View source for Guiding Principles on Conduct Of Business For Institutions O




== Top 20 FREQUENT WORDS ==
iifs 144
business 76
shar<U+012B> 75
client 69
principles 69
conduct 65
clients 45
compliance 45
islamic 44
services 44
financial 43
principle 38
charter 34
guiding 34
investment 34
management 33
tak<U+0101>ful 32
ifsb 30
information 28
products 28



== DOCUMENT KEY POINTS ==
*the organisation 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
*the standards prepared by the ifsb follow a lengthy due process as outlined in its guidelines and procedures for the preparation of standards guidelines which involves among others the issuance of exposure drafts holding of workshops and where necessary public hearings

*sultan bin nasser al suwaidi governor central bank of united arab emirates in alphabetical order of the country the member represents i

*al hamidy a saudi arabian monetary agency deputy chairman mr osman hamad mohamed khair a central bank of sudan until august members dr sami ibrahim al suwailem islamic development bank mr khalid hamad abdulrahman hamad central bank of bahrain mr gamaal m

*conduct of business working group chairman dr mulya effendi siregar a bank indonesia deputy chairman mr pervez said a state bank of pakistan members mrs ebtisam al arrayed central bank of bahrain mr hamad abdullah eqab albaraka banking group bahrain ms elham hassan pricewaterhousecoopers bahrain hajjah rafezah hj

*table of contents acronyms v introduction the scope of application understanding the application of the guiding principles the guiding principles principle truthfulness honesty and fairness principle due care and diligence principle capabilities principle information about clients principle information to clients principle conflicts of interest and of duty principle shar ah compliance definitions appendices appendix verses of the holy qur n and had th of the prophet muhammad pbuh addressing conduct of business
*appendix suggest for model self assessment questionnaire appendix guidelines for iifs to develop own client s charter iv

*in consideration of the above and in line with its mandate to promote the soundness and stability of the islamic financial system the council of the islamic financial services board ifsb at its ninth meeting held on november in jeddah kingdom of saudi arabia supported the formation of a conduct of business working group cbwg intended to complement existing and future ifsb standards and guidelines in the ifsi
*the guiding principles on conduct of business for institutions offering islamic financial services guiding principles are applicable to all institutions offering islamic financial services iifs in the banking tak ful islamic insurance or capital market segments including windows of conventional fir miss in accordance with the objectives of the ifsb the guiding principles will not reinvent the wheel but will instead wherever appropriate reinforce the existing internationally recognised frameworks or standards for the conduct of business

*the ifsb considers that since supervisory authorities have varying degrees of responsibility for regulating conduct of business in their respective countries the guiding principles will provide sufficient room for supervisors to tailor the rules in a variety of ways a for example by laws regulations internal rules within a company or institution and unwritten principles and custo miss understanding the application of the guiding principles
*a supervisory authority that can deploy a credible threat of possible future regulation may persuade an industry to deal with the self regulation in this context refers to voluntary compliance by an individual institution as opposed to the generally understood self regulation process by which a statutory regulator delegates day to day supervision to a self regulatory organisation sro which has a formal and official status

*however for iifs the requirements for ethical business conduct have their basis in the shar ah and these guiding principles can be shown to follow from the shar ah principles as set out in the appendix
*the international conduct of business principles were developed by the iosco with the key objective of focusing the conduct of financial intermediaries brokers banks portfolio managers financial analysts and investment advisers and other market participants

*the policy should among other things clarify i the procedures according to which an employee can report any instance of conduct that he or she considers to be in breach of such principles ii actions to be carried out by management upon receipt of the report and iii the obligations of iifs to take measures to prevent future breaches
*in general market manipulation is defined as any practice that distorts prices or trading volume in the market with the intent to deceive people or entities that rely on the publicly available information in order to make profits by selling at inflated prices or buying at artificially depressed prices

*in an islamic collective investment scheme icis the fund manager may engage in various practices that result in its making undisclosed profits at the expense of investors such as churning assets in the fund portfolio to generate commissions for itself or its affiliates or dealing with the fund as a principal on terms that are contrary to the investors interests a see the ifsb guiding principles on governance of islamic collective investment schemes

