Q1 When will the FAA come into force?
Q2 What can a company do if it wants to provide any of the financial advisory service under the FAA before the FAA comes into force?
Q3 What will happen to an existing corporate licence under the IIA, FTA and SIA when the FAA comes into force?
Q4 What will happen to any pending application for registration under the IIA or corporate licence under the FTA/SIA when the FAA comes into force?
Q5 Will there be sufficient time for companies to transit from the existing regulatory regime in the IIA, FTA and SIA to the new regime?
The commencement date of the FAA is linked to that of the Securities and Futures Act (SFA). The structure of the new legislation is that the FAA and the Parts of SFA relating to intermediaries will require the repeal of the Futures Trading Act (FTA) and Securities Industry Act (SIA) [and Insurance Intermediaries Act (IIA), in the case of the FAA] in order to commence. This means that the FAA and SFA commencement dates are linked to completion of the regulations and subsidiary instruments for both the FAA and SFA. MAS has been implementing the SFA in stages since January 2002. The remaining parts of the SFA, along with the regulations/ subsidiary instruments that are now being drafted, will be implemented in the third quarter of 2002. The FAA will come into force at the same time.
Any company who wishes to provide financial advisory services or any existing corporate licensee who wishes to expand its current scope of activities to include provision of financial advisory services may apply to MAS under the current regulatory regime. The company would be required to obtain the requisite registration/licence under the Insurance Intermediaries Act (IIA), Securities Industry Act (SIA) or the Futures Trading Act (FTA), as the case may be. MAS would be pleased to discuss with interested parties any regulatory issues in relation to the impact of the FAA on their business plans.
Existing licensees under the IIA, SIA and FTA whose activities fall under the ambit of the FAA will be notified by MAS in writing of their migration to the FAA. For more questions relating to the transition arrangements for existing market participants, please refer to the Frequently Asked Questions on the Financial Advisers (Transitional and Savings Provisions) Regulations 2002.
A pending application made under the IIA, SIA and FTA will be treated as an outstanding application under the FAA if the activity applied for falls under the ambit of the FAA. An applicant who wishes to make changes to the activity applied (eg. to include additional activities) after the FAA comes into force will be allowed to do so. In this regard, the person will need to submit an application to add a new activity. Such an application will be treated as a variation to the original application under the IIA, SIA or FTA.
The FAA was passed in Parliament in October 2001 and was gazetted in December 2001. MAS also released draft versions of the subsidiary instruments relating to the FAA for public consultation in March 2002. We are currently fine-tuning the subsidiary instruments in response to the various industry comments received. While there will be some changes in detail to reflect industry comments, we do not expect the final versions to differ fundamentally from the draft ones. Many of the market participants have commenced preparation for the implementation of the FAA from as early as October 2001. In addition, MAS is considering giving companies a reasonable grace period to comply with some of their obligations, especially any significant obligations that may take some time for firms to get the relevant systems or processes in place, when the new regulatory regime comes into force. Our aim is to ensure that the transition to the new regime is a smooth one for most market participants. We consider that companies who will be operating under the FAA should start planning for the transition to the new regime as early as possible.
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