Guidelines on public selling of financial products

ST ILLUSTRATION: MIEL

Proposals part of MAS effort to prevent sale of unsuitable products and to protect public

The increasing practice by banks and insurers to hawk credit cards, insurance policies and the like at malls and other public places is set to come under stricter controls.

These institutions may soon be required to adhere to new market conduct guidelines, such as ensuring they give consumers proper advice.

They may also be obliged to notify the Monetary Authority of Singapore (MAS) of their marketing activities at such places.

The proposals are part of an MAS effort to prevent the sale of unsuitable products and deter the harassment of consumers. Yesterday, MAS issued a consultation paper detailing these proposals and is asking for feedback to reach it by Aug 24.

Financial institutions increasingly choose to market credit cards and insurance products to the public at MRT stations, bus interchanges and shopping centres. Some also tie up with retailers selling consumer goods and groceries.

The proliferation of these activities could lead consumers who are not seeking to buy financial products and services to make "impulse purchases", MAS said.

The institutions might not be adequately prepared to give the necessary information for a proper sales and advisory session and consumers risk buying an unsuitable product, it said.

Consumers could also be enticed by gifts or bundled promotions. The sales booths, which are usually small and open, are not conducive for representatives to conduct proper sales and give advice.

MAS assistant managing director (capital markets) Lee Boon Ngiap said the authorities recognise the importance of marketing and distribution activities at retailers and public places to the institutions' business models.

Still, MAS is mindful of the potential risks posed to the public as some may not be fully aware of the risks and financial commitments required of financial products and may also succumb to impulse and unsuitable purchases.

The proposed guidelines include a requirement for financial institutions to call all customers approached at public places before or within the "free-look period" to ensure that they understood the transactions.

When contacted, the Consumers Association of Singapore (Case) gave the initiative the thumbs up.

Case executive director Seah Seng Choon said: "We are concerned with mis-selling of financial products when the financial institutions' representatives prospect clients at such locations.

"There is also a tendency for representatives to push their boundaries that borders on pressure selling just to get sales in such public places, particularly so when consumers are not interested.

"Moreover, consumers are usually not in the right frame of mind, nor do they have the time to ponder over buying financial products at such public places, and may end up with unsuitable financial products."

He recommended that the guidelines include a provision to disallow the closing of sales at such places.

"The representatives should arrange for a proper consultation location and time to walk through the product highlights sheet with the consumers," he added.

Other safeguards proposed by MAS include regular mystery shopping and site visits by financial institutions to monitor and check on the sales and advisory practices of representatives. Banks and insurers should also monitor complaints arising from such activities separately.

A version of this article appeared in the print edition of The Straits Times on July 24, 2015, with the headline 'Guidelines on public selling of financial products'. Print Edition | Subscribe