MAS reprimands financial advisers

The Monetary Authority of Singapore has reprimanded a few financial adviser organisations for breaches of requirements relating to risk management arrangements and the remuneration of supervisors. MAS also reprimanded a consultant for accepting remuneration in breach of regulatory requirement.

In the course of MAS’ ongoing supervision, there were indications that these financial institutions may have breached regulatory requirements on remuneration practices. MAS conducted an investigation and found numerous instances where remuneration was paid to supervisors in contravention of requirements under the Financial Advisers Act (FAA). These related to the Balanced Scorecard requirements (BSC) for the sale of investment products, and the Spreading and Capping of Commissions requirements (SCC) for the sale of regular premium life policies.

The BSC and SCC seek to align the incentives of financial adviser (FA) firms, representatives and supervisors with their customers’ interests, to promote a culture of fair dealing. Under the BSC, supervisors’ and representatives’ variable income are determined with reference to the fulfilment of non-sales key performance indicators (KPIs). Under the SCC, insurers and FA firms are required to cap the variable income payable to representatives and supervisors in the first year and spread the remaining variable income payable over a prescribed period.