Response to "Questions on sales of financial products" (Straits Times Forum, 28 Oct 2008)
Mr Stanley Jeremiah asked about MAS' supervision of the sale of structured products, penalties for breaches of our regulations and the review of sales practices of financial institutions ("Questions on sales of financial products", ST Forum, 28 October 2008).
Under our regulatory regime for the sale of investment products, financial institutions (FIs) and their representatives have to fully comply with MAS’ requirements. We take a range of supervisory measures such as thematic inspections, meetings with senior management and mystery shopping to reinforce these obligations.
Given current market conditions, we have instructed the CEOs of all FIs to conduct a thorough review of their processes and procedures for their sales and marketing activities.
If FIs fall short of the required standards, detected in the course of our supervision or through formal inquiries originating from consumers’ complaints, MAS will take appropriate action.
MAS has announced that we are conducting formal inquiries into potential breaches of the law, inadequate internal controls by FIs that sold structured products linked to Lehman Brothers, and poor sales practices by their representatives. We will announce any action we are taking when the inquiries are completed.
The penalties for breaching the Financial Advisers Act include fines, reprimands and prohibition orders to bar the contravening persons from providing financial advisory service for a certain period of time.
Finally, we have announced that we will review our regulatory regime for the sales and marketing of structured products. We will also look at ways to enhance our investor education programmes to help consumers make well informed investment decisions.
Angelina Fernandez Director (Communications) Monetary Authority of Singapore