*an iifs must endeavour to avoid taking steps to recover an amount owed to it that would inflict hardship on a debtor whose financial distress is not due to the debtor s misconduct but instead should take all reasonable steps to assist the debtor a for example to restructure the financing prior to exercising its rights over the collateral

*in this connection it should be borne in mind that the suk k may be purchased by investors in a number of countries in the belief that they are generally accepted as being shar ah compliant

*in addition to having the necessary professional competence and understanding the applicable laws rules and regulations of any government regulatory authority licensing agency or self regulating professional organisation iifs must ensure that the persons entrusted to deal on behalf of the iifs are equipped with an appropriate level of knowledge of the shar ah compliant characteristics of the financial products and services offered by the institution

*� providing an internationally accepted qualification that will equip candidates with a practical understanding of islamic finance � providing professional recognition for employees which will demonstrate that successful candidates have undergone rigorous training and sat a professional examination to reach their level of competence and � providing candidates with an understanding of the requirements of shar ah in a business context and preparing them to hold key positions in the islamic finance and tak ful industries
*it is particularly important that personnel who sell the financial products offered by an iifs whether as employees or as agents or brokers should be capable of understanding the products they sell especially the more complex ones and explaining their features clearly to potential clients so that the latter can make an informed choice as to whether a particular product is suitable for them see also principles and

*in order to give the client sound advice and to propose a suitable product an employee or representative of an iifs will need to obtain the following information from the client the amount of any deposit or initial payment he is able to provide the amount and source of his annual income and how secure it is and the maximum amount of monthly payments he can reasonably afford to make taking into account other financial commitments he may have his age and the term of the facility he seeks number of years over which he wishes to spread payments
*for example if a client considering a savings or investment product or a home purchase product chooses not to provide all the information requested the client must be cautioned that the iifs may not be able to give suitable advice without complete information and the client might risk making payments or entering into financial commitments which may not be appropriate to his or her needs or ability to pay

*good practice requires that all commission and similar arrangements be fully disclosed to clients and that in selecting a product for recommendation to a client the overriding criterion should be the benefits to the client and not the attractiveness of the commission to the iifs or its representative
*in conjunction also with principle honesty and fairness an iifs is required to provide appropriate and clear information to all clients and prospective clients regarding its products and services and the rights obligations and risks they involve for the client

*in the context of iifs good corporate governance should encompass i a set of organisational arrangements whereby the actions of the management of iifs are aligned as far as possible with the interests of its stakeholders ii provision of proper incentives for the organs of governance such as the board of directors the shar ah supervisory board ssb and management to pursue objectives that are in the interests of the stakeholders and facilitate effective monitoring thereby encouraging iifs to use resources more efficiently and iii compliance with islamic shar ah rules and principles
*profits generated by that enterprise or activity are shared in accordance with the terms of the mu rabah agreement while losses are to be borne solely by the capital provider unless they are due to the mu rib s misconduct negligence or breach of contracted ter miss restricted investment the account holders authorise the iifs to invest their funds based accounts on mu rabah or agency contracts with certain restrictions as to where how and for what purpose these funds are to be invested

*wak lah an agency contract where the customer principal appoints the iifs as agent wak l to carry out the business on their behalf and where a fee or no fee is charged to the principal based on the contract agreement
*tak ful participants a party that has participated in the tak ful product with the to who has a right to benefit under a tak ful contract

*on capabilities and prepare against them what force you can and horses tied at the frontier to frighten thereby the enemy of allah and your enemy and others besides them whom you do not know but allah knows them and whatever thing you will spend in allah s way it will be paid back to you fully and you shall not be dealt with unjustly
*qur an woe to those that deal in fraud a those who when they have to receive by measure from men exact full measure but when they have to give by measure or weight to men give less than due

