THE Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa) have declared the operations of U-Care in Namibia as illegal.
BoN and Namfisa said U-Care operated in contravention of both the Banking Institutions Act and the Long-term Insurance Act.
A joint statement in April last year said the BON directed U-Care to refrain from pursuing any further business activities in Namibia. Despite this directive, U-Care continued to operate in Namibia under the radar, the statement said.
The core activity of U-care Namibia is to introduce new members of the public to the business practice, whereby money in the form of a monthly fee per member is regularly accepted from members of the public.
It then encourages and requires participants to introduce or recruit new members of the public to the network in order to earn monetary rewards and progress in status.
The funds obtained in this manner from the public are then allocated to participants as rewards, which principally come from the monthly contributions received from existing and newly recruited members.
The statement said on another front, U-Care contravened the Long-term Insurance Act by acting as a funeral insurance intermediary without approval from the Registrar of Long-term Insurance.
“The funeral cover was underwritten by Trustco Life Limited, which is duly registered as a long-term insurer. Upon notification of these transgressions by U-Care, Trustco Life Ltd stopped underwriting the funeral cover benefits as from 31 May 2012,” the statement said.
BoN and Namfisa said members of U-Care who hold their funeral policy are advised to approach Trustco Life Limited on an individual basis to continue their funeral policy underwritten by them, if they wish to continue such a relationship.
The two regulators have asked members of the public who have joined U-Care to discontinue their membership with immediate effect while those who have intentions to join should desist from doing so, the statement said.
“In addition, charities and other organisations who were enticed to accept and receive donor funding from U-Care are also cautioned to relinquish their relationships with U-Care Namibia, since any involvement with U-Care may present them with reputational and legal challenges.”