3.1 Institutional Oversight

3.1.1 Introduction

The Central Bank expects Licensed Financial Institutions to be effectively managed by establishing an appropriate organizational structure, a supportive and constructive corporate culture; engaging well-qualified staff, defining clear policies and procedures, creating proper monitoring and controls supported by proper overall governance. The principle is to promote positive institutional conduct in serving all Consumers fairly.

3.1.2 Description

1. 3.1.2.1 The Central Bank requires Licensed Financial Institutions to have robust management oversight and responsibility structures in place for their activities including design, development, promotion, sales and distribution of products and/or services; compliance, risk and audit controls; up to date policies, procedures and training; engagement of qualified staff.
    
2. 3.1.2.2 Licensed Financial Institutions’ Board and Senior Management are required to instil a Consumer- focused corporate culture that will treat the Consumer fairly. The Licensed Financial Institution must actively monitor, identify, respond and address misconduct and potential Market Conduct risks.

3.2 Governance of Retail Operations

3.2.1 Introduction

Licensed Financial Institutions’ governance and management oversight structures must establish and maintain the level of integrity in the Market that both Consumers and the Central Bank expect. Governance of retail operations must be appropriate, properly implemented and maintained to ensure Consumer needs, suitability and affordability are properly assessed. Consumers are to be provided the right products and/or services to meet their needs and their ability to accept risk.

Licensed Financial Institutions must ensure Consumer financial assets, information and all Data are secure and protected.

3.2.2 Description

1. 3.2.2.1 Licensed Financial Institutions must have strong governance and effective management oversight in place over the design, development, promotion, sales and distribution, and the ongoing review and changes of Financial Products and/or Services.
    
2. 3.2.2.2 Licensed Financial Institutions offering or promoting Shari’ah compliant products and/or services must ensure compliance with Shari’ah governance which is set out in more detail by separate Regulation issued by the Central Bank.
    
3. 3.2.2.3 Licensed Financial Institutions must have effective controls, strong security and monitoring of transactions and activities of staff.
    
4. 3.2.2.4 All Licensed Financial Institutions must maintain up to date policies and procedures, systems and controls that fully comply with the requirements specified within this Regulation and its accompanying Standards.
    
5. 3.2.2.5 Licensed Financial Institutions must have and be able to demonstrate a corporate culture of Consumer service, fairness, transparency, ethical business conduct and effective disclosure.
    
6. 3.2.2.6 Licensed Financial Institutions must promote compliance with this Regulation and accompanying Standard in retail activities through policies, procedures, training, systems and controls including and not limited to Complaint handling and Complaint resolution, Consumer education, compensation and practices in sales and advisory services.
    
7. 3.2.2.7 Licensed Financial Institutions must ensure that all Authorized Agents comply with the applicable Articles of this Regulation and the accompanying Standards.