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  • BC-B.5 BC-B.5 Principle 5: Information to Clients

    • BC-B.5.1

      An Islamic bank licensee must provide clear and truthful information both in any public document issued and to its actual and prospective clients, both during the sales process and in subsequent communications and reports. See Sections BC-9.5, BC-9.6, BC-9.8 and BC-9.10.

      Added: July 2015

    • BC-B.5.2

      An Islamic bank licensee must ensure that every advertisement is designed to disclose all relevant information to the subject matter.

      Added: July 2015

    • BC-B.5.3

      This principle is concerned with transparency in dealings with clients and prospective clients. In conjunction with Principle 1 (BC-B.1 Truthfulness, Honesty and Fairness), an Islamic bank licensee 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 involved to make informed decisions. This requirement also applies to information to clients and prospective clients concerning the Shari'a compliance of products and services.

      Added: July 2015

    • BC-B.5.4

      An Islamic bank licensee must maintain fair treatment of customers through the lifetime of the customer relationships, and ensure that customers are kept informed of important events.

      Added: July 2015

    • BC-B.5.5

      An example of achieving fairness through transparent business dealing from the Shari'a perspective is in the requirement that for a Murabaha contract to be valid, the seller has to disclose the original cost (including any discounts received) and the profit margin/mark-up.

      Added: July 2015

    • BC-B.5.6

      The use of 'small print' to make potentially important information less visible is not compatible with good business conduct, and must be avoided. Likewise, there should be no 'hidden costs' in financing products, such as commissions or agency fees that are not disclosed to the client.

      Added: July 2015

    • BC-B.5.7

      All commission and similar arrangements must be fully disclosed to the subject clients. In selecting a product for recommendation to a client, the overriding criterion must be the benefits to the client and not the attractiveness of the commission to the Islamic bank licensee or its representative. Refer to (BC-4.2) and (BC-9.8).

      Added: July 2015

    • BC-B.5.8

      When introducing new, enhanced, supplementary or replacement services and/or products with cost or potential liability in the future, Islamic bank licensees must provide customers with full particulars of the change at least thirty calendar days prior to the date the change takes effect, and must obtain prior-written consent from each customer. Such notice is to enable the customer to decide whether to accept the new terms or terminate the agreement.

      Added: July 2015

    • BC-B.5.9

      The use by an Islamic bank licensee or its representatives of 'negative or hard selling' techniques intended to push a client into an agreement without having properly evaluated the benefits and costs is not consistent with good business conduct.

      Added: July 2015

    • BC-B.5.10

      Negative selling occurs when a bank provides unordered services/products to a customer and then bills the customer. Often, the supply is accompanied by a form of notice instructing the customer that if the offer is not rejected within a certain time, the bank will send an invoice or debit an existing account or line of credit.

      Amended: October 2015
      Added: July 2015

    • BC-B.5.11

      'Hard selling' has been defined as applying psychological pressure (by appealing to someone's fears, greed or vanity) to persuade the prospect to make a quick purchase decision.

      Added: July 2015

    • BC-B.5.12

      Given the complexity of many financial products, Islamic bank licensees should give their customers a 'cooling off period' so as to have ample time to evaluate the benefits and costs of a product before finally committing themselves. This guidance applies to long term commitments, such as investments and mortgage financing, provided that it is not sensitive to daily fluctuations.

      Added: July 2015

    • BC-B.5.12A

      The only instance where a 'cooling off period' may be waived is when the Islamic bank licensee has received written confirmation from the customer that he/she wishes to waive his/her right to the 'cooling off period'.

      Added: October 2015

    • BC-B.5.13

      The principle of the 'cooling off period' is that the customer enters into a non-binding commitment to enter into a contract which becomes binding (i.e. the contract is concluded) only after a specified period has elapsed and provided the customer has not indicated otherwise.

      Added: July 2015