MAS to give Legislative Effect to Financial Advisory Industry Review Proposals
Singapore, 2 October 2014… The Monetary Authority of Singapore (MAS) today released a consultation paper on legislative amendments to the Financial Advisers Act and Insurance Act to implement the policy proposals under the Financial Advisory Industry Review (FAIR). The FAIR proposals will raise the standards and professionalism of the financial advisory (FA) industry, and encourage greater efficiency in the distribution of life insurance and investment products. It will also create a more competitive market for insurance products and empower consumers to make informed decisions through better access to information.
2 In working out the implementation details of the FAIR proposals, MAS has been actively engaging and balancing the interests of industry stakeholders and consumer groups. We have made good progress in the following key initiatives:
(a) Life insurance products which consumers can purchase directly from insurers without paying commissions (direct purchase products): MAS announced the features of direct purchase products on 30 July 2014 (Click here to access the media release). Life insurance companies are currently developing these products and putting in place the infrastructure and processes in preparation for their launch in early 2015. MAS is also working closely with the life insurance companies to provide safeguards for consumers purchasing these products without financial advice.
(b) Web aggregator for consumers to compare the premiums and features of life insurance products: MAS has appointed a vendor to design and build the web aggregator with inputs from the life insurers and consumer representatives. Design work has been completed and system development is underway. We target to launch the web aggregator in the first quarter of 2015.
(c) Balanced scorecard framework for the remuneration of FA representatives and supervisors: FA representatives and supervisors will need to meet key performance indicators that are not related to sales, such as providing suitable product recommendations and making proper disclosure of material information to customers. Failure to do so will affect their variable income. This is to better align the interests of the FA industry and consumers. MAS will provide the industry with a one-year grace period to familiarise themselves with the framework before effecting the requirements in legislation in January 2016.
3 MAS aims to implement the full suite of FAIR initiatives in 2015. We will give the industry sufficient transition time to put in place systems and processes to comply with the requirements.
4 For the FAIR initiatives to be effective, consumers must play their part and take charge of their financial affairs. To help consumers, MoneySENSE will be embarking on a consumer education campaign to raise awareness of the FAIR initiatives and help consumers understand direct purchase products as well as how the web aggregator can help them make informed financial decisions.
5 Mr Lee Boon Ngiap, Assistant Managing Director (Capital Markets), MAS said, “MAS will look to the Board and Senior Management of financial institutions to set the right tone and promote a culture of fair dealing in their companies. Through the FAIR initiatives, consumers can look forward to a financial advisory industry that puts their interests first, delivers quality advice, and enables them to better meet their financial and life goals.”