3 October, 2015
On 23 July 2015, the Monetary Authority of Singapore (the MAS) issued a Consultation Paper proposing Market Conduct Rules for Marketing and Distribution Arrangements of Financial Institutions at Retailers and Public Places (Consultation Paper).
To mitigate potential market conduct risks posed to consumers, including harassment of consumers, confusion of the retailer’s role, enticement and mishandling of proceeds, the MAS is proposing a set of Market Conduct Guidelines and prior notification requirements to be imposed on:
- Who? The following financial institutions (FIs): banks, non-bank credit card and charge card licensees; holders of capital markets services licence; licensed financial advisers; and insurance companies and their intermediaries; and
- What? In relation to the following products: banking products and services, including credit cards, charge cards and unsecured facilities; capital markets products and services; and life insurance and general insurance, including accident and health insurance.
However, closed-door events such as seminars organized in an auditorium by invitation or subject to registration, as an example, would be excluded from the supervisory approach proposed in this Consultation Paper.
We highlight the notable proposals in the Consultation Paper below. The MAS is inviting comments and views by 24 August 2015, including on whether the proposed requirements should be extended to other classes of FIs or products. Please see this link for further details: Consultation Paper
The key proposals are as follows:
1. Market Conduct Guidelines
The proposed Market Conduct Guidelines would set out MAS' expectations on the controls and safeguards that FIs should put in place to address potential market conduct risks arising from marketing and distribution arrangements and would make the board and senior management of the FIs accountable for ensuring that such proper controls are in place. The proposed safeguards are as follows:
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2. Notification Requirements
The MAS proposes to require FIs to notify MAS and submit information on their marketing and distribution arrangements at retailers and public places on a quarterly basis. An outline of the information to be submitted is as follows:
- Arrangements with duration shorter than one quarter. FIs will be required to furnish information on their plans to conduct marketing and distribution activities at retailers and public places in the next calendar quarter at least two months prior to the start of the next calendar quarter; and the actual activities that have been conducted in the preceding calendar quarter.
- Arrangements with duration one quarter or longer.FIs will be required to furnish information on any new arrangements at least two months prior to the start of the calendar quarter in which such arrangements will commence. Thereafter, they will need to notify MAS of any changes to the arrangement.
- Additional information. The MAS also proposes that FIs submit the following information in their quarterly submissions:
- Details of market conduct complaints for marketing and distribution of products and services (e.g., inappropriate advice/misrepresentation/disclosure issues, aggressive sales tactics, unauthorized transactions, and issues on fitness and propriety of licensees), including the number of such complaints as well as the proportion of such complaints relative to the total number of market conduct complaints received by the FI;
- Top five financial products or services sold at all marketing and distribution arrangements at retailers and public places in the preceding quarter; and
- Details of any mystery shopping exercises, compliance visits and internal audits conducted in the preceding quarter.
The consultation period ends on 24 August 2015.
For further information, please contact:
