Strict rules in place to protect consumers of financial institutions

We thank Mr Francis Cheng for his letter (Clients risk losing out when agents are poached; Sept 18).

The Monetary Authority of Singapore (MAS) recognises that such mass movements of representatives could pose risks to consumers.

There are regulations and guidelines requiring financial institutions to have robust controls to safeguard the interests of consumers in their provision of financial advisory services.

Financial institutions and their representatives must ensure that the investment products and insurance policies they recommend are suitable, taking into account their customers' needs, financial situations and personal circumstances.

They are prohibited from recommending a switch from one investment product or insurance policy to another in a manner that is detrimental to the customer.

Financial institutions are also required to put in place systems and processes to identify any unusual trends in switching transactions.

They must have procedures to ensure that each switch recommended by a representative is reviewed by a supervisor for appropriateness.

The financial institutions must also implement systems to identify representatives with unusually high volumes of switching transactions, so that they can take appropriate action.

The MAS recognises that consumers may have concerns about the servicing of their insurance policies when their representatives move to another financial institution.

In this regard, the MAS expects financial institutions to reach out to their affected customers and assign new representatives to service these customers promptly. Financial institutions also have dedicated customer hotlines and service centres to address customers' queries.

The MAS is looking into the recent mass movement of representatives between financial institutions and is in discussions with them on the measures they are implementing to protect the interests of their customers.

We will not hesitate to take action where financial institutions or their representatives are found to have breached regulations or engaged in improper conduct.

We will also continue to monitor industry developments closely, and will engage the Life Insurance Association Singapore on its proposal to come up with parameters to manage such mass movements of representatives in the industry.

Bey Mui Leng (Ms)

Director (Corporate Communications)

Monetary Authority of Singapore

A version of this article appeared in the print edition of The Straits Times on September 23, 2017, with the headline 'Strict rules in place to protect consumers of financial institutions'. Print Edition | Subscribe