Singapore, 21 February 2008...The Monetary Authority of Singapore (MAS) is seeking views on proposed Guidelines on Fair Dealing – Board and Senior Management Responsibility for Delivering Fair Dealing Outcomes to Consumers (Guidelines).

2   The Guidelines emphasise the responsibility of the Board and Senior Management of financial institutions (FIs) to deliver fair dealing outcomes when FIs provide financial advisory (FA) services to retail consumers. The fair dealing outcomes that FIs should strive to achieve are:

(a) Consumers have confidence that financial institutions put consumers’ interests first in the conduct of their business;

(b) Financial institutions offer products and services that are suitable for the  consumer segments they target;

(c) Financial institutions appoint competent representatives who provide consumers with advice that meet their financial objectives and suit their personal circumstances;

(d) Consumers receive clear, relevant and timely information to make informed financial decisions; and

(e) Financial institutions handle consumer complaints promptly and in a consistent manner.

3   MAS expects the Board and Senior Management of the FI to review their business operations and identify how well the FI is delivering the fair dealing outcomes. Where gaps exist, the Board and Senior Management will have to develop a plan to address these gaps and set clear priorities and targets for its implementation.

4   Said Mr Shane Tregillis, Deputy Managing Director (Market Conduct), MAS, “One of MAS’ key objectives in financial supervision is to promote transparent and fair dealing by FIs. Increasingly, MAS will be looking to the Board and Senior Management of FIs to embed fair dealing outcomes in all their business practices.

5   In developing the Guidelines, MAS reviewed the FA industry’s progress since the Financial Advisers Act was enacted in 2002, sought feedback from some industry practitioners and surveyed international regulatory developments^[1].  MAS also conducted a poll to assess consumers’ experiences when they deal with FIs. When asked if they were satisfied that FIs had consumers’ interests in mind when selling an investment product, 59.5 per cent of the respondents were neutral.  This presents an opportunity for FIs to earn the trust and goodwill of consumers.  The poll also identified areas for improvement, such as the information provided to consumers on dispute resolution channels.  We have taken these findings into account in formulating the Guidelines.  Details of the consumer poll findings can be found in the Annex.

6   MAS encourages FA industry associations to actively promote fair dealing outcomes among their member firms. MAS has begun discussions with them on how best they can do so. Consumers also have an important role to play. They need to take responsibility for their financial decisions, and acquire basic financial know-how before they invest.  MAS will issue consumer tips to educate consumers on what the fair dealing initiative means for them.

7   MAS invites interested parties to provide feedback on the Guidelines, which are available on the MAS website [Click here to view the consultation paper ] (185.7 KB).Respondents should forward their comments to MAS by 21 May 2008.

^[1] The United Kingdom, Australia and Canada have reviewed, or are reviewing, their regulatory approach to retail advisory activities in their jurisdictions.  We note, in particular, the Treating Customers Fairly initiative undertaken by the Financial Services Authority of the United Kingdom which has been influential in the direction taken in developing these proposed Guidelines.

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Annex

KEY FINDINGS OF MAS CONSUMER POLL

1. OBJECTIVES

1.1 The objective of the poll was to assess consumer perceptions of whether financial institutions (FIs) deliver fair dealing outcomes based on their dealings with FIs.

2. METHODOLOGY

2.1 MAS commissioned a research company to undertake the poll in March 2007.

2.2 Telephone interviews were conducted with 412 respondents who had bought at least one investment product from FIs in Singapore from 2003 onwards, after the Financial Advisers Act had come into force in October 2002.  

2.3 The sampling frame comprised all telephone entries in SingTel’s Yellow Pages, and is stratified according to ethnicity proportions reflecting the Singapore population. Individuals selling investment products were excluded from the survey. Since not every Singaporean has purchased an investment product, the profile of the sample is unique to this group of consumers.

3. KEY FINDINGS

Majority were neutral when asked whether they were satisfied with FIs

3.1 Respondents were asked to indicate on a scale of 1 (not satisfied at all) to 5 (extremely satisfied) how satisfied they were with the FIs with whom they had bought their last investment product. As evidenced from the following table, the majority of the respondents  (more than 57%) were neutral in their responses:

Consumer satisfaction was largely influenced by competency of the FI’s representatives and provision of after-sales service

3.2 Among the respondents who were satisfied with the FIs with whom they had purchased their last investment product, the three oft-cited reasons for satisfaction were as follows:

• The representative provided constant follow-up or updates
• The representative was familiar with my needs
• The representative provided sufficient options, information and analysis

3.3 Among the respondents who were dissatisfied, the three oft-cited reasons were:

• Lack of follow-up or updates
• The representative was in a rush or tried to close the deal quickly
• The representative was insincere and did not make good recommendations

Majority were not aware of complaints handling processes in FIs

3.4 Among the survey respondents, only 2.4% had ever lodged a complaint with their FI. Less than 3 in 10 consumers were aware of the complaints handling processes in the FIs.  In addition, less than 1 in 5 consumers were aware of the independent Financial Industry Dispute Resolution Centre ["FIDReC"].