M5 Ebook

Rules And Regulations
for Financial Advisory

Services
5th Edition
Nurturing Asia’s Best

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RULES AND REGULATIONS FOR
FINANCIAL ADVISORY SERVICES
5th Edition – April 2020
© 2020 by Singapore College of Insurance Limited. All rights reserved.
No part of this publication may be reproduced, adapted, included as part of a compilation (electronic or
otherwise), stored in a retrieval system, included in a cable programme, broadcast or transmitted, in any form
or by any means, electronic, mechanical, recording or otherwise, without the prior written permission of the
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This Study Guide is designed as a learning programme. The SCI is not engaged in rendering legal, tax,
investment or other professional advice and the reader should consult professional counsel as appropriate.
We have tried to provide you with the most accurate and useful information possible. However, the
information in this publication may be affected by changes in law or industry practice, and, as a result,
information contained in this publication may become outdated. This material should in no way be used as
an original source of authority on legal matters. Any names used in this Study Guide are fictitious and have
no relationship to any persons living or dead.
1st Edition published in 2002

2nd Edition published in 2007
3rd Edition published in September 2010
4th Edition published in July 2011
4th Edition reprinted in October 2011
4th Edition reprinted in July 2013
4th Edition reprinted in July 2014
4th Edition reprinted in December 2016
PREFACE
Capital Markets and Financial Advisory Services Examination –
Module 5 – Rules and Regulations for Financial Advisory Services
In line with the licensing framework under the Securities and Futures Act (SFA) and
Financial Advisers Act (FAA), the MAS has launched a modular examination structure,
known as the Capital Markets and Financial Advisory Services Examination (CMFAS
Examination).
This study guide is designed for candidates preparing for the CMFAS Module 5 – Rules
and Regulations for Financial Advisory Services examination.
The objectives of the CMFAS Module 5 – Rules and Regulations for Financial Advisory
Services examination are to test candidates on their knowledge and understanding of the
regulatory framework governing Financial Advisers and representatives under the FAA;
the Financial Advisers Regulations (FAR); the Notices and Guidelines governing all
financial advisory activities in respect of investment products; and the distribution or
marketing of specific functionally similar investment products, namely, life insurance
policies and collective investment schemes, including unit trusts. In addition, there are
separate chapters covering Needs Analysis and Central Provident Fund (CPF) schemes,
which test candidates’ understanding of the process of conducting a proper clients’ needs
analysis as well as their understanding of the CPF and its schemes.
Organisation of the Study Guide
This study guide is divided into 14 chapters, which are devoted to specific topics that
the candidates will need to know in order to pass the CMFAS Module 5 Examination, as
outlined below.
Chapter 1: Provides a brief overview of the roles and objectives of the Monetary
Authority of Singapore, the Singapore Exchange Limited, the Investment
Management Association of Singapore, the Life Insurance Association of
Singapore, the Association of Banks in Singapore and the Association of
Financial Advisers (Singapore).
Chapter 2: Discusses the main concepts and principles underpinning the FAA and the
FAR, in particular, those aspects relevant to Financial Advisers and
Representatives.
Chapter 3: This chapter is a continuation of Chapter 2, and covers the sections of the
FAA relating to the Conduct of Business, Powers of Authority and
Offences.
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Chapter 4: Expounds on the requirements set out under the various Notices issued by
the MAS in relation to the FAA, in particular, FAA Notice Nos: FAA-N16,
FAA-N03 and FAA-N11.
Chapter 5: This chapter is a continuation of Chapter 4, and covers the requirements

set out under FAA Notice Nos: FAA-N02, FAA-N10, FAA-N12, FAA-N13,
FAA-N14, FAA-N15 and FAA-N20.
Chapter 6: Explains the definitions and requirements set out under Notice No: FAA-
N06 and the Guidelines to MAS Notice Notice No: FAA-N06 on
“Prevention Of Money Laundering and Countering The Financing Of
Terrorism”.
Chapter 7: Describes the Notices issued in relation to the FAA, in particular, FAA-N17,
FAA-N18, FAA-N19 and FAA-N21.
Chapter 8: Discusses the requirements and guidelines that an insurer is expected to

