As you may be aware, avenues for redress by consumers against banking institutions and insurers are already available via the Banking Mediation Bureau (BMB), and the Insurance Mediation Bureau (IMB) respectively. These bureaus, established more than a decade ago, have achieved considerable success in resolving disputes against banks and insurance companies. In 2004, a total of 1,515 cases have been handled by these two bureaus. Nevertheless, with the blurring of the traditional boundaries between financial products and services provided by banks, insurance companies, and other financial intermediaries, the creation of an integrated bureau is necessary for the resolution of a broad range of consumer issues raised in relation to the diverse range of financial institutions under the supervision of Bank Negara. There are also clear synergies to be achieved from leveraging on the resources available to enhance the efficiency and effectiveness of the dispute resolution process as consumers will be provided with a convenient and efficient one-stop centre to seek formal redress as an alternative to litigation, which may involve considerable time and financial resources. Ladies and gentlemen, It therefore gives me great pleasure today to launch the Financial Mediation Bureau, an integrated dispute resolution centre for financial institutions under the supervision of Bank Negara Malaysia. The creation of an integrated agency is in line with the international trends towards such resolution centres, and the framework and model for the Financial Mediation Bureau has been benchmarked against best practices worldwide, notably in countries such as the United Kingdom, Canada and Australia.

These include specific initiatives to strengthen the regulatory framework governing market practices by financial service providers as well as enhanced minimum disclosure requirements and standards for credit card issuers, and on fees and charges for financial products. At the same time, ongoing efforts to raise the level of professionalism have also been intensified. BIS Review 4/2005  1  In 2004, the Bank introduced measures relating to sales practices in the insurance industry. Life insurance agents are also required to adopt best advice practices in the sale of life insurance products. To facilitate comparisons by consumers through enhanced disclosures, the Bank introduced mandatory disclosures of commissions, fees and charges for insurance products with savings and investment features that are sold through banking institutions. To ensure equitable treatment of policyholders, the Bank further strengthened the regulations on claims settlement practices and enhanced the controls over bonus reductions by life insurers to ensure reasonable returns to participating policyholders. More recently, the industry, together with the Ministry of Transport, implemented the e-cover notes system, which will effectively eliminate forged motor insurance cover notes. This represents an important development towards protecting the interests of both vehicle owners as well as road accident victims. The Bank also expects to license financial advisers in 2005. Following the enactment of the relevant legislation, financial advisers will be licensed and regulated by Bank Negara Malaysia to provide professional advisory services on insurance to consumers in relation to their financial planning needs.