In November of 2013, the Bank outlined proposed regulatory reforms for the financial advisory industry which formed part of the “Life Insurance and Family Takaful Framework” or in short the LIFE Framework, which we published for consultation. An important aim of the reforms is to support the Bank’s desire to further diversify insurance delivery channels as one – although not the only – way to improve the quality of advice, and enhance choice and value for consumers based on their specific needs and circumstances. This in turn would contribute towards increasing the insurance and takaful penetration rate to 75 percent by 2020 as targeted under the Government’s Economic Transformation Programme (ETP). We received positive feedback from the financial advisory industry on the proposed reforms and while specific elements of the LIFE Framework remain under review to take into account the comments that were received, we have moved ahead to implement several changes proposed which concern the financial advisory industry. The Bank has lowered the minimum capital requirement for financial advisers to RM50,000 which will take effect from 1 January 2015 to encourage more advisers to enter the industry. This follows an increased focus on professionalism, innovation and quality of advice as the hallmark of those who are admitted to the industry.
This is the way we have tried to work so far, and we will continue to do so as long as necessary. When I come here to the Committee on Finance hearing to answer questions on monetary policy, that subject is usually what my introductory speech concerns. Today it will be slightly different. Recent developments clearly show how closely our main tasks, financial stability and monetary policy, are linked. I would therefore like to begin by talking about those points of contact and various measures we have taken to ensure that certain financial markets will function more normally. With this as a base, I will then move on to the interest rate decisions and the financial turbulence from a monetary policy point of view. Finally, I would also like to make a brief comment on our own experiences of earlier crises and the future of the global financial system. Monetary policy and financial stability – why is the system so important? One can say that the payment system and to some extent the financial markets are the circulatory system of our economy. What is usually referred to as financial stability concerns, to put it simply, working in various ways to ensure the financial system is stable and functions efficiently. For example, individuals, companies and organisations must be able to make and receive payments in an efficient manner.