We thank Ms Agnes Sng Hwee Lee for her feedback (Relook consumer banking practices, April 4).
Ms Sng expressed concern about the suitability of investment products. Her specific suggestion of a cooling-off period is actually covered by existing rules on sales practices which require all financial institutions to implement safeguards to ensure the suitability of investment products, including insurance policies, that are marketed to their customers. These safeguards include:
• Requiring banks to assess the nature and identify customer segments for which the product is suitable. Banks also have to ensure that their staff factor in the customer's investment objectives, financial situation and needs, and recommend only suitable products.
• Requiring banks to disclose to customers all material information on an investment product (for example, potential risks and benefits, fees and charges, as well as restrictions on withdrawal, surrender or claim).
• Requiring supervisors of the financial advisers to check and ensure the advisory process has been properly conducted, and that products recommended are suitable for the customer before a sale is completed.
• Allowing consumers to cancel their purchase decision within a cooling-off period. For unit trusts and unlisted debentures, it is seven days from the point of investment; for life policies, it is 14 days from the date of receipt of policy documents.
The Monetary Authority of Singapore (MAS) has and will take supervisory actions against financial institutions and their representatives who fail to comply with these rules.
Also, from MAS' supervisory reviews, it was found that the titles attached to bank officers - be they relationship managers or financial advisers - do not make a substantive difference to the sales process.
Our approach is to place specific responsibilities on banks to implement the safeguards mentioned and ensure that persons providing investment advice or investment recommendations meet specific qualifications, including knowledge requirements, and are authorised by the authority.
Retail investors must also play their part. They should not commit to buy an investment product if they do not understand the features and risks, or have not read the documents furnished. They can take the product documents home to review before making a decision.
MoneySense, the national financial educational programme (www.moneysense.gov.sg), has useful information on what the public should look out for when considering an investment.
Director, Corporate Communications,
Monetary Authority of Singapore