Media Releases
Published Date: 06 July 2012

MAS Releases Results of Mystery Shopping Survey Conducted on Financial Advisory Process of Banks and Insurers

6 July 2012…The Monetary Authority of Singapore (MAS) has today, released the findings of its mystery shopping survey on the financial advisory process of banks and insurers (Annex (59.9 KB)).

2   The objective of the survey was to assess the financial industry’s implementation of MAS’ guidelines on fair dealing (Guidelines on Fair Dealing - Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers (100 KB)).  These Guidelines set out five fair dealing outcomes, including providing adequate information in the advisory and sales process and ensuring that advice provided to customers is suitable. The Guidelines also emphasise the responsibilities of the Board and Senior Management of financial institutions in delivering these fair dealing outcomes when providing financial advisory services to customers.

3   The survey was conducted from October 2011 to December 2011, and focused on the financial industry’s implementation of Outcome 3 (relating to the quality and suitability of advice) and Outcome 4 (relating to adequacy of information disclosure) of the Guidelines.  In total, 126 mystery shoppers made 500 visits to 11 licensed banks and 4 registered insurance companies seeking financial advice from their representatives.  The products recommended by the representatives were reviewed for their suitability by a panel of industry practitioners based on the shoppers’ personal profile, their experience during the advisory and sales process, and sales materials obtained from the financial institutions. 

4   The key findings of the mystery shopping survey are as follows:

(i) Fact-find1
Fact-find was carried out in the bulk of the visits but the extent of information collected from the shoppers was inadequate.  Most representatives obtained information on the shoppers’ personal particulars and employment but other pertinent information such as the shoppers’ investment experience, financial objectives, risk preferences and financial situation were less frequently gathered.  Failure to conduct a comprehensive fact-find impedes the ability of representatives to make suitable recommendations. 

(ii) Product Disclosure
Most representatives disclosed basic information about the products recommended.  These include explanation on whether the product is meant for protection, savings or investment.  However, disclosures on risk factors, amount and frequency of fees and charges, warnings, exclusions and caveats, as well as the free-look period were omitted in a significant number of advisory sessions.  Inadequate disclosures may result in consumers making poor investment decisions due to lack of understanding of the product’s features and risks.

(iii) Product Suitability
The top three categories of products recommended were endowment insurance policies, unit trusts and investment-linked life policies.  Almost a third of the product recommendations were assessed by the industry panel as unsuitable.  The main reasons cited were that the products recommended did not match the shoppers’ financial objective or their stated investment horizon.

5   Mystery shopping exercises are a useful complement to MAS’ other supervisory tools to raise market conduct standards.  For the industry as a whole, the survey findings suggest that there is significant room for improvement.  MAS will share the results of individual institutions with their respective senior management.  In areas where they have fallen short of the fair dealing guidelines, the financial institutions are expected to take corrective actions.  

6   The Association of Banks in Singapore and the Life Insurance Association have agreed to work with MAS to conduct more regular mystery shopping surveys on their members.  The Financial Advisory Industry Review Panel2 will also consider the survey results in formulating their recommendations.


1   Fact-find refers to the gathering of customer’s information by the representative of the financial institution.  Such information would include the customer’s financial situation, financial objectives, needs and risk preferences.

2   The Financial Advisory Industry Review (FAIR) Panel is chaired by MAS’ Assistant Managing Director for Capital Markets, Mr Lee Chuan Teck, and comprises representatives from industry associations, consumer and investor bodies, academia, media, and other stakeholders.  The five key thrusts under FAIR are to: (i) raise the competence of financial advisory (FA) representatives; (ii) raise the quality of FA firms; (iii) make FA a dedicated service; (iv) lower distribution costs; and (v) promote a culture of fair dealing. (FAIR press release)