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Marketplace News|
Thursday, August 28, 2008 - Web posted at 8:30:24 AM GMT New bill plugs loopholes in the financial sector Consumers are set to benefit BRIGITTE WEIDLICHA NEW draft law is under way for the financial sector that will provide wide-ranging consumer protection regarding hire purchases and loans. |
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Consultations with the credit industry on the 400-page document will be held early next month before it is tabled this year still. The Namibia Financial Institutions Supervisory Authority (Namfisa) has spearheaded the drive to revamp and modernise the credit industry and over 100 pages of the new Financial Institutions and Markets Bill are devoted to consumer rights. It includes a stipulation that credit and insurance contracts must be formulated in simple language. Last year, the Parliamentary Standing Committee on Economics under the Chairmanship of Dr Hage Geingob, now Trade and Industry Minister, held hearings on the banking sector and credit providers. The overwhelming response from the public brought to light that many micro-lenders and retailers with hire-purchase services either stopped or changed loan provisions at will and mostly without consulting clients beforehand. The standing committee also heard bitter complaints about long-term and life insurance contracts drawn up in incomprehensible language not understood by consumers, who often did not know what they signed. The bill makes provision for a complaints adjudicator who will formally investigate and assess complaints against financial institutions. The new bill provides for debt counsellors and the establishment of a credit bureau. Credit providers may in future not unfairly discriminate against consumers. Consumers may request credit providers to inform them in writing about changes of credit conditions or why they do not want to provide credit. A credit provider on the other hand "may not harass a person in attempting to persuade that person to apply for credit or to enter into a credit agreement or related transaction". Providers will be held responsible if they make "reckless credit agreements". They will also be held responsible if consumers sign agreements without understanding the risks, costs or obligations involved and if "entering into that credit agreement would make the consumer over-indebted." A court may determine if a consumer is over-indebted or not and can refer the matter directly to a debt counsellor who, at the request of the consumer, may declare him or her over-indebted and arrange a debt review and credit extension. Such a proposal must be brought before a magistrate's court. Once the new law is in place, "no person shall induce or attempt to enter into a domestic policy with a person who is not a registered insurer". A clause stipulates that Namfisa will in future have to "comply with any request for information relating to its performance by Parliament or one of its committees". Traders at the local stock exchange will also be committing an offence if they leak inside information or make a profit from such information. The draft bill can be obtained from Namfisa and consultations will be held on September 10 and 11. Namfisa regulates pension and retirement funds, long- and short-term insurance providers, medical aid funds, friendly societies and unit trust schemes, the Namibia Stock Exchange and stockbrokers. It also supervises investment (asset) managers, micro-lenders, shops that offer hire purchase, participation bond schemes, public accountants and auditors. |
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