FAQs on Bancassurance/Bancatakaful (Banca)

No. Paragraph and requirement Question Answer

1 8.5 In relation to Paragraph 8.4, a How can a FSP demonstrate Proof of notification and acknowledgement of receipt
licensed person shall send a direct compliance with Paragraph 8.5? via customer portal, SMS or email are examples with
notification to policyholders/takaful respect to Paragraph 8.5, 8.6 and 8.7
participants in writing via appropriate
In complying with Paragraph 8.5, FSPs shall also
means, of the new point of contact for
ensure contact details of its policyholders/takaful
customer service and for their
participants are up to date to be able to carry out this
policies/takaful certificates servicing.
requirement effectively.
For the avoidance of doubt, a licensed person
8.6 Direct notification by a licensed sending a notification to the policyholder/takaful
person to policyholders/takaful participant’s agent or obtaining an acknowledgement
participants referred to in Paragraph 8.5 from an agent on behalf of the policyholder/takaful
may include automatically-generated participant, will not qualify as an acknowledgement
SMS, emails or push notification via of receipt from policyholder/takaful participant
customer portals or mobile applications.

2 8.7 A licensed person should endeavour What would qualify as

to obtain an acknowledgement of receipt acknowledgement of receipt from the
from the policyholders/takaful participants policyholders/takaful participants?
upon the notification sent.

3 9.5 The board and senior management What does ‘poor consumer Examples of poor consumer outcomes with respect
of FSPs shall be jointly accountable to outcomes’ mean? to banca include:-
ensure that the
(i) Recurring or persistent downward trend in
bancassurance/bancatakaful products
banca persistency rates over policy years
marketed and sold, as well as
with respect to a product sold via the banca
bancassurance/bancatakaful
channel;

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 No. Paragraph and requirement Question Answer
arrangements entered into, do not result (ii) Increasing number and severity of customer
in poor consumer outcomes. complaints received on banca products,
where customers are not aware that they
have purchased an insurance/takaful
product; and
In addition, examples of conduct that generally lead
to such poor outcomes include:
(i) designing banca products that are not
appropriate to the needs of target
customers;
(ii) unethical conduct of sales staff such as
product pushing and improper targeting of
consumers e.g. mass segments, retirees,
lower income, consumers which have
insufficient funds in their bank accounts or
with limited insurance/investment
experience such as university students;
(iii) insufficient consideration or reliance on
inappropriate qualitative and quantitative
indicators1 during the banca product life
cycle review.
(iv) not ensuring proper after sales follow-up is
carried out, especially for banca products
sold to vulnerable consumers, in particular
high-risk segments; and
(v) excessive fees paid by insurer/takaful
operator to its banca partner resulting in bias

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For example, taking into consideration historical data, persistency rates, complaints and appropriate customer profiling.
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 No. Paragraph and requirement Question Answer
towards high revenue-generating products
that are likely to result in unsuitable product
recommendations and sales to consumer,
which may result in premature surrenders by
policyholders/takaful participants.

The examples provided above are non-exhaustive.

FSPs are advised to also refer to item No.2 under the
FAQ on Fair Treatment of Financial Consumers
policy document2.

4 9.7 With respect to Is this requirement applicable to a This requirement is applicable to the apex entities or
bancassurance/bancatakaful group entity or financial holding group entities i.e. parent company or financial
arrangements concluded at the group company that is not approved by holding companies approved by the Bank. For the
level, the boards of a FSP and the board BNM as an apex entity pursuant to avoidance of doubt, for foreign-owned FSPs which
of the apex entity or group entity shall the Paper on Approach to Regulating have its apex entity operating in a jurisdiction other
ensure the bancassurance/bancatakaful and Supervising of Financial Groups? than Malaysia, the accountability is placed on the
arrangement entered into: Board of the FSP to ensure banca arrangements
affecting FSPs in Malaysia are in line with legal and
(c) shall not affect or limit the ability of
regulatory requirements in Malaysia, including the
any locally incorporated
ability to comply with Shariah requirements.

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Examples of poor consumer outcomes, amongst others, include the recommendation and sale of financial products:
(i) which are not suited to the financial circumstances of financial consumers;
(ii) that do not deliver what financial consumers were led to believe or expect; and/or
(iii) which leads to financial consumers making bad financial decisions or choices due to poor disclosure of the financial product risks, charges,
features and/or exemptions.

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No. Paragraph and requirement Question Answer
subsidiary of an apex entity or
5 Is it required that for any banca For any banca arrangements which are concluded at
within the financial group to
arrangements which is concluded at a group level, it is not mandatory for a corresponding
comply with local laws and
a group level, there should also be a agreement to be drawn out between the Malaysian
regulatory requirements, including
corresponding agreement between FSPs in question. Nevertheless, such an approach
the ability to comply with Shariah
the Malaysian FSP and the may be adopted by FSPs which consider the need
requirements at the point of
Malaysian banca partner which for such to ensure compliance with this requirements
entering into the bancassurance
meets the requirements of the policy in this policy document.
arrangement/bancatakaful and
document and specifies the fees
during the course of the
payable for the banca arrangement?
arrangement.

