Point Of Sale Disclosure in the Insurance, Banking and Securities Sectors

THE JOINT FORUM BASEL COMMITTEE ON BANKING SUPERVISION INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS C/O BANK FOR INTERNATIONAL SETTLEMENTS CH- 4002 BASEL, SWITZERLAND Point of Sale disclosure in the insurance, banking and securities sectors April 2014 Point of Sale disclosure in the insurance, banking and securities sectors iii Contents I. Executive summary .................................................................................................................................................................. 1 Background ................................................................................................................................................................................ 1 Methodology ............................................................................................................................................................................. 1 Significant differences identified ....................................................................................................................................... 2 Recommendations ................................................................................................................................................................... 3 II Introduction ................................................................................................................................................................................ 4 II.1 Reasons for action .......................................................................................................................................................... 4 II.2 Methodology .................................................................................................................................................................... 6 III. Scope ............................................................................................................................................................................................ 7 III.1 Characteristics of CIS ..................................................................................................................................................... 7 III.2 Sample of products which compete with CIS ...................................................................................................... 8 III.3 Definition of the products in the sample .............................................................................................................. 8 IV. Regulatory overview and analysis ................................................................................................................................... 10 IV.1 Current POS disclosure document requirements ............................................................................................ 11 IV.2 Format and language requirements ...................................................................................................................... 13 IV.3 Content of the POS Disclosure Document ......................................................................................................... 14 IV.4 Regulator review and producers’ and distributors’ responsibility ............................................................. 16 V. Policy recommendations ..................................................................................................................................................... 18 Annex 1: CIS disclosure regimes across jurisdictions ........................................................................................................ 23 Annex 2 List of members of the Joint Forum Working Group on Risk Assessment and Capital (JFRAC) ... 25 Annex 3 List of supervisors that provided responses to the mapping exercise .................................................... 26 Annex 4 Selected recent and upcoming national or international initiatives on consumer protection ...... 27 Annex 5 Disclosure practices related to the content of a POS disclosure document ......................................... 31 Annex 6 Feedback received on the August 2013 consultative report ....................................................................... 33 Point of Sale disclosure in the insurance, banking and securities sectors 1 I. Executive summary Background The mandate for this work on point of sale disclosure in the insurance, banking and securities sectors was prompted by the Joint Forum’s January 2010 Review of the Differentiated Nature and Scope of Financial Regulation. That report highlighted the fact that supervisory and regulatory standards for similar activities in different sectors, while at times appropriate, could pose risks to financial stability and create regulatory arbitrage opportunities. In particular, the report rec