Distribution of Traded Endowment Policies to Retail Investors Allowed
Singapore, 01 July 04...The Monetary Authority of Singapore (MAS) published today its response to comments it received from its public consultation on the regulation of traded endowment policies (TEPs) and traded life policies (TLPs). In its response MAS said that it agreed with proposals to apply separate rules to the distribution of TEPs and TLPs.
The distribution of TEPs to retail investors will be allowed provided investors meet the minimum investment amount of $20,000. The distribution of TLPs will continue to be restricted to non-retail investors. The distribution of both products will be a regulated activity requiring a license under the Financial Advisers Act (FAA), and subject to FAA rules on the sales and advisory process.
Distributors of TEPs will only be permitted to access the retail market provided certain additional conditions are met. These conditions may include, but are not limited to, the following:
Recognised Jurisdiction - The TEPs distributed here must be manufactured in a recognized jurisdiction.
Regulation of Life Company and TEP Manufacturer - The life insurance company underwriting the policy, and TEP product manufacturer, should be regulated by an authority with information sharing arrangements with MAS. Investors should also have access to a policyholder's compensation scheme should the life insurance company become insolvent.
Representative Office - The product manufacturer should have a representative office in Singapore to facilitate the resolution of any dispute with the product manufacturer, and furnish MAS with information or records regarding the product manufacturer when required.
Sales and Advisory Process - Product distributors here must ensure that the sales and advisory process meets the standards required of other regulated investment products under the Financial Advisers Act (FAA).
Notes to editors:
TEPs typically involve with-profits endowments, and investors are interested in such policies because of the bonuses that accrue based on investments made from the life fund.
TLPs involve the life policies of those who have experienced a decline in life expectancy. They are an umbrella term used to describe "viatical settlements" and "life settlements". Viatical settlements involve the life policies of those who are terminally ill, while life settlements involve the policies of those, typically over the age of 65, who have experienced a decline in health and life expectancy.