still familiarising itself with new personalities and the new functional responsibilities of the various departments. for this purpose we have designated the insurance supervision department as the main contact point for insurers in their communications with bank negara. internally, we will ensure that the issues raised are channeled to, and speedily resolved by, the right departments. under a more principle - based approach to regulation, bank negara will continue to introduce more flexible prudential standards for insurance companies. this will reflect an increased emphasis on the strength of an insurer ’ s corporate governance and risk management capabilities. it is also in line with the bank ’ s implementation of the risk - based approach to supervision. insurers that demonstrate sound risk management and strong governance can expect to enjoy greater capital efficiency and a lighter supervisory touch. in this connection, the bank is putting in the final touches to risk - based capital framework which will issued before the end of march for implementation on a parallel run basis for a period of two years. ladies and gentlemen, as life insurers gear up to take advantage of expanding opportunities in the changing environment, it is essential that commensurate efforts be directed at raising standards in the fair treatment of consumers. in the long run, the industry as a whole has a clear interest in informed, responsible and capable consumers. as past experience, whether in malaysia or abroad, has invariably shown, the irresponsible and unfair treatment of consumers is damaging to the consumer, damaging to the firm, and damaging to the reputation of the industry. the bank is encouraged by the high level of commitment shown by some insurers towards significantly improving their market conduct practices. nevertheless, much more can be achieved across the industry to address overly aggressive sales practices that result in unsuitable products being sold to consumers. bank negara is investing significantly in raising the level of financial capability among consumers through initiatives under the consumer education programme. additional focus has been given to this task with the setting up of the consumer and market conduct department. but this is an extensive task, for which a significant improvement in the level of financial literacy among across a widereaching spectrum of consumers may only be seen in the next generation of consumers. it is, therefore, important now that insurers take their responsibility for the fair treatment of consumers seriously. in particular, we would like to see a far greater interest by the board and senior management in improving selling practices, as well as the quality of disclosures and advice provided to consumers.

standards of financial and business practices. this is encouraging as ultimately, both the industry and bank negara have a common interest in promoting an efficient and stable insurance market in malaysia. at bank negara, we are continuing to strengthen our regulatory and supervisory capabilities as well as sharpen our focus. as those from malaysia would be familiar, we are now into the fourth month of the bank ’ s new regulatory and supervisory structure. the new organisational structure for the regulatory and supervisory functions within the bank were realigned back in november last year to move from the previous sectoral approach to regulation, to one that will integrate the bank ’ s regulation of the different financial sectors under its purview along functional lines. as a result, the functions previously under the former insurance regulation department have now been assumed by the newly established financial sector development department, the prudential policy department, the consumer and market conduct department and the financial surveillance department. on the supervision side – or better known to you as the examiners that come and pay you a visit every now and then – a new department known as the financial conglomerates supervision department has also been established to facilitate the integrated supervision of financial service groups that include both banks and insurance companies under their umbrella. the new cross - sector regulatory structure allows us to modernise the regulatory framework for both the insurance and banking sectors at a more equal pace. the increased synergies created will enable the bank to apply the best regulatory practices in the banking sector to the insurance sector, and vice versa. regulations in the area of market conduct, for example, are more advanced in the insurance sector than they are on the banking sector. on the other hand, the regulatory framework for risk management and capital adequacy is generally more developed on the banking side. under the new structure, the bank is able to leverage on the more advanced developments in either sector to enhance the regulatory framework for both sectors simultaneously if possible. this, in turn will promote a more consistent and comparable regulatory regime for the banking and insurance sectors. substantial resources have already been allocated to this effort, particularly in the areas of corporate governance, product regulation and financial reporting which have an important bearing on banks and insurers that are within the same group. the rationalisation of current regulations will also take into account international developments which will help to reduce the compliance costs for internationally active insurers operating in malaysia. the transition to the new structure has, so far, been smooth. as expected, the industry is