By Andreen Moncur
Namibian customers now have stronger protections under the Financial Institutions and Markets Act 2 of 2021 (“FIMA”), which sets clear rules for fair treatment in financial products and services.
The fair treatment of customers is one of the two key pillars of FIMA. At the heart of this protection is the Treating Customers Fairly (“TCF”) framework. TCF is designed to safeguard financial consumers – both individuals and businesses – from unfair treatment by financial institutions and financial intermediaries.
In the financial sector, the playing field is often uneven. Financial institutions and intermediaries, such as retirement funds or insurance brokers, usually have far more knowledge than the customers who use their products and services. This information gap, known as “information asymmetry,” can leave customers vulnerable to unfair practices. As a result, customers can be sold financial products and services which they do not understand and which are not suited to their unique financial needs and budget.
In Namibia, where levels of financial literacy are generally low and financial products are becoming increasingly complex, many people may not fully understand their rights and obligations. This increases the risk of unfair treatment and potential financial loss. TCF seeks to address this imbalance by holding financial institutions accountable for how they design, market, sell and service their products.
Importantly, FIMA makes it a criminal offence for any person to mislead or deceive customers about financial services. Those found guilty could face significant fines or prison sentences.
What does “treating customers fairly” mean?
Under FIMA, financial institutions and intermediaries must demonstrate fair treatment across the entire life cycle of a product – from design and promotion, through advice and sales, to claims handling and complaints resolution. To guide this process, seven outcomes have been established. These outcomes put the customer at the centre of business practices.
Central to Alexforbes Namibia’s culture, ethos, and philosophy is the principle that customers are its priority. The company is committed to treating all its customers fairly and must continually drive improvements to business processes and client experiences by placing its clients at the centre of everything it does, while ensuring compliance with legislation. Alexforbes Namibia encourages customers to understand and exercise their rights when purchasing financial products and services. The company views the Treating Customers Fairly (TCF) framework not as a regulatory burden, but as an opportunity to enhance its products and services.
The seven TCF outcomes
Outcome one: Fair treatment culture
Fair treatment should be part of a financial institution’s culture. Acting fairly should not be seen as a regulatory requirement only, but as the right way of doing business.
Outcome two: Appropriate product design and distribution
Products and services must be designed to meet the needs of clearly identified customer groups. It is unfair to sell a product to someone who does not need it or cannot afford it.
Outcome three: Clear and relevant information
Customers must be given clear, relevant and accurate information about a product before deciding. All important terms and conditions should be highlighted upfront.
Outcome four: Suitable financial advice
Advice must be appropriate to the customer’s circumstances. Financial institutions and intermediaries must properly understand both the product and the customer’s needs before giving recommendations.
Outcome five: Products perform as promised
Products and services must perform in line with what was promised at the time of sale. For example, if a guarantee was offered, it must be honoured.
Outcome six: No post-sale barriers
Customers should not face unnecessary obstacles when switching providers, making claims, or lodging complaints. Processes should be straightforward and efficient.
Outcome seven: Data privacy protection
Customers have the right to know how their personal information is collected, used and shared. Institutions must ensure data is protected and only shared with consent.
Why it matters
By embedding these outcomes, FIMA and TCF aim to create a fairer, more transparent financial sector in Namibia. The framework empowers customers to make informed decisions, while ensuring financial institutions and intermediaries are accountable for their products and conduct. By putting fair treatment at the centre of financial services, FIMA gives Namibian customers greater confidence that their money – and their rights – are being protected.
* Andreen Moncur is a Legal Consultant at Alexforbes Namibia
