4. RESULTADOS
4.3. BALANCE INSTITUCIONAL DEL PROGRAMA
4.3.2. Cumplimiento de metas por institución
1.1 Definition of financial advice
(activity / product based) and major
exemptions
The definition includes (i) advising on investments products and life insurance products other than a contract of reinsurance; (ii) advising through publications or writings or by issuing or promulgating research analyses or research reports concerning any investments products; and (iii) marketing of any collective investment scheme.
FAA: Section 2.
The definition includes advising on general insurance products and advising on behalf of an insurer or insured.
IA: Section 1.
1.2 Activities covered by rules
concerning financial advice
(e.g. personal financial advice,
general advice)
See 1.1
1.3 Products covered by rules
concerning financial advice
(e.g. long-term insurance)
The FAA covers investment products including securities (which includes unit trusts), futures contracts, foreign exchange and leveraged foreign exchange contracts, and life insurance policies (which include investment-linked life insurance products) and structured products.
FAA: Section 2.
The IA covers general insurance products. IA: Section 1.
1.4 Persons / entities to whom / which
financial advice rules apply (e.g.
employees, tied agents, brokers)
The FAA rules apply to any person or entity who / which conducts a financial advisory service (See 1.1).
FAA: Section 2.
The IA rules apply to any person or entity which advises on or arranges contracts of general insurance.
SINGAPORE
Issue
Summary of legislative approach Resource links (laws / regulations / regulatory guidance etc.)2. Product suitability
2.1 Requirements for assessment of
product suitability
There is no specific “suitability” requirement but more a test of “appropriateness”. Recommendations need to be appropriate having regard to the investment objectives, particular needs of the customer and financial situation.
FAA: Section 27(1)(2).
MAS: Guidelines on Fair Dealing-Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers.
MAS: Guidelines on Standards of Conduct for Financial Advisers and Representatives. Insurance brokers and intermediaries are
required to offer products which meet the customers’ needs.
IA: Section 35TA.
MAS: Guidelines on Market Conduct and Service Standards for Insurance Brokers. GIA: The Singapore General Insurance Code of Practice.
2.2 Product disclosure rules
FAs need to disclose all material information relating to any designated investment product recommended. No licensed financial adviser shall make a false or misleading statement. There is also an obligation to provide clear, accurate and not misleading information.FAA: Sections 25 and 26 and 58.
MAS: Notice on Information to Clients and Product Information Disclosure.
MAS: Guidelines on Fair Dealing-Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers.
Insurance intermediaries are subject to similar obligations.
IIA: Section 6. IA: Section 35R.
2.3 Affordability assessment rules
A licensed financial adviser, when making recommendations concerning a product must consider the financial situation of the client (See 2.1).There is no specific requirement of affordability assessment but a need to consider customers’ needs (See 2.1).
SINGAPORE
Issue
Summary of legislative approach Resource links (laws / regulations / regulatory guidance etc.)3. Disclosures re nature of intermediary services
3.1 Disclosure re capacity in which
intermediary is acting, who they are
acting for and on nature of
intermediary services
FAs need to disclose: name and business; the types of financial advisory service that it is authorised to provide under the Act; the or types of investment products in respect of which it is authorised to provide financial advisory service; the product providers whose products the financial adviser: procures on behalf of its client, recommends or markets to its clients, or markets to its client on behalf of the product providers. FA representatives need to disclosure all the above plus the financial advisers for which they act.
FAA: Section 58.
MAS: Notice on Information to Clients and Product Information Disclosure.
Insurance intermediaries need to disclose: the name of the registered insurer, their relationship with the register insurer and the premium charged by the registered insurer.
IIA: Section 5(1). IA: Section 35P.
3.2 Restrictions on use of certain
expressions such as “independent”
No FA can use the word “independent” or any of its derivatives that is alike. There is an exception for FAs with no links to product providers.
FAR: Regulation 21.
MAS: Guidelines on the Use of the Term Independent by Financial Advisers.
3.3 Liability rules (e.g. liability of
product provider for advice given by
intermediary) and (if required)
disclosure of liability rules
An FA is liable for their representatives. FAA: Sections 23B – 23E.
4. Professionalism in regards to advice / intermediary services
4.1 Licensing and registration
requirements
Corporations are required to hold a FA’s licence from MAS, unless exempt. An FA’s licence will only be granted to a corporation with an established a physical presence in Singapore. There are major exemptions for licensed institutions under other relevant Acts.
FAA: Sections 6, 9, 23. FAR: Regulations 15, 16, 17.
MAS: Guidelines on Criteria for the Grant of a Financial Adviser’s Licence.
A licensed issued by MAS is needed to carry insurance business (exemptions for foreign insurance schemes). There are other requirements (e.g. being a company or cooperative and financial requirements).
IA: Sections 3 and 8.
4.2 Professional training / competence
requirements
Financial advisers need to have a GCE “A-Level” or equal level of education (some exceptions, such a grandfathering apply). The Capital Markets and Financial Advisory Services Examination must be taken for advisory services (See 1.1, 1.2, 1.3).
FAA: Sections 9 and 58.
MAS: Guidelines on Criteria for the Grant of a Financial Adviser’s Licence.
MAS: Response to Feedback Received – Public Consultation on Recommendations of The Financial Advisory Industry Review (FAIR).
SINGAPORE
Issue
Summary of legislative approach Resource links (laws / regulations / regulatory guidance etc.)4.3 Conflict of interest rules
FA s must act in the best interest of the client and should disclose in writing any conflict of interest that may arise. FA must ensure that there is proper segregation of duties to minimise any possible conflict of interests.FAA: Sections 9 and 64.
MAS: Guidelines on Standards of Conduct for Financial Advisers and Representatives.
Insurance brokers are required to avoid situation where a conflict may arise. If unavoidable it should be disclosed.
IA: Section 35TA.
MAS: Guidelines on Market Conduct and Service Standards for Insurance Brokers. GIA: The Singapore General Insurance Code of Practice.
4.4 Requirements to treat customers
fairly / act in their best interests
AN FA licence can be revoked or denied if there is reason to believe it may not perform its function honestly, fairly and efficiently.
FAA: Sections 9 and 19.
An insurers’ licence can be revoked if it fails to meet obligations under the Act (e.g. product suitability and disclosure). Insurers are expected to act fairly when dealing with clients.
IA: Section 12.
MAS: Guidelines on Market Conduct and Service Standards for Insurance Brokers. GIA: The Singapore General Insurance Code of Practice.