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The IFSB Issues Exposure Draft of a Standard on Disclosures to Promote Transparency and Market Discipline for Takāful/Retakāful Undertakings (ED- 25) for Public Consultation

Date posted: 25 March 2020

25 March 2020, Kuala Lumpur - The Islamic Financial Services Board (IFSB) has today issued the Exposure Draft of a Standard on Disclosures to Promote Transparency and Market Discipline for Takāful/Retakāful Undertakings (ED-25) for Public Consultation for a period of sixty days, starting from 25 March 2020 until 25 May 2020. The IFSB invites comments from regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), academics and other interested parties.

Disclosures to Promote Transparency and Market Discipline for Takāful/Retakāful Undertakings, is developed to enhance the stability and soundness of takaful/retakaful industry. It focuses on the required disclosures of takaful, particularly takāful/retakāful include various distinguishing features than conventional insurance/reinsurers.  ED-25 is intended to set out requirements to be applied by regulatory and supervisory authorities to takāful/retakāful 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:  

  1. to facilitate access to relevant, reliable and timely information by takāful market players generally, and by takāful participants in particular, thereby enhancing their capacity to monitor and assess the performance of TUs;
  2. to improve comparability and consistency of all disclosures made by takāful operators (TOs);
  3. to support financial consumer protection for current and potential participants, by helping TOs to offer useful information disclosures on takāful products; and
  4. 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/retakāful 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 of disclosure is disclosures to participants and potential participants about the contract they are considering entering, 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 usual public hearing for this standard will not be held in view of the current global outbreak, but will be replaced by the online webinar.

The soft copy of ED-25 is available on the IFSB website, www.ifsb.org and the Secretariat invites all interested parties, especially members of the IFSB, to send their comments on ED-25 to the project team through email at ifsb_sec@ifsb.org  by 25 May 2020 at the latest.

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