When recommending insurance or takaful products, advisors must offer customers suitable product options from at least three different providers.
BNM (Bank Negara Malaysia) has issued a new draft rule for financial advisors and Islamic financial advisors on behavior management.
In a draft, the BNM sets out the business conduct, supervisory, governance, and operational requirements that must be met by a licensed financial advisor / Islamic financial advisor.
The rules are designed to ensure that advisors conduct their business in a fair, responsible, and professional manner that instills trust and confidence among consumers, says BNM.
Under the new rules, consultants must offer customers suitable product options from at least three different licensed providers for each recommended insurance category or recommended takaful business.
The consultation will seek opinions on whether advisors should move from commission-based to fee-based remuneration to ensure the independence of advice and recommendation for consumers.
Our Takaful Section contains valuable The new rules also formalize the governance standards of approved financial advisors and the board of directors’ obligations to ensure fair treatment, ethical behavior by employees, and the quality of advice.
Visit our Takaful section for more news on Islamic Insurance.
Managers must ensure that adequate risk management and internal control policies and procedures are in place to manage conflicts of interest. Employee behavior, handling of customer funds, and escalation of problems to the board of directors.
The KPIs for financial advisor representatives under the Balanced Scorecard (BSC) framework have also changed.
The draft rule available here can be commented on until September 9, 2021.
Separately, BNM has issued a separate document describing the requirements and procedures for advisors to apply for or renew permits to engage in financial advisory and Islamic financial advisory businesses, which are available here:
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Courtesy of Debt Solicitors.