(i) doing lengthy presentation, with excessive information and

(i) Undisclosed Relevant Information The takaful brokersor agents are not disclosing / withholding the relevant information (regardingcustomers / applicants) whether with or without intentions, with regard tounderwriting and risk selection to the company (Takaful Operator) he or sherepresents. By not disclosing or withholds that information, it will cause oraffect the company’s consideration on whether to accept or reject theapplication from the customers / applicants on buying their takaful products.  (ii) Highlighting favourableaspects / terms onlyThe takafulbrokers or agents are only explaining certain favourable information (forinstance, benefits of the takaful products) only in order to win thenegotiation with the potential customers.

They normally mislead by doing lengthypresentation, with excessive information and use technical jargon that wasdifficult to grasp. There was also a bias condition whereby the risks and costswere not sufficiently explained. Therefore, failure to deliver honest presentationof takaful product by the brokers or agents is carried weightage in Shari’ahissues that need to be curbed.  (iii) Inaccuracy of books records and accountsAccording to Section 33(1) and 54(1), Takaful Act 1984, theGovernor of Bank Negara Malaysia has power to inspect and require information fromTOs and any of its branch officers pertaining of all records including books,accounts and transactions of the takaful operations from time to time. Eventhough there is a mandatory regulation, the takaful brokers oragents yet to obey with the rules. This situation arises when the takaful brokersor agents fail to obtain necessary information from the customers/ applicants andalso fail to assist them in completing the takaful application form properlyand completely. For instance, all mandatory field must be completed by theapplicants themselves and make sure to sign the documents.

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This is because itwill become part of the legal contracts between Takaful Operator and the takafulparticipants/ customers.In some takaful policy, the takaful brokers and agents alsoneed to complete the agent report to support the applications. Other than that,the takaful brokers and agents also not maintaining their accounts (financialmatters) properly. This record keeping issue also related with the next issuethat is failed to submit participant’s contribution promptly.

Hence, in realitythe takaful brokers and agents is notkeeping their records properly.  (iv) Failedto submit participants’ contributions to the Takaful Operator promptlyThe takaful brokersand agents failed to submit contributions received from participants to the TakafulOperator on time (as per scheduled) and/or misused these funds by using it fortheir personal use. This is a violation of the agent’s duties and act ofembezzlement. The takaful brokers and agents must ensure any takafulcontributions collected on behalf of company (by them) must be safe-keepingunder their custody and also must separate from their personal funds.  This condition can also be described asco-mingling funds (the agent mixes his personal’s funds with the insurer’s orinsured’s funds).  (v) TwistingOne of the important shariah issues occurs when a participantis persuaded by the takaful brokers and agents to replace an existing takafulplan / policy with another one that is similar or display almost similarcharacteristic. This is because the agents will earn benefits through thecommission fees in the situations where they managed to sell new policy.

According to Code of Ethics for Takaful Agents issued by Malaysian TakafulAssociation, twisting is one of the serious misconduct amongst takaful brokersand agents.