The Islamic Financial Services Board (IFSB) has issued its "Exposure Draft on a Standard on Disclosures to Promote Transparency and Market Discipline for Takaful/Retakaful Undertakings (ED-25)" for public consultation.
The feedback period is open for 60 days from 25 March 2020 until 25 May 2020.
ED-25 is intended to set out requirements to be applied by regulatory and supervisory authorities to takaful/retakaful undertakings to promote transparency and market discipline by providing sufficient disclosures both to the market and to actual or potential participants.
The main objectives of the ED-25 are:
(i) to facilitate access to relevant, reliable and timely information by takaful market players generally, and by takaful participants in particular, thereby enhancing their capacity to monitor and assess the performance of takaful ventures;
(ii) to improve comparability and consistency of all disclosures made by takaful operators (TOs);
(iii) to support financial consumer protection for current and potential participants, by helping TOs to offer useful information disclosures on takaful products; and
(iv) to enable market players to complement and support, through their actions in the market, the implementation of the IFSB standards.
ED-25 covers two types of disclosure, public and private. First, it deals with the key disclosures that should be made publicly by TOs/retakaful operators with a view to market discipline. These disclosures have a mainly prudential aim, in order to ensure the soundness and stability of the industry. Public disclosures about environmental, social and governance (ESG) issues operate in a broadly similar way and, in governance particularly, overlap with the prudential disclosures. The second area is disclosures to participants and potential participants about the contract they are considering entering into, in order for them to make an informed decision about it, or about the performance of a contract under which they are already participants.
The IFSB will be conducting two online webinars for public consultation, to be held on 20 April and 6 May 2020. Participation in the webinar is free and open to all.
The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors.