So the FIM Bill is now through parliament and is on its way to the National Council to probably also sail through there. The only change was made to the section in each chapter that deals with principal officer and principle office. We do not know yet what was changed but the topic in itself it not really prone to controversy so it will unlikely have been an earth-shattering change.
During its first exposure to parliament last year, one parliamentarian indicated that she has a number of questions on the bill and had requested for the discussion to be postponed. ‘The people hear, please note they do not say’ that sponsoring minister Schlettwein got so infuriated that he had to be held back to prevent the poor parliamentarian being assaulted. With such experience, one can imagine that very few if any would have dared to challenge minister Schlettwein and that may well be the reason that only one question was asked, and disposed of without further ado. There is no reference in the minutes about the response to this question but it certainly did not result in any attempt at a rethink.
To put it on record, RFS invested a substantial amount of energy and time into efforts to define our key concerns and to have them being given proper consideration. This was done through RFIN which presented many of these and others to NAMFISA and the Minister. Through RFIN we met with members of the relevant parliamentary committee. Committee members expressed their appreciation for this initiative. The point was made that members wanted to avoid another law passing parliament without properly informed discussion, referring to laws recently passed that had to be referred back to parliament because they proved to contain serious deficiencies when they had to be implemented. To avoid such a recurrence, members suggested that a two-day workshop should be held for all parliamentarians to properly equip them for a constructive discussion on the outrageously complex arrangement of brand-new financial services laws.
RFS put together a list of 40 key concerns, arranged in FIM Bill page order, reflecting the relevant section, the provisions of the section, our concern and the change/s we proposed to eliminate our concern/s. Essentially our key concerns are categorised as follows:
- The objective of the bill – we believe that this bill will fail to achieve a number of its stated objectives, so far as it will substantially raise the costs for members thereby reducing the growth of their retirement savings and as it will actually require a compliance rather than a risk based approach as it is hailed to achieve.
- Administration and governance – we raised a number of concerns, such as those relating to time frames for industry to implement; the lack of a coordinated approach at the highest level; the effective elimination of the fund sponsor’s commercial interest in its commercial umbrella funds.
- Fines and penalties – the outrageous fines and penalties and the risks these pose to employer sponsored arrangements and employer trustees, where NAMFISA has the powers to impose a maximum penalty of twice the maximum fine a court is empowered to mete out.
- Regulator’s powers – we believe NAMFISA will, for all intents and purposes, have unfettered powers leaving all market participants at the mercy of the supervisor.
- Amendment and protection of benefits – we believe that much of the incentive for an employer to establish and maintain a pension arrangement for its staff has been removed.
- Unconstitutional provisions – we believe that the letter of the law creates the untenable situation expropriating all assets, including intellectual property that relate to the business of the fund but belong to the fund administrators and umbrella fund sponsors.
Going by the FIM bill experience it would seem that the Namibian legislative structure is severely hamstrung where we do not really have a functioning regulator who is appropriately equipped to exercise its responsibility of regulating. Instead, the ministry of finance is utterly dependant on, not to say at the mercy of the supervisor, which is NAMFISA. In its attempts to have its concerns heard at regulatory level, industry found that every attempt to be heard merely ended up with the supervisor. So, there is and never was, any channel for having industry’s concerns heard objectively and without bias.
Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.