Monetary Authority of Singapore Annual Report 2012/2013
Anchor of Serving

PROTECTING CONSUMERS

Mystery Shopping Survey

MAS engaged an external consultant to conduct a mystery shopping survey and released the results of the survey on 6 July 2012. The survey focused on the financial advisory (FA) industry’s implementation of MAS’ Guidelines on Fair Dealing, pertaining to the quality and suitability of advice as well as the adequacy of information disclosure.

The survey involved 126 mystery shoppers making 500 visits to 11 banks and four insurance companies to seek financial advice from their representatives. A panel of industry practitioners was engaged by MAS to assess the suitability of the products recommended to the mystery shoppers, based on the shoppers’ personal profile, their experience during the advisory process, and the sales materials obtained from the financial institutions.

The survey found that:

  • Fact-find was generally carried out but the extent of information collected was inadequate. This may impede the representatives’ ability to make suitable recommendations.
  • Basic product information was disclosed but other pertinent information such as risk factors, amount and frequency of fees and charges, as well as free-look period were omitted. Inadequate product disclosures may result in consumers making poor investment decisions due to a lack of understanding of the product features and risks.
  • Almost a third of the product recommendations were unsuitable. In many cases, the products recommended did not match the shoppers’ financial objectives or investment horizon.

The survey results suggest that the FA industry has significant room for improvement and the findings were considered by the Financial Advisory Industry Review (FAIR) Panel, in the formulation of its recommendations.

MAS has shared the survey findings of the individual institutions with their respective senior management and the overall industry results with the Association of Banks in Singapore (ABS) and the Life Insurance Association, Singapore (LIA). ABS and LIA have committed to working with MAS to conduct more mystery shopping surveys of their members.