SBP has issued a comprehensively revised set of instructions on the sale of third-party products, the instructions will be applicable from 1st November.
“It will be mandatory for banks to assess the suitability of customers for the sale of third party products. In addition, they will take extra care while selling such products to vulnerable consumer segments like widows, senior citizens, etc. Banks also don’t assume any responsibility after the sale of products which leads to difficulties for customers and disputes.” said the Central Bank of the country, issued on the sale of third-party products to address concerns over the sale and bring transparency that would be applicable from November 1.
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Usually, the banks sell financial products which are provided by other banks or financial institutions. These offers are likely to lead to miss-declaration about the properties of products.
According to the new instructions of the SBP, the senior management and board of the bank will ensure that risks to consumers in the sales of such products are identified and addressed proficiently.
The banks will be bound the mention clearly that they are selling the third party product as an agent or distributor and they will be bound, according to SBP, to develop and enforce a code of conduct to strengthen further accountability of bank employees, involved in selling the third party products.
All Islamic banks and Islamic branches of conventional banks will ensure that the sale of the products is according to Sharia law and regulations of the State Bank of Pakistan while their agreement with the product provider should be approved by their Sharia board.
“Banks have been directed to ensure the provision of special training to their staff for the sale of third party products and take disciplinary action against the concerned employee(s) in case of fraud.”