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The Monetary Authority of
Singapore (MAS) today (26 Oct 2004) issued Guidelines on Switching of
Designated Investment Products ("Guidelines").
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The Guidelines aim to provide
guidance to financial advisers on the controls, processes and procedures MAS
expects them to put in place to monitor and deter undesirable switching
activities.
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They also include disclosure
requirements to ensure that consumers are fully informed of the costs and
implications of switching.
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The Guidelines recommend that
financial advisers structure remuneration packages that reward representatives
who provide professional advice to consumers.
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MAS considers that any
remuneration structure based solely on sales volume may encourage product
pushing and undesirable switching.
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It is an offence under the
Financial Advisers Act ("FAA") for a financial adviser or its
representatives to engage in switching activities that are detrimental to the
interest of consumers.
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Our regulatory regime aims to
safeguard the interest of consumers by ensuring that financial advisers
recommend investment products that are suitable for consumers and that they
disclose to consumers the key features of the product being recommended
including the risks of buying the product, the fees and charges to be borne by
the consumer, and the remuneration that the financial adviser will receive for
the recommendation.
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In conjunction with the release of
the Guidelines, MAS has published a consumer alert explaining what switching
is and what consumers can do to protect their interests. The alert is
available on the consumer portal at www.mas.gov.sg/consumer.
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The Guidelines
and MAS'
response to the feedback received from the public consultation are
available on MAS' website.
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Source: Monetary
Authority of Singapore Press Release 26 Oct 2004
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MAS issues guidelines on switching
