Customers' interests ‘top priority for banks’
Manama, May 8, 2012
Too often over the past five years the interests of customers at banks have been neglected as bank management has focused on bonuses and share price, said the Governor of the from Central Bank of Bahrain (CBB).
If banks neglect customers' interests, then they will lose those customers, added Rasheed Al Maraj, speaking to to delegates at the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) conference at the Diplomat Radisson Blu Hotel, Residence and Spa yesterday (May 7).
"This theme of looking after the interests of customers is carried in the AAOIFI Governance Principles paper issued in 2005," he said. "In particular Principle Three of this paper warns against inequitable treatment of fund providers.
"The 2009 AAOIFI Corporate Social Responsibility paper also focuses on dealing responsibly with clients and par excellence customer service.
"If you couple the governance standards with the ethics paper for employees of financial institutions, you find a formidable set of requirements, principles and standards relating to putting the interests of customers first," he said.
"So against this background of improving levels of disclosures, the CBB will be making further efforts through its review of its corporate governance and business conduct rules to raise the bar for corporate governance," he added.
"The review of the CBB corporate governance requirements has already finished its first stage of internal review. The next will be consultation with the financial sector. Coupled with governance is Sharia. This is one of the themes of this conference," he said.
"From the perspective of the CBB as a regulator, we have noted that all too often, the approach of banks, particularly conventional banks, has been to start with a conventional transaction or product and then try to give it a finishing coat of Sharia-compliant paint.
"Financial institutions must not regard Sharia compliance as the finishing touch to product development," he said.
"Instead, product development needs to start from Sharia principles - Islamic financial institutions must become Sharia driven. That is why this conference and the next set of consultations by AAOIFI are going to be so important," he said.
"If financial institutions and standards setters can address the interest of customers, governance and Sharia compliance satisfactorily then we can look forward to Islamic finance continuing its growth and reaching its full potential," he added. – TradeArabia News Service