Monetary Authority of Singapore issues finalised FAIR initiatives to lift insurance industry standards

What will be introduced to the financial advisory and insurance industry with the Financial Advisory Industry Review (FAIR) initiatives?

(a) a balanced scorecard remuneration framework which rewards the provision of good quality advice to align the interest of FA representatives with that of customers;

(b) a direct channel through which “basic insurance” products can be purchased with a nominal administration fee; and

(c) a web aggregator to enhance comparability amongst life insurance products.

Full release:

MAS Issues Response to Consultation on Recommendations of Financial Advisory Industry Review (FAIR)

Singapore, 30 September 2013 - The Monetary Authority of Singapore (MAS) today issued its response to the public consultation on the recommendations of the Financial Advisory Industry Review (FAIR).

2   The review, which started in April 2012 with the appointment of the FAIR Panel, aimed to raise the standards and professionalism of the financial advisory (FA) industry and enhance the market efficiency for the distribution of life insurance and investment products in Singapore. The FAIR Panel’s recommendations were published on 16 January 2013 and were opened for public consultation from March to June 2013.

3   The majority of the responses received from the public consultation were in support of the recommendations made by the FAIR Panel. Of the FAIR Panel’s 28 recommendations, MAS has fully accepted 19 recommendations, modified 8 and dropped one recommendation.

4   In deciding on the finalised FAIR initiatives, MAS gave careful consideration to all of the Panel’s recommendations as well as feedback received through the public consultation exercise. The initiatives reflect MAS’ view of what would lift standards of practice in a meaningful and decisive way. They include the introduction of:

(a) a balanced scorecard remuneration framework which rewards the provision of good quality advice to align the interest of FA representatives with that of customers;

(b) a direct channel through which “basic insurance” products can be purchased with a nominal administration fee; and

(c) a web aggregator to enhance comparability amongst life insurance products.

Details of the FAIR initiatives are set out in the response to the feedback received from the public consultation, which can be found at this link: http://www.mas.gov.sg/News-and-Publications/Consultation-Paper/2013/Consultation-Paper-On-Recommendations-of-the-Financial-Advisory-Industry-Review.aspx.

5   Mr Lee Chuan Teck, Assistant Managing Director for Capital Markets, MAS, said, “This set of initiatives will transform the financial advisory industry by creating an environment where firms compete on the quality and value of their products and services rather than on the aggressiveness of their sales force. Consumers will be the ultimate beneficiaries of this change. MAS will review these measures periodically to see if more needs to be done.”

6   The FAIR initiatives will be introduced in stages, with appropriate transition periods, to ensure their smooth implementation by the FA industry.