observe in respect of the development and pricing of insurance products,
as stated in Notice No: MAS 302, as well as the provisions of Notice No:
MAS 307 governing investment-linked policies.
Chapter 9: Describes the Guidelines and Circular issued in relation to the FAA, in
particular, FAA Guideline Nos: FAA-G01, FSG-G01, FAA-G04, FAA-G05,
FAA-G06, FAA-G07, and the Circular No: CMI 01/2011.
Chapter 10: This chapter is a continuation of Chapter 9, and covers the provisions
under FAA Guideline Nos: FAA-G08, FAA-G09, FAA-G10, FAA-G11 and
FAA-G14.
Chapter 11: Describes the Guidelines and Circular issued in relation to the FAA, in
particular, FAA-G13; FAA-G15; FAA-G16; CMG-G02 and FSG-G02.
Chapter 12: Equips candidates with the essential knowledge relating to the revised
Code on Collective Investment Schemes (CIS).
Chapter 13: Equips candidates with the essential knowledge on the CPF and its
schemes.
Chapter 14: Lays out the concepts and principles relating to conducting a proper needs
analysis in the recommendation of investment products.
This fifth edition incorporates changes to the existing study guide that simplifies and
clarifies key terms and concepts. In addition, Chapter 7 and Chapter 11 include new
content such as updates to the FAA and FAR; changes to the Notices and Guidelines
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issued in relation to the FAA; updates to Notice No: MAS 302 and Notice No: MAS 307;
the revised Code on CIS; as well as changes to the CPF schemes and Income Tax.
While every effort has been made to ensure that the Study Guide materials are accurate
and up-to-date at the time of publishing, some information may become outdated before
the latest version is released. Hence candidates are advised to check the “Version Control
Record” found at the end of this Study Guide to ensure that they have the correct version
of the Study Guide. For examination purposes, the Singapore College of Insurance adopts
the policy of testing only those concepts and topics that are found in the latest version
of the Study Guide.
Please note that the contents of this Study Guide do not constitute legal advice. Please
consult the legal or compliance officer of your company if you need further advice in this
regard.
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ACKNOWLEDGEMENT
For our first edition, we would like to acknowledge the contribution of Mr Josh Toh for
writing the chapters on “Financial Advisers Act and Financial Advisers Regulations”,
“Written Directions” and “Guidelines”.
We also wish to thank the Monetary Authority of Singapore, the Central Provident Fund
Board, Dr Myint Soe, Mr Richard Lai, and Mr Leong Sze Hian for their valuable feedback
and comments for our second edition.
We would also like to record our thanks to the Monetary Authority of Singapore and Mr
Richard Lai for their contributions to the third edition. For the fourth edition, we would
like to extend our deepest appreciation to the Monetary Authority of Singapore for their
constructive suggestions and comments.
For this fifth edition, all changes were updated based on the latest MAS
Notices/Guidelines/Circulars and CPF Schemes.
Karine Kam
Chief Executive
Singapore College of Insurance
April 2020
Copyright reserved by Singapore College of Insurance Limited [Version 1.0] v

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Table Of Contents
Preface i
Acknowledgement v
Chapter 1 The Regulatory Bodies And Associations 1

Chapter Outline
Key Learning Points
1. Introduction
2. Monetary Authority Of Singapore (MAS)
A. Classification of Instruments Issued By The MAS
B. Tenets Of Effective Regulation
3. Singapore Exchange Limited (SGX)
A. Introduction
B. SGX Regulatory Functions
4. Investment Management Association Of Singapore
(IMAS)
A. Objectives Of IMAS
B. Code Of Ethics And Standards Of Professional
Conduct
5. Life Insurance Association Of Singapore (LIA)
A. Vision And Mission Of LIA
6. Association Of Banks In Singapore (ABS)
7. Association Of Financial Advisers (Singapore) – [AFA(S)]
Chapter 2 Financial Advisers Act And Financial Advisers 13

Regulations – Financial Advisers And Representatives
Chapter Outline
Key Learning Points
1. Financial Advisers Act (FAA)
2. Financial Advisers Regulations (FAR)
Contents
3. Principles Of The FAA And FAR
A. Customers’ Interest
B. Consistency
C. Accountability
D. Independence
4. Need For Financial Adviser’s Licence
A. Who Is A Financial Adviser?
B. Exempt Financial Advisers And Their
Representatives
C. Excluded Financial Advisers (First Schedule Of The
FAA)
D. Types Of Financial Advisory Services (Second
Schedule Of The FAA)
E. Products Regulated Under The FAA
F. Excluded Products
5. Application For Grant Of Financial Adviser’s Licence
A. Need For Professional Indemnity Insurance Policy
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Module 5: Rules And Regulations For Financial Advisory Services
B. Grounds For Refusal To Grant Financial Adviser’s

Licence
C. Grounds For Refusal To Grant Financial Adviser’s
Licence Without Opportunity To Be Heard
D. Minimum Financial Requirements
6. Exempt Persons (Third Schedule Of The FAA)
A. Prerequisites To Be Met By Exempt Persons
B. Representation Made By Exempt Persons
C. Definition Of Accredited And Qualified Investors
7. Use Of The Term “Financial Adviser” Or “Life Insurance
Broker”
8. Use Of The Term “Independent”
9. Launch Of Representative Notification Framework (RNF)
A. Applicability Of RNF Regime
B. Public Register Of Representatives
10. Who Are Representatives?
A. Representative To Act For Only One Principal
B. Types Of Representatives
C. Criteria To Be A Representative
D. Acting As Representative
11. Appointed Representative
A. Criteria To Be An Appointed Representative
B. Cessation Of Status Of Appointed Representative
12. Provisional Representative
A. Criteria To Be Appointed As A Provisional
Representative
B. Cessation Of Status Of Provisional Representative
13. Differences Between Appointed Representative And
Provisional Representative
14. Notification Procedure
A. Documents To Be Lodged With The MAS
Contents
B. Entry Into The Public Register

C. Retention Period
D. Undertaking Of Responsibilities For Provisional
Representatives
15. Power Of The MAS To Refuse Entry Or Revoke Or
Suspend Status Of Appointed Or Provisional
Representative
A. Conditions For Refusal To Enter Details In The Public
Register
16. Power Of The MAS To Impose Conditions Or Restrictions
17. False Statements In Relation To Notification Of Appointed
Or Provisional Representative
18. Appeals
Chapter 3 Financial Advisers Act And Financial Advisers 41

Regulations – Conduct Of Business, Powers Of
Authority And Offences
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Table Of Contents
Chapter Outline
Key Learning Points
1. Introduction
2. Obligation To Disclose Product Information To Clients
3. Statements By Licensed Financial Advisers
4. Recommendations By Licensed Financial Advisers
5. Receipt Of Client’s Money Or Property
A. Section 28 Of The FAA
6. Obligation To Furnish Information To The MAS
7. Insurance Broking Premium Accounts
A. Separate Bank Accounts
B. Conditions For Withdrawal
C. Refund Of Loss On Investment
D. Retention Of Interest And Income
8. Negotiation And Placement Of Risk With Unlicensed
Insurers
A. Rationale For The Above Law
9. Representations By Licensed Financial Advisers
A. Proposed Contract Of Insurance
B. Claim Under A Contract Of Insurance
10. Licensed Financial Advisers To Disclose Certain Interests
In Specified Products
A. Disclosure Of Potential And Actual Conflict Of
Interest
B. Defence For Failure To Disclose Conflict Of Interest
C. Penalty For Contravening “Conflict Of Interests”
D. Register Of Interests In Listed Specified Products
11. Unsecured Advances, Unsecured Loans, And Unsecured
Credit Facilities
A. Conditions For Granting Unsecured Advances, Loans
And Credit Facilities
Contents
B. Definition Of Terms Used In Regulation 18 Of The
FAR
12. Approval Of Chief Executive Officer And Director Of
Licensed Financial Adviser
A. Criteria To Be Appointed As Chief Executive Officer
Or Director
B. Duties Of Chief Executive Officer And Director
C. Criteria For Determining If Chief Executive Officer Or
Director Of Licensed Financial Adviser Has Breached
Duties
13. Removal Of Officer Of Licensed Financial Adviser
14. Power Of Authority To Issue Written Directions
15. Prohibition Orders
A. Power Of Authority To Make Prohibition Orders
B. Effect Of Prohibition Orders
C. Variation Or Revocation Of Prohibition Orders
16. Power Of Authority To Publish Information
17. Corporate Offenders And Unincorporated Associations
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18. Offence By Officers

