Namfisa investigates firm over N$250 million losses

The Namibia Financial Institutions Supervisory Authority (Namfisa) has launched an investigation into Wealth Management Solutions (WMS), a financial advisory firm, following reports of client losses estimated at N$250 million, potentially rising to N$350 million. The losses primarily affect pensioners and families whose savings were allegedly mismanaged through foreign exchange investments, with the firm's owner, Hanjo Schlabitz, reportedly using money market funds to cover earlier foreign investment losses. This incident highlights critical issues in financial regulation and consumer protection within Namibia's non-banking financial sector, especially in light of the recently commenced Financial Institutions and Markets Act, 2021 (FIMA), and Namfisa's expanded supervisory mandate. The investigation underscores the regulator's commitment to maintaining market integrity and safeguarding investor interests, particularly after a recent Supreme Court ruling found Namfisa liable for regulatory oversight failures in a previous fraud case.

The Namibian financial sector is currently grappling with a significant scandal as the Namibia Financial Institutions Supervisory Authority (Namfisa) investigates Wealth Management Solutions (WMS), a financial advisory firm, over reported client losses amounting to at least N$250 million. These substantial losses, which a liquidator estimates could escalate to N$350 million, have predominantly impacted vulnerable clients, including pensioners and families who entrusted their life savings to the firm. The firm's owner, Hanjo Schlabitz, is alleged to have engaged in risky foreign exchange investments and subsequently used funds from clients' money market accounts to offset earlier losses, raising serious concerns about fiduciary duties and regulatory compliance.

This development comes at a critical juncture for Namibia's financial regulatory landscape, coinciding with the recent commencement of the Financial Institutions and Markets Act, 2021 (Act No. 2 of 2021) (FIMA), and the new Namibia Financial Institutions Supervisory Authority Act, 2021, on 1 May 2026. These legislative reforms were designed to modernise the non-banking financial sector, enhance oversight, and bolster consumer protection. The WMS investigation will serve as an early and crucial test of the effectiveness of this new regulatory framework and Namfisa's resolve in enforcing its expanded powers. For legal practitioners, this case underscores the heightened importance of understanding the evolving regulatory environment, the scope of supervisory authority, and the avenues for client recourse in instances of financial mismanagement.

Namfisa, established under the Namibia Financial Institutions Supervisory Authority Act, 2001 (Act No. 3 of 2001), is the independent body mandated to regulate and supervise non-banking financial institutions and services in Namibia. Its core functions include fostering a stable and fair non-banking financial sector, promoting consumer protection, and advising the Minister of Finance on related matters. This mandate encompasses the licensing, supervision, and enforcement of compliance across a broad spectrum of entities, including long-term and short-term insurance providers, investment managers, pension funds, and financial intermediaries.

The regulatory framework governing financial advisors and investment management in Namibia has recently undergone a significant overhaul with the operationalisation of FIMA and the new Namfisa Act on 1 May 2026. FIMA, specifically, aims to consolidate and modernise the laws regulating financial institutions, intermediaries, and markets outside the banking sector. Under FIMA, brokers like WMS are categorised as financial intermediaries, who are required to maintain up-to-date financial records. The new legislation places a greater emphasis on governance and individual accountability, extending 'fit and proper' requirements to directors and senior management, and enhancing consumer protection. This legislative shift provides Namfisa with significantly greater powers to ensure market integrity and financial stability, making the WMS investigation a key indicator of the new regime's impact.

The investigation into Wealth Management Solutions by Namfisa highlights several critical areas of legal and regulatory concern. Firstly, the alleged use of client money market funds to cover losses from foreign exchange investments by Hanjo Schlabitz points to potential breaches of fiduciary duties and the fundamental principle of segregating client funds. Financial intermediaries are entrusted with client assets and are expected to act in the best interests of their clients, avoiding conflicts of interest and speculative practices that jeopardise savings. Such actions, if proven, could lead to severe penalties under FIMA and other applicable laws, including license revocation, substantial fines, and potential criminal charges, particularly under the Financial Intelligence Act, 2012 (Act No. 13 of 2012), which carries penalties of up to N$100 million in fines or 30 years imprisonment for non-compliance.

Namfisa's investigative powers, derived from the Namibia Financial Institutions Supervisory Authority Act, 2001, and now strengthened by FIMA, allow it to conduct thorough inquiries into the operations of regulated entities. The regulator's commitment to its mandate is particularly scrutinised in light of the recent Supreme Court ruling in May 2026, which found Namfisa liable for N$35 million in the Prowealth case due to its failure to exercise adequate regulatory oversight over a fraudulent investment firm. This precedent places added pressure on Namfisa to demonstrate robust enforcement in the WMS matter, ensuring that its supervisory actions are proactive and effective in protecting consumers. The fact that WMS and Schlabitz still hold active registrations with Namfisa, despite the significant losses and liquidation application, raises questions about the timeliness and efficacy of regulatory intervention prior to the full extent of the losses becoming apparent.

The affected clients, largely pensioners, face a challenging path to recovery. While the firm has applied for voluntary liquidation, the liquidator estimates that only a fraction of the total losses may be recoverable. Clients may pursue civil claims against WMS and potentially against Schlabitz personally, particularly if fraud or gross negligence is established. The outcome of Namfisa's investigation will be crucial in providing a basis for such claims and informing any potential collective action by the 87 individuals and two organisations who have already come forward as creditors. This case also highlights the jurisdictional complexities when investments are made on overseas platforms, as Namfisa's direct control over foreign entities is limited, leaving clients in a precarious position between local advisors and foreign regulators.

Furthermore, the incident underscores the importance of the 'fit and proper' requirements for financial intermediaries under FIMA, which demand competence, honesty, integrity, and financial soundness from individuals in key positions. The alleged conduct of Schlabitz, a chartered accountant and certified financial planner, directly challenges these standards. The absence of a mandatory audit requirement for financial intermediaries under FIMA, as noted in the source, might be a point of review for future regulatory enhancements, especially given the scale of funds managed and the potential for abuse.

The Namfisa investigation into Wealth Management Solutions serves as a stark reminder of the inherent risks in the financial advisory sector and the critical role of robust regulatory oversight. For legal practitioners, this case underscores the imperative of advising clients on the enhanced regulatory landscape under FIMA, particularly concerning due diligence when selecting financial advisors and understanding the protections (and limitations) afforded by the law. The potential for significant individual liability for financial intermediaries and their principals, coupled with Namfisa's strengthened enforcement powers, necessitates a meticulous approach to compliance and ethical conduct.

Moving forward, practitioners should closely monitor the progress and outcome of Namfisa's investigation, as it will likely set precedents for the application of FIMA and shape future regulatory guidance. The avenues for client recourse, including civil litigation and participation in liquidation proceedings, will be central to mitigating the impact on affected investors. This incident also highlights the ongoing need for public education on financial literacy and the importance of verifying the registration status and track record of financial service providers. The Namibian financial sector must now demonstrate its capacity to enforce its modernised regulatory framework effectively to restore and maintain public confidence in its non-banking financial institutions.