Global POS regulation must be streamlined, says report

Point-of-sale disclosure regulations across global insurance, banking and investment sectors must be aligned, says a consultative report released by the Basel Committee on Banking Supervision.

The committee says it’s targeting international point-of-sale standards after considering findings of a 2010 global regulatory review released by The Joint Forum, (a group established by BCBS, the International Organization of Securities Commissions and the International Association of Insurance Supervisors in 1996).

The forum’s review found differing “supervisory and regulatory standards for similar activities…[across the insurance, banking and securities]…sectors.” And while it says that’s appropriate at times, such gaps could “pose risks to financial stability and create regulatory arbitrage opportunities.”

The new BCBS report adds, “In particular, [that 2010 review] recommended the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, and the International Association of Insurance Supervisors work together to develop [streamlined] standards where appropriate.”

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The BCBS report proposes a number of recommendations to improve point-of-sale disclosure regulations. These include:

• POS disclosure documents should be provided to consumers free of charge before the time of purchase.
• Jurisdictions considering POS disclosure should consider requiring that documents disclose key characteristics, including costs, risks and financial benefits, or other features of a given product and any underlying or referenced assets, investments or indices.
• All POS disclosure documents should be clear and not misleading, and written in a plain language designed to be understandable by the consumer.
• All POS disclosures should include the same type of information to facilitate comparison of competing products.
• Allocation of responsibility for preparing, making available and delivering POS disclosure documents should be clearly established, and POS disclosure documents should identify which entity is responsible for its content.

Comments on the consultative report should be submitted by October 18 by e-mail (baselcommittee@bis.org) or snail mail (send to: Secretariat of the Joint Forum [BCBS Secretariat], Bank for International Settlements, CH-4002 Basel, Switzerland). All comments may be published on the websites of the Bank for International Settlements.

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