Lee Chuan Teck, chairman of the panel for the Financial Advisory Industry Review (FAIR) and a senior figure at the Monetary Authority of Singapore, made the statement in response to weeks of market and media speculation following the announcement in late March that MAS would be conducting a widespread review of how financial products are sold to investors.
Seen by many as Singapore’s answer the UK’s Retail Distribution Review, much of the commentary about FAIR has focused on the pros and cons of introducing a purely fee-based model for financial advisers, as is set to happen in the UK in January. However, Teck said it is both “premature and inaccurate to suggest the panel will recommend a fee-based model”, adding the review “goes beyond the issue of adviser’s remuneration”.
Teck went on to say the panel has already received some “interesting suggestions that include a mixture of fees and commissions”.
Furthermore, Teck reemphasised the mission statement of the review, which was originally set out by MAS managing director Ravi Menon at an industry event in March. The main areas of review being to consider how to:
- raise the competence of financial advisory representatives;
- lower the distribution costs of insurance and investment products;
- promote a culture of fair dealing in FA firms;
- make financial advice a dedicated service; and
- raise the quality of financial advisory firms.
In his speech, delivered at the 50th anniversary celebration dinner of the Life Insurance Association, Menon said there was a real need for life insurance products in Singapore and that the average life cover for a Singaporean is only about a third of what his dependents will need in the event of an early death and that this need must be met.
However, he also said there is a need for more sophisticated financial planning for which professional advice is needed and that the review will look at how this advice will be paid for going forward. This statement is likely to have been the root a much of the subsequent speculation about the introduction of a fee-based regime.
In its most recent statement, the MAS said it is currently soliciting feedback from both the public and industry before it begins its deliberations on suitable proposals and encourages interested to parties to submit views to fairfeedback@mas.gov.sg.
