The Islamic Financial Services Board (IFSB) has issued its Exposure Draft of Core Principles for Islamic Finance Regulation (Takaful Segment) for Public Consultation. The IFSB said that the standard is intended to provide a set of takaful core principles, closely aligned with the IAIS ICPs (as adopted in November 2019), but with additions and modifications where necessary to reflect the application of shariah principles in takaful.
The aim is to provide an international benchmark standard to promote a sound regulatory and supervisory system and to maintain a fair, safe and stable takaful sector for the benefit and protection of the interests of takaful participants, beneficiaries and claimants as well as contributing to the stability of the Islamic financial system.
Ultimately, the standard intends to provide an appropriate international standard for sound regulatory and supervisory practices specifically for the takaful sector; enable policymakers and supervisors to self-assess the level of observance of principles and standards in the regulations; identify areas for improvement and guide development of reform agendas and responses to emerging issues; and to provide a basis for peer review enabling objective external assessment by specialised bodies.
Core principles for regulation of the financial sector have become standard tools to guide regulatory and supervisory authorities (RSAs) in developing their regulatory regimes and practices. They also serve as the basis for regulatory authorities or external parties such as multilateral agencies to assess the strength and effectiveness of regulation and supervision in a jurisdiction. This standard intends to complement the IAIS ICPs (November 2019) to address areas that either do not deal, or deal inadequately, with the specificities of Islamic finance.
The IFSB envisages that the core principles for Islamic Finance Regulation (Takaful Segment) (CPIFR-Takaful) will be used by jurisdictions as a benchmark for assessing the quality of their regulatory and supervisory systems, and for identifying future work to achieve a baseline level of sound regulations and practices for takaful. Furthermore, the CPIFR-Takaful may also assist IFSB member jurisdictions in self-assessment; financial sector assessment programme by the International Monetary Fund and the World Bank; reviews conducted by private third parties; and peer reviews conducted, for instance, within regional groupings of insurance RSAs.
Consultation on the exposure draft started on 31 March 2022 and will end on 23 June 2022. The IFSB invites comments from regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services, academics and other interested parties. The IFSB has conducted an online public hearing (via webinar) on 25 April 2022, as part of the public consultation process. Participation in the webinar was free and open to all. M