Aviva, AIA, Prudential, Peter Tan reprimanded by MAS
They were found to have breached rules on commission payments or remuneration
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Four financial institutions have been reprimanded by the Monetary Authority of Singapore (MAS) for breaching rules on commission payments.
AIA Financial Advisers (AIA FA), Prudential Assurance Company Singapore (Prudential), and Aviva, along with its wholly owned subsidiary, Aviva Financial Advisers (Aviva FA), were found to have breached risk management and supervisor remuneration regulations, the central bank said yesterday.
MAS also reprimanded Mr Peter Tan Shou Yi, a consultant engaged by Aviva, for accepting remuneration in breach of regulatory requirements, and Aviva FA's chief executive and director, Mr Lionel Chee Boon Chai, for his failure to discharge the duties of his office.
Mr Tan and his company, Peter Tan Organisation Management and Consultancy, were sued in 2019 by Prudential for up to $2.5 billion for allegedly "surreptitiously" orchestrating a mass defection to Aviva FA in mid-2016.
Last month, the High Court found that he had breached his agency agreement in soliciting the defection.
An MAS spokesman said a reprimand registers the authority's serious concerns regarding the misconduct by a financial institution (FI).
"The FIs and individuals are required to remediate the issues promptly.
"MAS may also take the reprimands into account when considering action to be taken against the FIs/individuals for any future contraventions."
In deciding on the appropriate enforcement action, MAS will consider all the circumstances of the case, including the seriousness of the misconduct, the impact of the misconduct on customers or the financial sector, and any remediation action taken.
MAS said its investigation found numerous instances where remuneration was paid to supervisors in contravention of requirements under the Financial Advisers Act (FAA).
These violations were related to the Balanced Scorecard requirements (BSC) for the sale of investment products, and the Spreading and Capping of Commissions rules (SCC) for the sale of regular premium life policies.
The BSC and SCC seek to align the incentives of financial adviser (FA) firms, agents and supervisors with their customers' interests, to promote a culture of fair dealing.
The MAS spokesman said: "In respect of the impact to customers, MAS has not found evidence of direct harm to customers as a result of the FIs' failure to adhere to the BSC and SCC requirements."
Still, MAS said AIA FA failed to assign BSC grades to three of its managing directors as well as determine and pay their remuneration in accordance with the BSC.
The MAS investigation found that Mr Tan, engaged by Aviva as a consultant from July 2016 to March last year, went beyond providing strategic advice and acted as a supervisor to Aviva FA's agents.
While Mr Tan from July 2016 to April 2019 had frequent and direct interactions with Aviva FA's agents, including discussions on sales and compliance issues, neither Aviva nor Aviva FA had put in place compliance arrangements to monitor his activities in Aviva FA.
Prudential failed to review and assess the performance of three individuals referred to as Master Group Agency Manager Leaders and a consultant and assign BSC grades to them, as well as determine and pay their remuneration in accordance with the BSC.
Ms Ho Hern Shin, MAS deputy managing director for financial supervision, said: "MAS expects financial institutions to have robust arrangements to ensure that their agents place their customers' interests first."