*prophet muhammad pbuh in another had th also said the seller and the buyer have the right to keep or return goods as long as they have not parted or till they part and if both the parties spoke the truth and described the defects and qualities of the goods then they would be blessed in their transaction and if they told lies or hid something then the blessings of their transaction would be lost

*on compliance and shar ah compliance we have sent down to you o messenger the book with the truth embodying it and with nothing false in it confirming the divine authorship of and the truths that are still contained by whatever of the book was revealed before it and guarding over all the true teachings in it
*he who guards against the doubtful things keeps his religion and his honour blameless but he who falls into doubtful things falls into what is unlawful just as a shepherd who pastures his flocks round a preserve will soon pasture them in it

*did the fund management company or its affiliates deal with the fund or account as a principal a either a seller to or a buyer from the fund or account if so list each transaction and indicate whether it was done at a verifiable market price or fair price at the time of the transaction
*appendix suggest for model self assessment questionnaire this questionnaire can be used either by an iifs that has adopted a voluntary approach to compliance with the ifsb conduct of business standard or by a regulator that decides to make compliance mandatory

*show unusual suk k structures a for example a an agreement by the originator to repurchase assets from the issuer at a preagreed ie guaranteed price b an arrangement for the mu rib to subsidise the return by means of an interest free loan in the event that the profit falls below the benchmark in effect a guarantee of interest c a structure by which certain tranches have priority over others d any other structure with unusual or not generally accepted features
*provide a schedule for all relevant employees who received training with details and the date on which training was given or if there are employees who should have received training but have not yet received it explain why

*the compliance officer as well as being responsible for compliance with any general licensing requirements should have a high degree of expertise in the shar ah as it applies to islamic finance and to the specific business of the iifs
*was each client who made an investment given a full description of the investment either by means of a prospectus or other offering document or verbally and a statement of any risks additional costs penalties or limitations on benefits including withdrawal or early redemption penalties involved

*the compliance officer should be responsible for maintaining a record of customer complaints which at a minimum should record the date and nature of the complaint action taken to resolve it whether the complaint was a breach of shar ah principles or of general conduct of business requirements acceptance by the complainant of the solution and the date and regulatory action if that was an outcome
*in particular the compliance officer should ensure that new product offerings have been properly examined and approved by shar ah scholars see above

*benefits to the public � enables the public to know specifically the quality of service to expect from the iifs � enables the public to evaluate the performance of the services rendered � reduces uncertainties over the delivery of services � facilitates comparisons between iifs that offer similar services and � allows the public to be more aware of the conduct commitment of each iifs
*the concept of client s charter definition a client s charter is a written commitment made by an iifs or organisation in terms of the deliverance of its outputs or services to its customers inclusive of stakeholders

*figure i three main aspects of a client s charter client s charter definition focus characteristics � written commitment � existing potential � clarity � displayed customers and � facilitates � assurance of good stakeholders dissemination conduct practices � guiding principles of � credibility � customer and conduct of business � practicality stakeholder rights � attitudes � specific � continuous improvements focus the client s charter focuses on the existing and potential customers and stakeholders as they are the recipients of the outputs or services provided by the iifs
*implementation of the client s charter implementation of the client s charter consists of five principal stages as depicted in figure � formulation of the client s charter � promotion of the client s charter � service delivery � monitoring and � evaluation and improvement


 ''Please note, This is an auto generated summary based on sentances position in the document and other factors''
== DOCUMENT WORD ANALYSIS ==
=== Main Category ===
: AlHuda Material\islamic banking


=== KeyWords ===
islamic risk murabaha minimum iifs NA customers financing customer banking profit credit maximum shariah underlying limit service corporate required mode



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== DOCUMENT REFERENCES ==


=== Number of Pages ===
35


=== Published Date ===
2009-12-31 20:11:06


== Full Document ==


[https://www.hodhood.com/en/HodHoodDocuments/IslamicFinance/IslamicBanking/Guiding%20Principles%20on%20Conduct%20Of%20Business%20For%20Institutions%20O.pdf Read the Full Document]


[[Category:Islamic Finance]]

[[Category: Islamic Banking]]