To ask the Senior Minister (a) for an update on the investment status of Singaporeans who have been led to park their monies in so-called 'lucrative' funds; (b) what measures are being taken by the authority with regards to fund managers who have flouted basic principles of gaming; and (c) how we can ensure a more educated and better informed pool of investors in our community.
(a) Mdm Ho has asked how Singaporeans have fared in their investment in 'lucrative' funds. MAS does not maintain statistics on the profits or losses made by consumers in their respective investments.
I believe Mdm Ho is concerned that investors may have been attracted to certain investment products on the basis of potentially high returns, without being aware of their inherent risks. MAS' role is to require that investors are provided with full, prompt and accurate disclosure of all material information necessary so that they can make informed decisions. To take Mdm Ho's example of funds, fund managers are required to disclose the investment objectives of the fund and the potential risks of the fund, as well as all relevant fees involved.
The fund management industry should also aim to provide disclosure that is not only technically accurate but helpful to investors in making informed judgments. This can only benefit the industry as investor confidence in fund products grows.
However, investors must ultimately bear responsibility for their decisions. In selecting an investment, investors should consider both the potential returns and the risks of the product they intend to invest in. Regulation cannot protect consumers from investment risk.
(b) Mdm Ho was also concerned about overly aggressive behaviour by fund managers in recommending investment products. The Financial Advisers Act (FAA) sets out market conduct rules regulating the sales and advisory process of all investment products. Recommendations on investment products must have a reasonable basis, taking into account the investment objectives, financial situation and particular needs of the person to whom the recommendation is made.
MAS also regularly provides guidance to the industry on the standards we expect of them. For example, we have made known our views on how remuneration should be disclosed. We will be also be issuing a paper to highlight good practices observed in the industry, as well as guidelines to deter undesirable churning of products.
Investors who feel that they have been subject to mis-selling or misrepresentation should first take up the matter with the financial adviser. Failing which, they can turn to existing industry dispute resolution schemes.
(c) Mdm Ho asks about initiatives to ensure that investors are more educated and better informed. The Government launched a national financial education programme called MoneySENSE in October 2003, which is a collaborative effort by various government agencies, industry associations and community organizations. It aims to help Singaporeans acquire skills and knowledge to better manage their finances and make well-informed financial decisions.
MoneySENSE has issued consumer alerts and tips to guide consumers when they deal with financial advisers and help them make sense of investment products. MoneySENSE has also organized a number of seminars and workshops covering topics such as basic money management and financial planning.
Financial education however has to be a long-term, sustained effort. We have to continue to raise awareness among consumers of the need to seek information and advice before committing to investing in a product.