The Financial Advisory Industry Review (FAIR) consultation paper seeks feedback on the recommendations made by the FAIR Panel, as well as on some new, additional recommendations from the MAS.
As reported, the FAIR Panel concluded its review of Singapore’s financial advisory industry late last year, and on 16 Jan released its findings, which contained some 28 recommendations.
In a statement, MAS said it had reviewed the panel’s report and that it agreed “in principle” to its recommendations, but that it had a few of its own to add. They are:
- that details as to how the so-called “Balanced Scorecard Framework” for remunerating FA representatives, called for by the panel, be provided as to how it would be “operationalised across the industry”;
- further details also be provided as to how the FAIR Panel’s proposals for strengthening the complaints’ handling and resolution processes of advisory firms would be handled, along with how certain “enhanced requirements” of the existing Financial Advisers Act would be dealt with;
- that former financial advisory industry representatives who are on a “short career break from the FA industry” be permitted to enjoy “grandfathered” status when they return – as is already to be offered, under the proposed regime, to those already in the industry but not on a break – should a proposal to raise the minimum academic entry requirement for new advisers be adopted;
- that advisory firms be permitted to enter into “introducer agreements” with “corporations only”.
The consultation paper is available on the MAS website, and may be downloaded by clicking here.
Comments must reach the comments should reach the MAS by 4 June.The email address for comments is fairfeedback@mas.gov.sg.
Eight months
The FAIR Review Panel was drawn up last year, after Ravi Menon, managing director of the MAS, stunned Singapore’s advisory and financial services products industry last March by unveiling detailed plans for a major review.
After eight months considering the matter, the review panel issued its recommendations, which, to the surprise of some and the relief of many, stopped short of calling for a ban on the use of commissions as a means of paying for advisors’ services. Other recommendations included a ban on "remuneration structures" for "introducers" that are tied to sales volumes or transactions; and a ban on introducers from providing customers with product information.
The recommendations closely followed “five key thrusts” that Menon instructed the FAIR Panel to address.These were to raise the competence of financial advisory representatives; lower the distribution costs of insurance products; promote a "culture of fair dealing"; make the delivery of financial advice a "dedicated and professional vocation"; and to generally raise the quality of financial advisory firms practicing in Singapore.
