The Council of the Islamic Financial Services Board (IFSB) has adopted a new standard on the effective supervision of Shariah governance and approved the issuance of a Guidance Note aimed at strengthening crisis preparedness in the takaful sector.
At its 46th Council Meeting in Rabat earlier this month, the Council adopted IFSB-31: Guiding Principles for Effective Supervision of Shariah Governance, a standard aimed at strengthening supervisory oversight of Shariah governance across takaful undertakings, Islamic banks and Islamic capital market institutions, which is foundational to financial stability and consumer protection in Islamic finance. The issuance of this standard does not replace IFSB-10: Guiding Principles on Shariah Governance Systems for Institutions offering Islamic Financial Services. The standard recognises differences in legal and institutional frameworks across jurisdictions and promotes proportionate implementation and consistency in supervisory outcomes. It is applicable to all supervisors that license Islamic financial institutions or Islamic capital market products, implementable under their financial stability or market conduct mandates.
The Council also approved the issuance of a Guidance Note, GN-10: Recovery and Resolution for Takaful Undertakings, marking a significant advancement in the IFSB’s ongoing efforts to strengthen the resilience and crisis preparedness in the takaful sector. The Guidance Note is designed to assist regulatory and supervisory authorities in developing robust recovery and resolution frameworks tailored to the specificities of takaful. GN-10 provides guidance on the application of the IFSB Takaful Core Principles (TCPs) and complements broader international frameworks, including the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions and the relevant IAIS guidance.
The IFSB is an international standard-setting organisation that was officially inaugurated on 3 November 2002. It promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, which includes the insurance, banking and capital markets.