6 9.12 A licensed person shall ensure that Is the requirement applicable to The requirement is applicable for prospective upfront
any upfront fees paid to its outstanding upfront fees? fee (as per Paragraph 9.15) which includes upfront
bancassurance/bancatakaful partner by fees that are still outstanding upon the issuance of
the licensed person, or any other party on the Bancassurance/Bancatakaful policy document.
its behalf, is fully borne by the licensed
person’s shareholders’ fund.
7 How will the requirement affect For the avoidance of doubt, prospective or
existing banca agreements outstanding upfront fees in existing banca
prospectively, as well as new and agreements i.e. which are payable upon the
renewals of existing agreements? issuance of the banca policy document, shall be
borne by the licensed person’s shareholders’ fund.
This will also include upfront fees payable in new and
future renewals of existing banca agreements.

8 9.16 Licensed persons should With respect to Paragraph 9.16 and Paragraph 9.17 serves as a guidance indicating
incorporate conditions or appropriate 9.17, are licensed persons allowed examples of good practices licensed persons may
targets tied to the payment of upfront fees flexibilities to set appropriate KPIs? follow and poor practice licensed persons should
that are aimed at:

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No. Paragraph and requirement Question Answer
(a) ensuring all parties to the avoid with regards to arrangements on upfront fees
bancassurance/bancatakaful payment.
arrangement delivers quality
Licensed persons should determine its own practices
sales; and
and KPIs with regards to its upfront fee payment
(b) preventing misaligned sales
arrangements, which shall not lead to any
incentives from developing.
detrimental outcomes for all parties involved,
particularly to policyholders/takaful participants.
9.17 With respect to Paragraph 9.16,
good practices observed include
establishing minimum persistency rate
thresholds that the
bancassurance/bancatakaful partner
must meet and providing for clawback
mechanisms on fees paid pursuant to the
bancassurance/bancatakaful agreement
when such thresholds are not met.
Conversely, poor practices observed
includes a bancassurance/bancatakaful
arrangement that tie minimum sales
targets and business volume thresholds
to the payment of upfront fees given that
such targets tend to incentivise higher
sales without sufficient focus on ensuring
quality sales.

9 9.18 For non-credit products, a licensed How does Paragraph 9.18 (b) affect
person shall establish robust internal external joint committees established
policies, procedures and controls in between FSPs to carry out the role of
relation to its reviewing and monitoring the
effectiveness of internal policies and
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FSPs that have established external joint committees
to carry out the role may continue to do so. However,
FSPs must ensure that the members of the joint
committee should at least include risk management
No. Paragraph and requirement Question Answer
bancassurance/bancatakaful persistency controls with respect to banca or compliance, with findings of the joint committee
rate. This shall include: persistency rate? subsequently shared with internal audit.
(a) a monitoring framework to A similar arrangement can be put in place in this
adequately measure, monitor and respect for internal joint committees i.e. one
escalate persistency issues; and established within the licensed persons without
(b) the role of risk management or representation from the banca partner.
compliance and internal auditors
in reviewing and monitoring the
effectiveness of these internal
policies, procedures and controls
in relation to
bancassurance/bancatakaful
persistency rate.

10 10.1 In ensuring marketing names used
for life insurance/family takaful products
are not misleading to consumers, FSPs
shall use the word “insurance or takaful”,
whichever is applicable, in its marketing
name (e.g. ABC Wealth Insurance, XYZ
Wealth Takaful) or prominently state
below the marketing name that “This is an
11 insurance or takaful product”, whichever
is applicable, for all non-credit life
insurance/family takaful products offered
under the bancassurance/bancatakaful
arrangement.
Should the placement of the
statement recur throughout the
marketing material or is only once per
material sufficient?
Are FSPs required to inform existing
in-force customers regarding
changes made with regard to
disclosure?
FSPs must include the statement prominently i.e. in
legible font, at the first reference of the marketing
name of the product and at the front page of all
marketing materials, if the marketing name does not
include the word “insurance” or “takaful”.
e.g. SmartCash (this is an insurance product).
The Bank wishes to reiterate that this requirement is
applicable to all new and existing products offered
via the banca channel (Please refer to Paragraph
10.6 in the policy document) and not on existing
customers. Hence, existing in-force customers need
not be informed regarding the changes in
disclosures.

