideration and approval of the House.
“In re-tabling this Bill, I seek for your favourable consideration to enable the implementation of the long-overdue reforms and modernization in the non-banking financial sector. This Bill seeks to consolidate and modernize the regulatory framework of the non-banking financial sector in line with the risk-based supervision framework aspired for in the Namfisa Bill,” said Schlettwein.
The laws governing this interconnected sector, some of which are as old as 50 years, are not only archaic but discrete in the context of rapid developments in the industry at home, regionally and globally.
At present, supervision for the non-banking financial is undertaken through the various standalone laws such as the Pension Funds Act, 1956, the Usury Act, 1968; the Unit Trusts Control Act, 1981, the Stock Exchanges Control Act, 1985, the Medical Aid Funds Act, 1995 and the Short-term and the Long-term Insurance Acts.
The minister said that the non-banking financial sector, whose asset base is about twice the size the Gross Domestic Product, plays a key role in the Namibian economy and the stability of the financial system. Hence, the regulatory framework must necessarily be up to date to ensure that market and systemic risks are effectively deterred and managed and that the industry contributes optimally to national development objectives.
The Bill brings forth the legislative framework, which balances among the imperative of business growth, domestic economic and financial markets development as well as the risk-based supervision framework for this systematically important industry.
All in all the Bill seeks to foster the following; the financial soundness and stability of financial institutions and financial intermediaries; the highest standards of conduct of business by financial institutions and financial intermediaries; the fairness, efficiency and orderliness of the financial institutions and markets; the protection of consumers of financial services; the promotion of public awareness and understanding of financial institutions and financial intermediaries; and the reduction and deterrence of financial crime.
The regulatory revamp for the non-banking financial sector legal framework was initiated in 2008 and underpinned by extensive and reiterative consultation process. The consolidation of the various standalone laws into a single piece of legislation, with specific chapters focusing on each industry sub-sector and policy cohesion across the entire framework, came about as a result of wide stakeholder consultation.
To further address the concerns raised about the impact of the new legislation on the industry, final rounds of consultation were held last year, particularly with the Retirement Funds Industry, NAMAF and the Namibia Savings and Investment Association (NaSIA).
“As an outcome of these consultations, the industry has come out supportive of the FIM Bill, but raised the need to be given more time to be consulted on the subsidiary legislation and to prepare for the subsequent implementation. Namfisa has already availed the set of regulations and critical standards for industry commentary and consultation, while the primary legislation is in the approval process,” said Schlettwein.
He warned that notably, leap-frogging and modernising financial sector regulation come with associated benefits and costs. He said the macro benefits for the country and financial system envisaged in this reform far outweigh the costs.
“As regards the Bill, some of the latest drafting input provided which are not inconsistent with the Draft Bill and its policy rationale will be considered for Floor Amendments during the discussion stage of the Bill.
“I wish to thank the financial services industry for invaluable comments provided and call for partnerships in embracing and implementing the provisions of the Bill. I thank NAMFISA, the legal Drafters and all experts who contributed to the formulation of the Bill.
“With these remarks, I re-table the Financial Institutions and Markets (FIM) Bill to the House for your support and approval.”