02 Jul 2015 13:50pm
WINDHOEK, 02 JUL (NAMPA) Government will establish an Office of the Financial Services Adjudicator to address the weakness surrounding the protection of financial customers in the country.
Minister of Finance, Calle Schlettwein revealed on Thursday during the NamibRe Industry Breakfast Meeting, that Cabinet recently sanctioned the establishment of an Office of the Financial Services Adjudicator by approving the promulgation of the Financial Services Adjudicator Bill. NamibRe is a state-owned reinsurance company.
Under the Bill, the adjudicator is empowered to enquire into, investigate, consider and determine complaints against financial service providers in a just, procedurally fair, economical and expeditious manner.
The Bill will form part of the troika, together with the Financial Institutions and Markets (FIM) Bill and the Namibia Financial Institutions Supervisory Authority (NAMIFISA) Bill, which will be tabled in Parliament this year.
Schlettwein explained that currently, financial customers are not adequately protected and more needs to be done to ensure that the providers of financial products and services treat their customers fairly.
Poor market conduct, where financial institutions conduct their business in ways that prejudice customers, amplifies challenges relating to low savings and over-indebtedness, and undermines steps taken to make the financial sector more accessible to Namibians in order to deepen financial inclusion, said the finance minister.
He, however, said the Financial Services Adjudicator Bill will not prevent poor market conduct, since the adjudicator will only seek redress in cases where users of financial services have suffered financial prejudice or damage.
He said more needs to be done to ensure and enforce fair market conduct.
The major weaknesses in the current framework include fragmentation, inconsistency and incompleteness of regulation across the sector, he said.
In many instances, poor market conduct practices are driven by inappropriate incentives, which is well illustrated by the deeply conflicted financial advisory industry, as financial advice is frequently linked to commissions paid by product suppliers on product sales, thus raising questions around whose interests are being represented, he explained.
He then urged the industry to examine its practices, such as the poorly understood policy terms and layered and high charges, to see whether these disincentivise savings, especially retirement savings by households.