A. Defence On Reasonable Grounds
19. Falsification Of Records By Officers, etc.
Chapter 4 MAS Notices – Part I [Notice Nos: FAA-N16; 59

FAA-N03 & FAA-N11]
Chapter Outline
Key Learning Points
1. Introduction
A. MAS Notices Relating To The FAA
2. Notice On Recommendations On Investment Products
[Notice No: FAA-N16]
A. Introduction
B. Applicability Of Notice No: FAA-N16
C. Circumstances Where Notice No: FAA-N16 Does
Not Apply
D. Representatives Of Financial Advisers
E. Recommendations On Investment Products
F. Requirements On A Financial Adviser Providing
Financial Advisory Services In Relation To Units In A
Collective Investment Scheme, The Units Of Which
Are Excluded Investment Products (“EIP-CIS”)
G. Requirements On A Financial Adviser Providing
Financial Advisory Services In Relation To Units In
An Investment-Linked Policy Sub-Fund, The Units Of
Which Are Excluded Investment Products (“EIP-ILP
sub-fund”)
H. Requirements On Financial Advisers Providing
Financial Advisory Services In Relation To Overseas-
Listed Investment Products
Contents
I. Switching of Designated Investment Products

3. Notice On Information To Clients And Product Information
Disclosure [Notice No: FAA-N03]
A. Applicability Of Notice No: FAA-N03
B. Persons Exempted From Notice No: FAA-N03
C. General Disclosure Principles
D. General Information About The Financial Adviser
And Status Of A Representative
E. Remuneration Of The Financial Adviser
F. Conflicts Of Interest
G. Designated Investment Products
H. Illustration Of Past And Future Performance Of
Designated Investment Products
I. Marketing Materials
4. Notice On Dual Currency Investments
A. Definitions
B. Warnings
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Table Of Contents
C. Guidelines On Structured Deposits

Annexes
Chapter 5 MAS Notices – Part II [Notice Nos: FAA-N02; FAA-N10; 109

FAA-N12; FAA-N13; FAA-N14; FAA-N15 & FAA-N20]
Chapter Outline
Key Learning Points
1. Introduction
2. Notice On Appointment And Use Of Introducers By
Financial Advisers [Notice No: FAA-N02]
A. Definition
B. Requirements For Financial Advisers Appointing
Introducers
3. Notice On Prohibited Representations Made By Persons
Exempted Under Regulation 27(1)(d) Of The Financial
Advisers Regulations (RG 2) [Notice No: FAA-N10]
A. Definitions
B. Prohibited Representations
4. Notice On Entry Requirements Of A Provisional
Representative [Notice No: FAA-N12]
A. Definitions
B. Entry Requirements
C. Validity Period
5. Notice On Minimum Entry And Examination Requirements
For Representatives Of Licensed Financial Advisers And
Exempt Financial Advisers [Notice No: FAA-N13]
6. Notice On Reporting Of Misconduct Of Representatives
By Financial Advisers [Notice No: FAA-N14]
A. Definitions
B. Report Of Misconduct Of Representative
Contents
C. Update On Report Of Misconduct Of Representative
D. Annual Declaration
E. Investigations
F. Disciplinary Action
G. Use Of Information In Report
7. Notice On Cancellation Period For Unlisted Debentures
A. Definitions
B. Applications
C. Sale Of Unlisted Debenture
D. Disclosure Of Cancellation Period
8. Notice On Requirements For The Remuneration
Framework For Representatives And Supervisors
(“Balanced Scorecard Framework”) And Independent
Sales Audit Unit [Notice No: FAA-N20]
Appendices
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Chapter 6 MAS Notice No: FAA-N06 - Prevention Of Money 231

