Financial Institutions and Market Act changes

Carmen Forster
The Financial Institutions and Market Act (FIMA) has arrived. The long-awaited legislation will replace the existing legislation for non-banking institutions regulated by the Namibia Financial Institutions Supervisory Authority (NAMFISA). The institutions that FIMA will govern include retirement and medical aid funds and their administrators, short- and long-term insurers, collective investment schemes, and asset managers. NAMFISA has activated a FIMA implementation plan that includes formal consultations with stakeholders on the draft of critical regulations and standards. The regulations and standards have been issued by means of a notice in the Government Gazette and are available on the NAMFISA website. Regulated entities and industry associations have until 28 February 2022 to comment in writing on the draft standards and regulations. NAMFISA will consider all submissions and, where necessary, hold formal consultation sessions before finalising the standards and regulations. The final standards and regulations will be gazetted on 1 October 2022 when FIMA becomes operational.

Implications for retirement funds

The introduction of FIMA will result in numerous changes for retirement funds, their management boards, members, sponsors, and service providers. It is essential to be aware of these changes, understand their consequences, and prepare for their impact. These changes include existing retirement funds that will have to re-apply for registration under FIMA. To register, retirement funds must amend their rules to ensure that they are FIMA compliant. Retirement fund administrators and financial intermediaries will also be required to register under FIMA. Every person or entity required to register under FIMA must do so within 12 months of FIMA coming into force; compliance costs are expected to increase under FIMA due to additional training, reporting, administration, and professional indemnity insurance requirements; failure to comply with or contravention of certain FIMA provisions or NAMFISA directives is a criminal offence. NAMFISA is empowered to take enforcement actions against any person to whom FIMA applies. If convicted, a person can face a fine, a prison term, or both.