Fundsupermart 'pressured by firms to scrap promotion' offering lower life insurance commissions

Pressure from financial firms forced online distributor Fundsupermart to scrap a promotion offering lower life insurance commissions just days after it was launched, it was alleged yesterday. -- PHOTO: WEBSITE SCREENGRAB
Pressure from financial firms forced online distributor Fundsupermart to scrap a promotion offering lower life insurance commissions just days after it was launched, it was alleged yesterday. -- PHOTO: WEBSITE SCREENGRAB

PRESSURE from financial firms forced online distributor Fundsupermart to scrap a promotion offering lower life insurance commissions just days after it was launched, it was alleged yesterday.

The claim came from the Competition Commission of Singapore (CCS), which said the action by the 10 financial advisory firms appeared to be anti-competitive.

It alleges that the companies, which are members of the Association of Financial Advisers (Singapore), or Afas, wanted iFast, the parent of Fundsupermart, to end the promotion.

iFast, a securities dealer and financial adviser, launched the promotion offer through Fundsupermart on April 30, 2013.

It was selling insurance products on its online platform at a 50 per cent rebate off the lifetime commission, which would vastly lower the price of a policy. The move could have had a major impact on the amount of commission reaped by advisers.

But the offer was withdrawn four days later, on May 3, the CCS noted.

The sudden cancellation of the promotion was reported in The Straits Times and prompted several Forum letters from readers.

There were claims that the offer had sparked unhappiness among industry players, who saw it as a price war tactic.

Afas had expressed the concern of members to Fundsupermart, and was reported saying "that the tone and language used in its postings could be detrimental to the reputation and professionalism of other financial advisers".

There was also a complaint lodged with the CCS, which started investigations under the Competition Act.

It said yesterday that it "provisionally finds that there was an agreement during an Afas meeting on May 2, 2013, as well as further coordination among the 10 financial advisory companies to apply pressure on iFast to withdraw its Fundsupermart offer".

It noted that the 10 firms would have had financial leverage over iFast, which offers investment products through a business-to-business distribution platform, which provides services to financial institutions such as advisers.

"The parties' use of iFast's distribution platform collectively contributed significantly to iFast's revenues in Singapore," noted the CCS.

The watchdog noted that the Competition Act bars businesses from entering an agreement with the purpose of preventing, restricting or distorting competition.

It added that firms should "independently determine their responses to competition and refrain from participating in any discussion, coordination or plan which is anti-competitive in nature".

The 10 companies cited in the CCS statement yesterday have six weeks to make their case.

They are: Cornerstone Planners, Financial Alliance, First Principal Financial, Frontier Wealth Management, IPP Financial Advisers, JPARA Solutions, Professional Investment Advisory Services, Promiseland Independent, Ray Alliance Financial Advisers and Wynnes Financial Advisers.

The CCS will make its final decision on the matter after consideration of the firms' views and other evidence, it said.

The CCS could fine the firms involved.

rachaelb@sph.com.sg