MAS to Require Financial Advisers to Implement Enhanced Transaction Safeguards for Selected Retail Clients

On 24 August 2023, the Monetary Authority of Singapore (“MAS“) issued its Response to feedback received on the “Consultation Paper on Enhancing Pre- and Post-Transaction Safeguards for Retail Clients” (“Consultation Paper“). The consultation exercise was conducted from 22 June 2021 to 3 August 2021. The proposals in the Consultation Paper aim to raise industry standards and promote greater consumer trust in the financial advisory (“FA“) industry in Singapore. These consist of proposed enhanced regulatory safeguards to be imposed on FA firms to protect the interests of retail clients, particularly selected clients (“SCs“), who meet any two of the following criteria:

  1. are 62 years of age or older;
  2. are not proficient in spoken or written English; and/or
  3. have below GCE “O” or “N” level certifications (or the equivalent).

MAS stated in its Response that it will proceed to implement the key proposals in the Consultation Paper which are highlighted below. The new requirements will be set out in MAS Notice FAA-N16 Recommendation on Investment Products (“FAA-N16“). MAS will consult on the proposed revisions to FAA-N16 in due course. MAS proposes a nine-month transitional period from the time the revised FAA-N16 is published, for the revisions to take effect.

  • Strengthening the requirements to determine and document a client’s SC status.
  • Requiring a TI to be present for all investment recommendations made to SCs.
  • Criteria for qualification as a TI.
  • Enhancing requirements relating to call-backs.
  • Audio recording of call-backs for SCs and clients of SRs
  • Digital advisers (subject to certain conditions) will be exempt from the above requirements.

For more information, click here to read the full Legal Update.

CONTACTS

Head, Financial Institutions Group
+65 6232 0456
Singapore,
Head, Insurance & Reinsurance
+65 6232 0645
Singapore,
Deputy Head, Financial Institutions Group
+65 6232 0482
Singapore,
Deputy Head, Insurance & Reinsurance
+65 6232 0365
Singapore,

Country

EXPERTISE

SECTORS

Share

Rajah & Tann Asia is a network of legal practices based in Asia.

Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

This website is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this website.

© 2024 Rajah & Tann Asia. All Rights Reserved. All trademarks are property of their respective owners.