MAS releases Notices and Guidelines to support the implementation of the Securities and Futures Act and the Financial Advisers Act
2 The Monetary Authority of Singapore (MAS) today released a package of Notices and Guidelines to support the implementation of the SFA and the FAA. These will be phased in over the next 6 to 12 months to facilitate a smooth transition to the new regulatory regime. The Acts will be fully operative at the end of this final phase in period.
4 A number of the Notices detail important new requirements under the new legislation. Industry participants are given a period of 6 months from the implementation of the new legislation on 1 October 2002 to comply with the following Notices:
- Notice on Recommendations on Investment Products;
- Notice on Information to Clients and Product Information Disclosure; and
- Notice on Cancellation Period for Collective Investment Schemes constituted as Unit Trusts.
5 The 6-month period will enable industry participants to put in place the necessary systems and procedures to ensure compliance with the new requirements. Industry participants that are able to comply with the Notices earlier are encouraged to do so.
6 MAS has also provided specific transitional arrangements in the Notice on Minimum Entry and Examination Requirements for existing industry participants and new applicants over the next 12 months. Under these arrangements, existing representatives do not have to pass any new examinations to be able to continue their current activities. Instead, they will be given 12 months to undertake a short non-examinable course to enable them to update their knowledge of the relevant rules and regulations. The new Capital Markets and Financial Advisory Services Examination will take effect on 1 December 2002.
7 The other Notices and Guidelines take effect on 1 October 2002. This includes the Guidelines on the Use of the Term 'Independent' by Financial Advisers.
8 MAS has previously written to all licensees under the Securities Industry Act, Futures Trading Act and Insurance Intermediaries Act informing them about their licensing status under the SFA and the FAA. All licensees have now been formally notified of their migration to the new regime.
9 MAS has commenced briefings for industry participants on the new legislation, regulations and associated instruments to familiarise industry participants with the key features under the new regulatory regime and to address areas that may require further clarification. Further sessions are scheduled over the next few weeks.
10 MAS will continue to work closely with industry participants and their professional organisations to ensure a smooth migration to the new regime. Copies of the legislation, regulations, Notices and Guidelines are available on the MAS website at .Appendix
MAS today issued the following Notices and Guidelines:
SFA and FAA
a) Notice on Minimum Entry and Examination Requirements for Representatives
The Notice on Minimum Entry and Examination Requirements for Representatives sets out the minimum entry requirements and application of the Capital Markets and Financial Advisory Services Examinations (CMFAS Exam) for persons intending to carry on regulated activities under the SFA and the FAA. It also specifies the circumstances under which the CMFAS Exam requirements do not apply, and transitional arrangements for the implementation of the CMFAS Exam.
The CMFAS Exam will commence on 1 December 2002, and will be jointly administered by the Institute of Banking and Finance and the Singapore College of Insurance. It comprises 9 modules covering rules and regulations, as well as product knowledge and analysis. The 9 modules correspond to the types of regulated activities and financial advisory services under the SFA and the FAA respectively. Under the transitional arrangements, existing representatives do not have to pass any new examinations to be able to continue their current activities. Instead, they have been given 12 months to undertake a short non-examinable course to enable them to update their knowledge of the relevant rules and regulations.
b) Notice on Cancellation Period for Collective Investment Schemes Constituted as Unit Trusts
This Notice requires fund managers of unit trusts (or distributors who hold units on behalf of investors in nominee accounts, as the case may be) to give investors a right to cancel an agreement to purchase units in a unit trust, where the right must be exercised within 7 days from the date the investor signs the agreement. Industry participants are given until 31 March 2003 to comply with the requirements in this Notice.
c) Guidelines on Licence Applications and Payment of Fees
The Guidelines on Licence Applications and Payment of Fees set out the administrative procedures for corporations and individuals who wish to apply for licences under the SFA or the FAA, add regulated activities to their licences, or renew their licences. The Guidelines also provide details on the procedures for the payment of application and licence fees by applicants and licensees.
d) Guidelines on Criteria for the Grant of a Licence
The aim of these Guidelines is to provide guidance on the licensing requirements and the factors that MAS takes into consideration when reviewing applications for the capital markets services and representative's licences under the SFA, as well as applications for financial adviser's and representative's licences under the FAA.
a) Notice on Recommendations on Investment Products
The Notice on Recommendations on Investment Products spells out the standards to be maintained by financial advisers and representatives in the areas of 'Know Your Client', needs analysis, documentation and record keeping. Industry participants are given until 31 March 2003 to comply with the requirements in this Notice.
b) Notice on Information to Clients and Product Information Disclosure
The Notice on Information to Clients and Product Information Disclosure sets out the general principles as well as specific requirements as to the form and manner of disclosure to clients. In particular, financial advisers are required to disclose to clients all remuneration received, including fees, commissions and benefits. Industry participants are given until 31 March 2003 to comply with the requirements in this Notice.
c) Notice on Appointment and Use of Introducers by Financial Advisers
Regulation 31 of the Financial Advisers Regulations 2002 provides exemption from the requirements under the FAA for persons conducting introducing activities. The Notice on Appointment and Use of Introducers by Financial Advisers spells out the standards to be maintained by financial advisers when they appoint introducers to perform introducing activities on their behalf.
d) Notice on Reporting of Misconduct of Representatives by Financial Advisers
The Notice on Reporting of Misconduct of Representatives by Financial Advisers requires financial advisers to submit to the MAS quarterly reports of any disciplinary action taken against their representatives during the preceding quarter for any misconduct committed. Financial Advisers are required to submit their first report for the quarter ending on 31 March 2003.
e) Guidelines on Standards of Conduct for Financial Advisers
The Guidelines on Standards of Conduct for Financial Advisers set out the standards of conduct expected of financial advisers and their representatives in carrying on the business of providing financial advisory services. They provide guidance in a number of areas including competence, conduct of business, disclosure obligations and complaints handling.
f) Guidelines on the Use of the Term 'Independent' by Financial Advisers
The purpose of the Guidelines on the Use of the Term 'Independent' by Financial Advisers is to provide guidance to financial advisers on the circumstances they may use the term 'independent' in the name, description or title under which they carry on business in Singapore, promote or advertise their services, or use the term in respect of their provision of any financial advisory service.
g) Guidelines on Fit and Proper Criteria
MAS expects participants in the financial advisory industry to be efficient, honest, have sound financial standing and be persons of integrity. The Guidelines on Fit and Proper Criteria set out the fit and proper standards expected of financial advisers and their representatives.