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Singapore clamps down on investment sales process

Wednesday 27 October 2010 - by Nicola York

Financial advisers in Singapore will be subject to stringent new rules restricting the sales process for unlisted investment products.

In a consultation paper released this week, the Monetary Authority of Singapore is proposing amendments to the prohibit bank tellers from referring customers to representatives for the purchase of investment products.

The aim is to achieve clearer segregation between traditional teller transactions and investment product sales activities.

Tellers will be allowed to refer clients to representatives only when there is an express request by the client for information on investment products.

New provisions will also be introduced to require financial advisers to carry out a due diligence exercise to ascertain whether any new product is suitable for the financial advisers’ targeted clients before offering the new product to any client.

This due diligence exercise will have to be formally approved by every member of the senior management of the financial adviser. The financial adviser will have to maintain records of the due diligence exercise and the approval from senior management.

In practice, banks already voluntarily comply with these proposals. The amendments to the Financial Advisers Regulations will give the proposals the force of law.

MAS says: “The proposals are focused on promoting effective disclosure by improving the quality of information available to investors, strengthening fair dealing in the sale and advisory process and enhancing MAS’ powers under the Financial Advisers Act.”

All responses to the consultation must be submitted by 26 November 2010.

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