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Retail Banking Services
In order to facilitate the efficient distribution of retail banking services, MAS announced on 12 January 2001 that banks and retailers would be allowed to implement cash-back services using their EFTPOS systems. These services would allow consumers to withdraw small amounts of cash when making purchases at various retail outlets such as supermarkets and departmental stores, reducing the need to make separate trips to ATMs. The benefits of cash-back services include enhanced consumer convenience and choice, and lower transaction costs. Cash-back services were launched at several retail locations in March 2001.
MAS also announced on 12 March 2001 that it would allow banks to offer banking services including cheque collection, cash withdrawal and credit card payments on third-party premises such as post offices, community centres and retailers. Banks may reduce costs by leveraging on the premises and staff of retailers, and pass on these savings to consumers. The range of services that a bank would be permitted to provide at these "limited-purpose branches" would depend on whether it had in place the necessary resources and safeguards to provide these services in a competent, effective and secure manner.
Life Insurance
In August 2000, the Committee on Efficient Distribution of Life Insurance (CEDLI) announced its recommendations aimed at promoting transparency and competitiveness in the distribution of life insurance products. CEDLI was a private sector committee appointed by MAS to examine ways to enhance efficiency in the sale of life insurance. Following the acceptance of most of CEDLI’s recommendations by MAS, the Life Insurance Association of Singapore has developed, in consultation with MAS, guidelines on the needs-based sales process as well as the training and competency requirements for life insurance advisors. From 1 January 2001, all life insurance advisors were required to conduct a fact-find, needs analysis and to ensure product suitability in their recommendations. From 1 April 2001, all life insurers were required to implement training and competency requirements. With reforms made in the sales advisory process and professional training requirements, the insuring public would benefit from sales advisors answerable to higher standards of knowledge, integrity and professionalism.
With the implementation of training and competency requirements, MAS lifted the limits on recruitment and agency force size on 1 April 2001. MAS has been in discussions with the industry to implement CEDLI’s recommendations on disclosure of distribution costs, charges and expenses beginning 1 July 2001. Enhanced disclosure will allow policyholders to evaluate whether they are getting value for the advice they receive.
General Insurance
As part of the private sector initiative to raise standards of the general insurance industry, the General Insurance Association of Singapore formed a Motor Insurance Task Force (MITF) to review the practices and conduct of motor insurance business. The objective of the MITF is to develop a set of international best practice on sales and service standards for Singapore motor insurers to provide an enhanced level of service and disclosure to consumers. The first report of the MITF, issued in March 2001, recommended the adoption of a statistical risk-based pricing method for motor insurance. The final report on disclosure, claims cost management, and consumer education is expected in July 2001.
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