Effective Institutional Oversight

1. 3.1.2.1Effective Oversight includes requiring Licensed Financial Institutions to:
   1. a.Integrate into the management of the Licensed Financial Institution, the general principles which the Consumer Protection Regulation and the accompanying Standards are based upon;
   2. b.Maintain effective Board governance and oversight of the management of conduct and compliance risks. With respect to the term Board and any assigned roles or responsibilities required by these Standards, these shall, for the purpose of licensed foreign bank branches, be the same requirements of the foreign bank branch representative or committee that have been designated by Licensed Financial Institution in accordance with the Central Bank Regulation on Corporate Governance;
   3. c.Establish a governance structure that provides assurance and evidence that there is effective oversight of conduct risks. The governance structure must cover the breadth of the Licensed Financial Institution’s financial products, services and related Retail Operations including the use of Third Parties;
   4. d.Develop and implement an effective control framework to manage conduct risks and ensure compliance with the Consumer Protection Regulation and the accompanying Standards. The control framework must be approved by the Board of the Licensed Financial Institution; e. Develop, document and integrate conduct risk tolerance into the Licensed Financial Institution’s decision-making process and overall strategy;
   5. f.Ensure the Licensed Financial Institution’s key control and assurance functions, Compliance, Risk and Audit, are each mandated appropriately for the identification, prevention, monitoring, detection, verification and mitigation/resolution of conduct and related risks;
   6. g.Ensure all appropriate Staff are qualified at all times to perform their responsibilities and are competent in their understanding and application of the Consumer Protection Regulation and the accompanying Standards;
   7. h.Establish management and Staff remuneration structures that promote responsible business and Market Conduct with the aim of preventing mis-selling practices, unreasonable risk taking, or other irresponsible actions and or behaviors;
   8. i.Apply strict product and/or service approval processes that must be carried out before a new or updated Financial Product and/or Service is released to the Market;
   9. j.Establish effective and efficient Complaint management processes and systems to ensure resolution, analysis and reporting of Complaints;
   10. k.Implement appropriate control framework, security and monitoring measures to protect Consumers’ Data and information against misuse, unauthorized access and undue processing and analysis;
   11. l.Establish a comprehensive Data collection process for Consumer Complaints and inquiries to enable effective trend analysis and the identification of issues regarding Financial Products and/or Services, non-compliance matters, Staff misconduct and the fair treatment of Consumers. The Central Bank may prescribe templates to Licensed Financial Institutions to standardize Data collection, classification and reporting;
   12. m.Instill a culture in the Licensed Financial Institution that promotes fair dealing, transparency and behavior that protects the interests of Consumers first;
   13. n.Ensure the Licensed Financial Institution’s governance framework encompassing the above components is commensurate with the size, complexity and risk profile of the Licensed Financial Institution; and
   14. o.Ensure that Islamic Financial Institutions comply with Islamic Shari’ah.
2. 3.1.2.2Licensed Financial Institutions must apply the principles and the requirements of the Consumer Protection Regulation and accompanying Standards to any new product or service, activity, action, change, event or any other situations.
3. 3.1.2.3Licensed Financial Institutions must file by January 31st each year an annual letter of attestation confirming compliance with Article 98 of the Decretal Law and specifically addressing matters related to Chapter 6 of the Decretal Law and the supporting Regulation and Standards. The letter must be filed by the Licensed Financial Institution’s most senior compliance officer and approved by the Board. The Central Bank may prescribe the form and details as to the content of the letter.