session iii nbfira - ceo forum nov 3, 2016
TRANSCRIPT
ADAPTING TO CHANGES IN FINANCIAL SYSTEM, POLICIES AND STRUCTURES
The Role of NBFIRA in Regulation, Experience and Suggestions for DFIs.
O M RAMASEDIPresented at the CEO Forum of the WFDFI, GABORONE – Nov 3, 2016
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Presentation outline Introduction
Mandate
Purpose of Regulation
Legislation & Regulated NBFIs
Licensing and Fit & Properness of Key Personnel
Regulatory Process (Slides 8 to 13)
Challenges
Lessons for DFIs
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INTRODUCTION NBFIRA was established by an Act of Parliament
The Act was promulgated in 2006
Started its operation on April 1, 2008
The NBFIRA Act is a comprehensive “umbrella statute”
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MANDATE OF NBFIRA The principal object of NBFIRA is to supervise and
regulate non-bank financial institutions (NBFIs) so as to foster the:- Safety and soundness of NBFIs; High standards of business conduct; Fairness, efficiency and orderliness in the
financial market; Stability in the financial system; and Reduction and deterrence of financial crime
Regulated Industries Include: Retirement Funds, Insurance, Capital Markets and Lending Activities
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purpose of regulation To ensure through regulation and supervision that
these institutions remain financially healthy and stable in order to meet their obligations towards their clients.
To ensure that the consumers are adequately educated, knowledgeable and protected in order to make informed decisions over their financial matters (i.e. products and services there are buying).
To ensure that proper governance structures are in place that will result in appropriate internal and external controls of these institutions leading to financial strength of the entities.
Enhancement of public confidence
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Legislation – NBFIRA Act
– Botswana Stock Exchange Act (Securities Act – still to commence)
– Insurance Industry Act (the proposed Insurance Industry Act is waiting for commencement)
– The International Insurance Act 2005
– Pension and Provident Funds ( the proposed Retirement Funds Act awaits commencement)
– Collective Investment Undertakings (CIU) Act (currently under review)
– The Income Tax Act and Regulations (Part 2 –Superannuation Fund)
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Licensing & fit and properness
All NBFIS are subject to Licensing Requirements Local Incorporation and Local Office Address Controllers are vetted for fit and proper at licensing and on continuous
basis
Vetting is in terms of
Qualification
Competence
Security Clearance
General Conduct
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Supervision and Monitoring
• Risk Base Methodology – Set a risk tolerance– Identify the Risk to NBFIRA– Review the Impact of the problem, and
lastly – The probability of the problem occurring– Linking supervisory resources and
responses to the risk scores.
• License
• Continuous Monitoring, • Determine a risk rating
• Compliance and Enforcement
Status
Normal
Watch list
Remedial Action
On-Site Supervision
Restructure
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Market Confidence
• NBFIRA ensures market confidence in several ways• NBFIRA Act Section 7(C)
– ……Advising the Minister on matters related to non-bank financial institutions and financial services, whether of its own accord or at the request of the Minister
• NBFIRA Act Section 8 • be fair and consistent in their implementation of their mandate• Deter financial crime - ensure there are standards in place – i.e. code of conduct, corporate
governance, risk policies, etc.
• NBFIRA Act Section 54 - 56– Carry out inspections and investigations
• NBFIRA Act Section 73-75– Statutory management
• Including – issuing ‘directives’, and collaborating with other regulatory bodies locally and internationally
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Investor Protection• The Authority strives to ensure Investor Protection• Treating Customers Fairly (TCF)– Principles
– Culture & Governance - – Product Suitability – Disclosure– Performance and Service in line with expectations– Claims, Complaints, etc – Business conduct
• Honesty and fairness• Diligence• Capability • Information for customers
– Governance• Conflict of interest • Financial stability• Capacity
• Approving rules for Self-Regulated Organisations • Review of new products in the market
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Tribunal
Also geared towards investor protectionThe NBFIRA Act Section 85 – 88 provides for
…a Tribunal shall be established and shall be responsible for reviewing decisions made by the Regulatory Authority or self regulatory organization under this Act.
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Cooperation • The Regulatory Authority has been given the
power to enter into arrangements with other agencies as per Section 40 of the NBFIRA Act.
• In following the above NBFIRA has signed Memoranda of Understanding with Locally Regionally Internationally
• Bank of Botswana• Botswana Unified Revenue Services• Botswana Accounting Oversight
Authority• Competition Authority Botswana• Financial Intelligence Agency
• Committee for Insurance, Securities & Non-Banking Authorities, SADC (CISNA)
• Commissao Mercado De Capitais of the Republic of Angola
• Financial Services Board (South Africa)
• The Office of the Registrar of Insurance & Retirement Funds (Swaziland)
• Financial Services Commission (Mauritius)
• Securities & Exchange Board of India
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Regulatory ChallengesCapacity Building
Recruitment
Limited Funding Opportunities
IT Accessibility and bandwidth
Market dynamism
Lack of training facilities
Unavailability of skills in
market
Limiting on line access
Balancing innovation with
financial stability
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Supervision and
Monitoring
Governance and
Transparency
Market Surveillance
Effective Regulation
Lessons for DFIs
COLLABORATIONCOLLABORATION
Thank You
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