The State Bank of Pakistan (SBP) has taken the initiative of launching a conduct assessment framework (CAF) to promote the concept of responsible banking (in other words, self assessment) among financial institutions with regard to fair treatment of customers, a circular said on Friday.
The SBP imposed the CAF on banks to adopt from 1st January whereas the banks will be required to undertake the annual assessment as of 31st December.
What is CAF?
According to the SBP, the framework is a conduct tool for self assessment for the banks. The purpose is simple, to adopt and develop a periodic, reliable, diagnostic and comparable mechanism which would help banks to deliver on their commitment of fair treatment of customers (FTC) in an optimum manner.
This tool will help identify the grey areas as well as keep track of all the progress with . It comprises of three modules in addition to cultural, products/services and consumer grievances handling mechanism.
SBP said that in order to ensure FTC framework, this initiative will go a long way to impact customers in a positive manner.
- Risk and Solution: According to the SBP, the conduct risk directly influences and impacts the customers. Customer protection has been re-branded by the SBP. Now, it is a success proposition for banks rather than being a compliance issue. SBP has also ensured adoption of self conceived fair treatment of customers framework by the banks.
- Monitoring: Banks are required to monitor their adherence on an ongoing basis and demonstrate how culture, strategies and controls deliver fair treatment to their customers through FTC.
- Evaluation and Implementation: State of conduct is adopted by banks if they are to deliver consumer protection. Evaluation of the customer and staff’s perception of bank’s delivery of FTC is done through research tools, according to SBP. No bank is entitled to adopt a certain research methodology, as they are free to opt for any one they deem fit.