Response to "Light, in the financial dark" (Today, 5 December 2006)
I refer to "Light, in the financial dark" (TODAY, 5 December 2006).
2 We agree with the writer that raising market conduct standards in the financial industry requires joint efforts by MAS, financial institutions and consumers.
3 MAS takes the lead in setting disclosure and conduct requirements in the sale of investment products. We actively supervise the industry using a range of supervisory tools. For example, we published our findings from a mystery shopping survey where individuals posed as interested customers seeking advice from various financial institutions. The survey was designed to assess the quality of the advisory and sales process in the financial advisory industry. We also recently published our recommendations on controls to address improper switching of investment products following a review of financial institutions' practices and internal controls. When our rules or regulations are breached, we take appropriate regulatory actions. These are some examples of supervisory activities MAS undertakes to raise industry standards.
4 The writer commented that financial institutions must be more genuinely concerned about making material information available to consumers. MAS agrees. In addition to ensuring that regulatory requirements are met, it is the responsibility of the senior management of each financial institution to put in place systems, processes and incentive structures to promote fair dealings with customers. They should ensure that key features, risks and benefits of their products are communicated clearly and succinctly to their customers.
5 Finally, we do not think that publishing complaints against financial institutions would necessarily result in stronger consumer awareness of the key risk areas in financial products. To raise the levels of financial literacy and to help consumers make better investment decisions, we develop case studies and educational articles based on consumer complaints and feedback. These activities are part of the MoneySENSE national financial education programme. MoneySENSE consumer guides, articles and quick tips are online at www.moneysense.gov.sg.
Angelina Fernandez Director (Communications) Monetary Authority of Singapore