The Special Committee on Competition, spearheaded by the Malaysia Competition Commission (MyCC), convened recently (24th March 2014) to discuss various competition issues cutting across sector regulators. The Special Committee on Competition was formed in 2011 essentially to share common issues on competition law as well as to ensure that there is consistency in the application of the law. It is also to ensure that the terms and principles on competition introduced by sector regulators and excluded from the Act are consistent with the Competition Act 2010. Representatives from the MyCC present at the meeting were MyCC Commissioners, Datuk Dr Rebecca Fatima Sta Maria, Tan Sri Dato’ Dr Michael Yeoh, Tuan Ragunath Kesavan, and MyCC Chief Executive Officer (CEO), Puan Shila Dorai Raj. Chairing the meeting was MyCC Chairman, Tan Sri Dato’ Seri Siti Norma Yaakob.
The following are some excerpts from the meeting relevant to the insurance industry:
During the meeting MyCC Chairman, Tan Sri Dato’ Seri Siti Norma Yaakob requested some clarifications by Bank Negara Malaysia (BNM) in relation to banks or insurance companies breaching the Central Bank’s guidelines. BNM clarified that while no financial penalty will be imposed, in such cases, the bank or insurance company found to be in breach will be required to refund the money to the consumer or replace the product. According to BNM, it holds the bank and insurance companies responsible over the actions of their agents.
This query by The MyCC was in response to the many consumer related complaints that MyCC received on a daily basis. MyCC Chairman pointed out that there could be systemic issues that needed to be addressed seriously by the BNM.
I am not sure if BNM has raised the implementation under Schedule 7 of the Financial Services Act 2013 (FSA) and Islamic FSA (IFSA) during the said meeting but recently BNM has raised a concept paper on PROHIBITED BUSINESS CONDUCT dated 4 March 2014 for feedback from the insurers and takaful operators. The document is issued to provide guidance on descriptions of prohibited business conduct as set out in Schedule 7 of the FSA and IFSA and the factors that BNM will consider in determining whether a bank or insurance company has engaged in a prohibited business conduct. Accordingly this concept paper was issued under the consultation with the MyCC earlier on.
The list of prohibited business conduct under Schedule 7 complements and reinforces existing standards on business conduct and consumer protection issued by the Bank, and serves to:
(a) ensure that financial consumers are not provided with misleading or deceptive information in connection with a financial service or product;
(b) prevent unreasonable business practices that intimidate or exploit financial consumers;
(c) prevent business practices that restrict the freedom of financial consumers to choose between financial services or products available to them; and
(d) prevent collusive business practices that may result in unfavourable outcomes to financial consumers.
Get the copy of this concept paper for an understanding – the business frontier may have changed significantly in recent times