C11. Introduction of New Products Flashcards
what are the objectives of the Guidelines on Introduction of New Products?
a) To improve the time-to-market for financial institutions to introduce new products, or to effect changes to existing products
b) To promote sound risk management practices in managing and controlling product risk by ensuring the appropriate assessment and risk mitigation during the product development and marketing stages
c) To further strengthen the duty of care owed to consumers to ensure that products developed and marketed are appropriate to the needs, resources and financial capability of targeted consumer segments
how do u define what is a new product?
i. A product that is being offered for the first time in Malaysia;
ii. A combination of or variation to an existing product that results in a material change to the structure, features or risk profile of the existing product.
how does management provide fair treatment to customers?
Financial Institutions’ Board should approve policies and procedures that:
a) Enable fair treatment of consumers
b) Avoid the potential for mis-selling
c) Avoid terms and conditions that are inherently unfair to consumers
d) Avoid business practices that restrict the freedom of choice to consumers
what are the goals of customer suitability procedures?
a) The customer has a practical understanding of the features of the product and its investment risks
b) The product would meet the customer’s investment objectives and horizon
c) The product is consistent with the customer’s appetite for risk
Effective customer suitability procedures should include:
a) Processes clearly describing the types of consumers that a product would generally be suitable for
b) Clear lines of authority for approving transactions with customers that do not meet generic customer suitability categorisations
c) Sales personnel who are suitably trained to properly analyse customers’ needs and risk appetites
d) Effective supervision of personnel involved in sales
e) Appropriate documentation and record-keeping to facilitate reviews of compliance with approved procedures
is making recommendations without reasonable basis is also an offence?
Making recommendation without reasonable basis is also an offence under section 92 of CMSA in regard to selling permitted capital market products.
Fees, and key terms and conditions must be disclosed at which stages?
Fees, and key terms and conditions must be disclosed at three different stages:
before, at the point of entering into, and during the term of the contract.
what are the types of information to be disclosed to customers?
Amongst the information to be disclosed therein are:
a) Key features of the product
b) Key terms and conditions
c) Fees and charges
d) Significant risks associated with the product
e) Important notices or warning statements on the financial product
The use of plain and intelligible language in the contracts, agreements and policy documents enable customers to better understand their contractual rights and responsibilities.
