Licensing Guidelines for Pension Brokers

PENSION AND INSURANCE SUPERVISION DEPARTMENT RESERVE BANK OF MALAWI LICENSING GUIDELINES FOR PENSION BROKERS (Financial Services Act, 2010 and Pension Act, 2010)

PENSION AND INSURANCE SUPERVISION DEPARTMENT 1.0 INTRODUCTION In line with the provisions of the Financial Services Act, 2010 and Pension Act 2010, the Reserve Bank of Malawi has issued the following licensing guidelines to facilitate applications for a licence to operate as a Pension Broker. These guidelines are intended to provide guidance on the licensing criteria for persons applying for a pension broker’s licence. They also set out to provide various continuous requirements and conditions to be complied with by licensed pension brokers. It is recommended, in the first instance, for potential applicants to contact the Registrar to discuss requirements before formalising applications. 2.0 DEFINITIONS All words and expressions in these guidelines have the same meaning as ascribed to in the Pension Act and the Financial Services Act. 3.0 FORM OF APPLICATION 3.1. Application for a licence must be submitted using the approved forms in accordance with the Financial Services (Licensing and Registration of Pension Entities) Directive, 2014. 3.2. The application should be divided into four parts:  Part A: General information of the applicant(s);  Part B: Business plan, financial information and other related information;  Part C: Governance and Compliance; and  Part D: Certification. 3.3. The applicant(s) must take into account the requirements outlined in these guidelines, the Financial Services Act 2010 and the Pension Act, 2010, including the Registrar’s Directives. 3.4. The applicant(s) must complete the application forms and submit all supporting documents to the Registrar together with prescribed fees. 3.5. Forms must be completed in English and supporting documents must be in English. Where original documents are not in English, they must be accompanied by certified English translations. If a query or request for information is not relevant, applicants must answer ‘no’, ‘none’, ‘not applicable’ or ‘not known’ and provide an explanation where necessary.

PENSION AND INSURANCE SUPERVISION DEPARTMENT 3.6. The applicant(s) must certify that information provided in the application and supporting documents is true and correct. 3.7. The applicant(s) must designate a contact person to act on its behalf on matters connected to the application. All communication between the Registrar and the applicant(s) will be directed to the contact person. 3.8. Submitting inaccurate or incomplete documentation will delay processing of the application and may lead to rejection of the application 3.9. Submitting misleading information is an offense under the Financial Services Act, 2010 4.0 APPLICATION PROCESSING 4.1. The applicant is required to submit the prescribed documents and forms together with a non-refundable licence assessment fee of K50, 000.00 4.2. Upon receipt of an application and the prescribed fee, the Registrar shall conduct a due diligence of the application and appropriate verification of materials therein. 4.3. Where the applicant(s) is currently licenced or otherwise operates in a foreign jurisdiction, the Registrar may extend enquiries to that jurisdiction’s regulators. 4.4. The applicant(s) may be invited to make presentations or attend interviews at the Registrar’s office or 4.5. The Registrar may seek to conduct an onsite visit or third party interviews in relation to the application. 4.6. The Registrar may, in his discretion, require further information before processing the application. 5.0 ENQUIRIES Enquiries concerning the preparation, submission and status of an application should be addressed to The Director, Pension and Insurance Supervision Department, Reserve Bank of Malawi, P.O Box 565, Blantyre.

PENSION AND INSURANCE SUPERVISION DEPARTMENT PART II – DETAILED APPLICATION REQUIREMENTS 6.0 SUBMISSION OF APPLICATION FORM The applicant(s) must complete the relevant forms included in the Schedule to Financial Services (Licensing and Registration of Pension Entities) Directive, 2014 and provide supporting information as follows: 6.1. Part A: General Information and Supporting Documents (a) PLR F1: Applicant Details – Company; (b) PLR F3: Responsible Person Details – Directors (to be completed for each director); (c) PLR F5: Responsible Person Details – Other Responsible Persons (to be completed for each responsible person); (d) PLR F6: Significant Owners – Natural Persons; (e) PLR F7: Significant Owners – Corporations; 6.2. Part B: Business Plan, Financial Information and Other Related Information; 6.2.1. The application must provide a detailed business plan, financial information and forecast, and shall include: (a) Details of the proposed Malawi operations and organisation structure (b) Details of current operations, services, jurisdictions of operations, corporate structure including a list of other licences held by the group and related jurisdictions [certified copies of licences must be attached]; (c) Overview of business strategy and objectives including services proposed, strategy, business acquisition plan, growth and profitability forecasts as well as implementation plan; (d) Expectations for branch operations and service delivery; (e) three year financial projection including statement of financial position, statement of comprehensive income, cash flow and profit forecasts; underlying assumptions and sensitivity analysis of projections; (f) Expectations for fees and services to be charged

PENSION AND INSURANCE SUPERVISION DEPARTMENT 6.3. Part C: Governance, Compliance and Operating Standards 6.3.1. The applicant(s) must provide information regarding the following– (a) A description of Board operations including: i. Board composition with a diverse mix of skills; ii. Proposals for Board and Executive Management Committees and their membership and Charters; iii. Risk appetite statement and risk management strategy; iv. Identification of potential conflicts of interest and plan for management; v. Expectations for compliance and vi. internal audit function; (b) Completed Fit and Proper Persons Questionnaire on all responsible persons with appropriate attestations in accordance with Pension (Fit and Proper Persons) Directive; (c) Description of arrangements for professional indemnity insurance policy and Fidelity insurance policy; (d) Provide a copy of all material outsourcing agreements and written explanations on risks relating to the outsourced activities how arrangements satisfy all governance, compliance and risk management requirements and how ongoing risks will be monitored. 6.4. Part D: Certification The application must include Form PLR F12 - Certification of applications by a company. 7.0 SUBMISSION OF SUPPORTING DOCUMENTS Further to the application form, an applicant must also submit certified copies of the following documents; (a) Certificate of Incorporation (b) Memorandum and Articles of Association (c) Shareholders’ register;

PENSION AND INSURANCE SUPERVISION DEPARTMENT (d) Share certificate for each significant owner (e) evidence of an undertaking by an insurer to provide indemity cover and Fidelity cover which shall contain an endorsement that stipulates that the insurer must notify the Registrar of any cancellation or non￾renewal of any of the above policies (f) Operations manuals; (g) Letters of appointment and acceptance of Directors; (h) Minutes of pre-commencement of Board meeting; (i) Letters of offer and acceptance of employment in respect of management team; (j) Charters or terms of reference for the Board and its committees; 8.0 COMMENCEMENT OF OPERATIONS (a) The applicant shall be required to commence Pension Broking business within six months from date of licence; (b) Before commencement of operations the licensee must submit to the Registrar a commencement letter attaching a copy of the opening statement of affairs signed by the directors and appointed auditors of the company. (c) The Registrar may at any time before or after licensing inspect the premises of the licensee to ascertain their suitability to offer Pension Broking services 9.0 LICENCE RENEWAL REQUIREMENTS The following applies to existing Pension Brokers (a) A licence to operate as a pension broker shall expire on the 31st day of March, every year and shall be required to be renewed; (b) An application to renew a licence to operate as a pension broker shall be submitted to the Registrar by 31st day of January, every year. (c) An applicant is required to submit only material changes to the initial application i.e. change of responsible person, directors, shareholders, change of address etc. (d) The applicant is required to provide evidence of an undertaking by an insurer to provide professional indemnity insurance policy and fidelity insurance policy. (The Registrar may prescribe minimum coverage amounts from time to time).

PENSION AND INSURANCE SUPERVISION DEPARTMENT (e) An application shall be accompanied by a licence renewal fee of K30,000.00 in form of a bank certified cheque payable to the Reserve Bank of Malawi. This fee is non refundable. (f) Late submission of renewal application shall attract an initial penalty of K50,000.00 and K5,000.00 for each additional month of non￾compliance. (g) In addition to the above an application to renew licence shall be supported by the following documents  Financial Statements and projections  Business plan with business strategy and objectives  Complete fit and proper person questionnaire for each responsible person  Certification (Form PLR F 12) 10.0 SUBMISSION Duly completed application form must be submitted with supporting documents to any of the following address: The Registrar of Financial Institutions Reserve Bank of Malawi Independence Drive PO Box 30063 Lilongwe 3; or The Director Pension and Insurance Supervision Department Reserve Bank of Malawi 10 Hannover Avenue PO Box 565 Blantyre. Tel: 01 820 444/299 Fax: 01 822 118 Email: pisu@rbm.mw These guidelines and relevant forms can be downloaded from the Reserve Bank of Malawi’s website: www.rbm.mw