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No. Paragraph and requirement Question Answer

However, if FSPs are of the view that existing in-

force customers will benefit from being made aware
of these changes in disclosure, particularly if there
already are indications that existing customers may
not know that they had purchased an
insurance/takaful product (e.g. high lapse rates
within the first year), then FSPs are strongly
encouraged to consider engaging with existing
customers to ensure that they are fully aware that the
product they had purchased was an
insurance/takaful product.

12 10.3 FSPs shall send a notification When should the notification be The notification should be issued promptly upon
directly to policyholders/takaful issued? conclusion of the sale e.g. the following day.
participants via appropriate means, upon
conclusion of a
13 bancassurance/bancatakaful sale, to Who should issue the notification to It can be issued by either licensed person or banca
inform policyholders/takaful participants policyholders/takaful participants? partner depending on whom the role is assigned to
that they have “purchased an insurance under the banca arrangement between the licensed
or takaful product from [the name of the person and banca partner.
licensed person]”.

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No. Paragraph and requirement Question Answer

14 10.11 Disclosure of any product Would such illustrations of No. Such illustration of large and total percentages
features of an insurance/takaful product guaranteed cash pay-outs comply based on annual premiums payable in this example,
shall not be expressed or illustrated in a with Paragraph 10.11? can easily be misrepresented as high returns when
manner: Total 38% of guaranteed cash
the actual annualized return may be significantly
pay-out, as a percentage of lower e.g. less than 4%. Hence, such illustrations
(a) which can mislead a customer or
annual premium payable of may lead to inappropriate comparisons with returns
result in the customer RM12,000 of banking deposit products such as fixed deposits
misinterpreting the Guaranteed cash pay-
Policy out as percentage of and can mislead customers into making an
insurance/takaful product
years annual premium uninformed decision, which is a non-compliance with
features; or
payable Paragraph 10.11.
(b) that could lead to inappropriate
comparison with the returns of 5 10% FSPs are also advised to refer to Appendix 1 of the
banking deposit or investment 10 13% Bancassurance/Bancatakaful PD as it provides non-
products, including, but not limited exhaustive examples of permitted and non-permitted
to, fixed deposits and unit trusts. 15 15% illustrations of Guaranteed Cash Pay-outs in
marketing materials.
Total 38%

15 11.1 FSPs must ensure that staff of Does banca sales staff have to pass Banca sales staff should pass (a) before selling any
bancassurance/bancatakaful partner or both (a) and (b) before he/she is insurance or takaful product. If he/she also sells
its appointed third-party service providers allowed to sell any products? investment-linked products, then he/she also is
involved in the marketing and providing required to pass both (a) and (b) prior to selling and
advice on insurance/takaful products marketing any insurance or takaful product.
have passed the following qualifications
before they are allowed to sell/market
bancassurance/bancatakaful products:
(a) Pre-Contract Examination for
Insurance Agents (PCEIA) and
the Takaful Basic Examination

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 No. Paragraph and requirement Question Answer
(TBE) for distribution of insurance
and takaful products respectively;
and
(b) Certificate Examination in
Investment-Linked Life insurance
(CEILLI) for distribution of
investment-linked products.

16 Others – Guidelines for Are licensed persons allowed to Yes.

Bancassurance / Bancatakaful
(BNM/RH/GL 003-25 & BNM/RH/GL
004-18)3
8.1 To encourage wider public
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acceptance of bancassurance as a
delivery channel, insurers may contribute
to expenses relating to the promotion of
bancassurance by their bancassurance
partners. For life insurance business,
such expenses will not form part of the
commission limits stipulated in item 5.1
and 6.1. For general insurance business,
such expenses will not form part of the
commission limits stipulated in item 7.1.
continue contributing to expenses
relating to the promotion of banca by
their banca partners?
Do marketing costs form part of the The limits on management expenses (which typically
commission limits stipulated in include marketing costs) for life insurers/family
Paragraph 5.1 and 6.1? takaful operators have been removed via the Bank’s
letter on Removal of Limits on Management
Expenses of Licensed Life Insurers/Family Takaful
Operators – Specification pursuant to Section 47 of
the Financial Services Act 2013/Section 57 of the
Islamic Financial Services Act 2013 dated 1
December 2015. This aimed to provide life
insurers/family takaful operators greater flexibility in
managing their operating expenses. Whereas for
general insurers/takaful operators, the requirement
with respect to this will be specified in the OCC
General Guidelines.

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This is a requirement which is in the Guidelines on Bancassurance and Guidelines on Bancatakaful (the Guidelines) effective since April 2009 respectively,
which is now superseded by the issuance of the Bancassurance/Bancatakaful.policy document (the PD). For the avoidance of doubt, Paragraph 8.1 under the
Guidelines has been removed in the PD.
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 No. Paragraph and requirement Question Answer

Nevertheless, production and persistency bonuses

are subject to OCC limits, regardless if it is deemed
as being part of marketing costs, upfront fees or
otherwise.

Bank Negara Malaysia

30 June 2022

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