New Banking Products and Services Regulation

Senior management must ensure that there are full operational readiness to support new products and services, including processes, controls and systems infrastructure and approvals from other authorities are obtained prior to offering new products and services, where relevant. (3) Chief Risk Officer (CRO) and Chief Compliance Officer (CCO), in coordination with the product or service developer, are responsible for determining whether the change to any product or service is considered to be a material change. 6. Products and Services Policy Requirements 6.1 General Requirements Banks are required to have in place an internal policies and procedures that set out the oversight and governance arrangements for the offering of new products and services. These internal policies and procedures must at minimum satisfy the following: 6.1.1 To be integrated as part of the bank’s governance, risk management and internal control framework. 6.1.2 Defining the roles and responsibilities of all stakeholders including the Board and all control functions involved in developing and launching new products and services. 6.1.3 Defining parameters for the authority which approves new products and services including the circumstances under which such authority may be delegated. 6.1.4 Defining the requirements to have a pilot or testing phase for new products and services. A bank is required to assess the effect of a product and service on target market before its commercial launch and take appropriate changes where scenario analysis shows adverse results for the target market. 6.1.5 Consumer protection requirements including the bank’s standards for management of customer suitability and mis-selling risks along with a requirement to conduct annual assessment of all products and services against such established standards. 6.1.6 The internal policies and procedures must be reviewed and updated on a regular basis or when it’s needed, ideally on an annual basis, and at least once every (3) years. 6.1.7 The policies and procedures must be communicated by the bank in a timely manner to all relevant parts and levels within the organization, and to ensure that the new product and service offering are fully integrated throughout a bank’s line functions. 6.2 Considerations When developing products and services internal policies and procedures, banks must consider the following: 6.2.1 Designing and bringing to the market products and services with features, charges and risks that meet the interests, objectives and characteristics of, and are of benefit to the market segment identified for the products and services. In this regard, a formal customer appropriateness and customer fairness assessment must form part of bank’s processes before approval of new products and services. 6.2.2 The products and services offered to customers are fair and suitable. 6.2.3 Avoid any conflicts of interest, potential for mis-selling, terms and conditions that are inherently unfair to consumers, and business practices that restrict the freedom of choice to consumers. 6.2.4 To be proportionate to the nature, scale, risk, and complexity of a bank’s products and services, and designed to identify and control product risk across the value chain, including at minimum the stages of product development, authorization and governance, price, marketing, sale and distribution. 6.2.5 The gradual commercial launch of any new product and service taking into consideration the market segment, riskiness and complexity of the product and service.