Key Supervisory and Regulatory Initiatives

INSPECTIONS AND SUPERVISORY REVIEWS

Inspections on Licensed and Exempt Financial Advisers

MAS conducted inspections on licensed and exempt financial advisers across the banking, insurance and securities sectors, including routine, thematic and surprise inspections. The inspections focused on four main areas, namely, the advisory and sales process, training and competency assessment process for representatives, compliance oversight and complaints handling process.

The inspections revealed varying standards of compliance among financial advisers. MAS noted improved compliance such as putting in place a well-structured advisory and sales process to ensure that recommendations made to clients meet their investment objectives, financial situation and particular needs. MAS also found that the financial advisers had generally improved in their supervisory review of recommendations by their representatives for the sale of unit trusts and life policies. There were also areas that needed improvement such as the lack of proper systems and controls to monitor switching of investment products among some financial advisers. Such monitoring is important to deter commission-driven representatives from engaging in improper switching of investment products, which could be detrimental to the interests of clients.

During the same period, MAS also conducted routine and thematic inspections on insurance brokers. The thematic inspections focused on the proper maintenance and use of insurance broking premium accounts in accordance with the regulations. There were no major adverse findings arising from these inspections.