11 October, 2017
The Monetary Authority of Singapore (MAS) has announced plans to streamline the notification requirements generally applicable to financial institutions in respect of their representatives who carry on regulated activities on their behalf. Specifically, it is proposed that representatives who serve only non-retail customers (ie, accredited and institutional investors) need no longer be notified to the MAS under the representative notification framework.
Currently, persons who distribute life policies, such as financial advisers, banks (through their bancassurance channels) and insurance companies themselves, are required to lodge notifications with the MAS when they appoint representatives to advise on or arrange contracts of insurance in respect of such policies. The MAS proposes that these notifications will no longer need to be lodged if the representatives serve only non-retail customers. Consequently, such representatives would not be subject to the competency requirements under relevant MAS notices, which would otherwise require such representatives to pass certain examination requirements unless exempt.
The above proposal is meant to reduce the administrative burden on financial institutions, but is not meant to do away with the standards of competence and conduct expected of representatives when they carry on financial advisory services. The financial institutions appointing them will still be required to satisfy themselves that their representative are fit and proper, and to have in place systems and controls to ensure the proper conduct of their representatives. In other words, even with the introduction of the proposal, financial institutions are still expected to maintain all current procedures in relation to ensuring the fitness and propriety of their representatives, such as to conduct due diligence checks and to ensure its representatives are competent, and to put in place compliance functions and internal controls to ensure their representatives comply with applicable laws, codes of conduct and standards of good practice.
The proposal will apply on a voluntary basis: financial institutions may continue to require all their representatives to notified to the MAS even if they serve only non-retail customers. As a corollary, existing representatives serving only non-retail customers may remain on the MAS register of representatives, although their employing financial institution retains the discretion to request the MAS to remove their names from the register if they do not serve retail customers.
For further information, please contact:
Andy Leck, Principal, Baker & McKenzie.Wong & Leow
andy.leck@bakermckenzie.com
