Contributed by Carmen Diehl, C.A.(Namibia), Senior Manager: Risk Management and Compliance

The FIMA (Act 2 of 2021) was promulgated in Government Gazette no. 7645 on 1 October 2021. The Minister of Finance has not yet set an effective date. In recent newsletters, we have provided brief overviews of the latest status of standards and regulations. We continue the series in this newsletter.
 
This summarises the main provisions of draft standards and regulations under the FIM Act and implications for retirement funds.Standards Chapter 10: General

GEN.S.10.13 Payment of contributions

This Standard applies to all registered funds, friendly societies and medical aid funds.

Summary:

• Deadline for Payment: All contributions owed to a registered fund, medical aid fund, or friendly society must be paid in full and deposited into the fund’s bank account within 7 calendar days after they become due.
• Unpaid Contributions: If contributions remain unpaid after the 7 days, the outstanding amount (plus any applicable interest) becomes a debt due to the fund. The fund’s board may file a certified statement with a competent court, which will then have the same effect as a civil judgment and can be enforced accordingly.
• NAMFISA may instruct the liable person to pay the outstanding amount immediately.
• The fund’s rules must specify whether interest is charged on overdue contributions and how it is calculated.

What to do:

• The Fund’s rules must be amended in line with this standard and regulation RF.R.5.8, the protection of unpaid contributions of an employer, and to make provision for the charging of interest on overdue contributions and how it is calculated.

GEN.S.10.17 Description of Plain Language

This Standard applies:

• to all financial institutions and financial intermediaries and to their boards, directors, principal officers, other officers, employees, trustees, custodians and agents; and
• in respect of all documents presented to clients of registered financial institutions and financial intermediaries.

Summary:

• Clarity and Audience Focus:
  • Documents must be written for the clients, not for the financial institution or financial intermediary.
  • Use clear, informative language, avoiding jargon or abbreviations unless explained.
• Content Guidelines:
  • Include a glossary of terms if technical terms are used.
  • Ask questions that require client responses.
  • Remove unnecessary or redundant words.
• Writing Style:
  • Use plain, everyday language, short sentences, and the active voice.
  • Write in the first person where appropriate.
  • Use a readable font (minimum 12-point typeface).
  • Use direct verbs (e.g., “apply” instead of “make an application”).
  • Use “must” where the client is required to act.
  • Avoid double negatives and complex phrasing (e.g., “at least” instead of “no fewer than”).
  • Include examples, lists, tables or visuals to aid understanding.
  • Highlight key points using bold or underline.
• After reading the document, the client should be able to understand the document, make an informed decision and understand their rights and obligations set out in the document.

What to do:

• Financial institutions and financial intermediaries should review documents provided to clients (e.g. rules of the fund, member booklets, fund forms, annual report, service level agreements, etc.) against the requirements of this standard. Where service providers draft documents, financial institutions and financial intermediaries should ensure that the service providers comply with the requirements of this standard.
• Service providers that are involved in client communication should train their staff on plain language principles and client-focused communication.

GEN.S.10.18 The fiduciary responsibilities of financial institutions and financial intermediaries and of their directors, members of boards, principal officers and other officers

This Standard applies to all financial institutions and financial intermediaries, as well as their functionaries.

Summary:

• Financial institutions, intermediaries, and their representatives owe a fiduciary duty to clients and investors.
• Duties of financial institutions and financial intermediaries:
  • Act in the best interest of clients/investors
  • Disclose all material information before any transaction or relationship
  • Avoid or manage conflicts of interest
  • Ensure compliance with this Standard by their representatives
• Duties of functionaries/ representatives of financial institutions or financial intermediaries:
  • Act in clients’/investors’ best interest
  • Keep information confidential
  • Avoid or manage conflicts of interest and disclose any that arise
  • Make decisions affecting clients/investors based on reliable information and in good faith
  • Seek expert advice when necessary
  • Act with diligence, skill, and care in executing client/investor transactions
  • Manage affairs prudently to avoid prejudice to clients/investors
  • Comply with laws and the governance framework of the financial institution or financial intermediary
  • Provide material information to enable informed decisions
• Financial institutions, financial intermediaries and their functionaries must maintain written (hard or electronic copy) records of material dealings with clients/investors to be able to demonstrate the execution of fiduciary duties.
• The records must be kept for five years after relationship termination, or longer if requested by a competent authority.

What to do:

• Update the code of conduct of the financial institution or financial intermediary with the requirements of this standard.
• The document retention policy of the financial institution or financial intermediary should require the keeping of records of material dealings with clients/ investors for five years after relationship termination.

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