Laundering And Countering The Financing Of
Terrorism – Financial Advisers
Chapter Outline
Key Learning Points
1. Introduction
2. Definitions
3. Underlying Principles
4. Assessing Risks And Applying A Risk-Based Approach
A. Risk Assessment
B. Risk Mitigation
5. New Products, Practices And Technologies
6. Customer Due Diligence (“CDD”)
7. Simplified Customer Due Diligence
8. Enhanced Customer Due Diligence
9. Reliance On Third Parties
10. Record Keeping
11. Personal Data
12. Suspicious Transactions Reporting
13. Internal Policies, Compliance, Audit And Training
14. Guidelines To MAS Notice No: FAA-N06 On Prevention
Of Money Laundering And Countering The Financing Of
Terrorism
Appendices
Chapter 7 MAS Notices – Part III [Notices Nos: FAA-N17; 293

FAA-N18; FAA-N19 & FAA-N21]
Chapter Outline
Key Learning Points
1. Introduction
Contents
2. Notice On Reporting Suspicious Activities & Incidents Of Fraud

3. Notice On Technology Risk Management [Notice No: FAA-N18]
4. Notice on the Distribution of Direct Purchase Insurance Products
[“DPI”] [Notice No: FAA-N19]
5. Notice On Cyber Hygiene [Notice No: FAA-N21]
Appendices
Chapter 8 MAS Notice Nos: MAS 302 AND MAS 307 309
Chapter Outline
Key Learning Points
1. Introduction
2. Notice No: MAS 302 – Product Development And Pricing
A. Part I – Mandatory Requirements
B. Part II – Guidelines
3. Notice No: MAS 307 – Investment-linked Policies (ILPs)
Appendices
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Table Of Contents
Annexes
Chapter 9 MAS Guidelines – Part I [Guideline Nos: FAA-G01; 361

FSG-G01; FAA-G04; FAA-G05; FAA-G06 & FAA-G07]
And Circular No: CMI 01/2011
Chapter Outline
Key Learning Points
1. Introduction
2. Guidelines On Criteria For The Grant Of A Financial
Adviser’s Licence [Guideline No: FAA-G01]
3. Guidelines On Fit And Proper Criteria [Guideline No: FSG-
G01]
A. Fit And Proper Test
4. Circular On Due Diligence Checks And Documentation In
Respect Of The Appointment Of Appointed, Provisional
And Temporary Representatives [Circular No: CMI
01/2011]
5. Guidelines On Standards Of Conduct For Financial
Advisers And Representatives [Guideline No: FAA-G04]
A. Purpose Of The Guidelines
B. Integrity
C. Objectivity
D. Confidentiality
E. Competence
F. Due Care And Diligence
G. Disclosure To Client
H. Know Your Client
I. Conflicts Of Interest
J. Complaints Handling
K. Compliance With Laws
Contents
6. Guidelines On The Use Of The Term “Independent” By
Financial Advisers [Guideline No: FAA-G05]
A. Background Information
B. Conditions To Be Met
C. Commissions And Other Benefits
D. Product Restriction
E. Relationship With A Product Provider
F. Penalty For Breach Of Regulation 21 Of The FAR
G. Application Of The Guidelines
7. Guidelines On Applications For Approval Of Arrangements
Under Paragraph 11 Of The First Schedule To The
Financial Advisers Act [Guideline No: FAA-G06]
A. Applications Of Paragraph 11
B. Assessment Criteria
C. Target Clientele
D. Applications
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8. Guidelines On Exemption For Specialised Units Serving

High Net Worth Individuals Under Section 100(2) Of The
Financial Advisers Act [Guideline No: FAA-G07]
A. Definition Of “High Net Worth Individual”
B. Extent Of The Unit Being Separate And Distinct
C. Criteria Used By The MAS In Assessing The
Applications
D. Conditions That May Be Imposed With The Granting
Of The Exemptions
Appendices
Chapter 10 MAS Guidelines – Part II [Guideline Nos: FAA-G08; 413

FAA-G09; FAA-G10, FAA-G11 & FAA-G14]
Chapter Outline
Key Learning Points
1. Introduction
2. Guidelines On Conduct Of Business For Execution-Related
Advice [Guideline No: FAA-G08]
A. Definition Of “Execution-Related Advice”
B. Recommendations On Capital Markets Products
C. Documentation And Record Keeping
D. Disclosure Of Conflicts Of Interest
E. Disclaimer
3. Guidelines On Structured Deposits [Guideline No: FAA-
G09]
A. Purpose Of These Guidelines
B. Use Of The Term “Structured Deposit”
C. Product Information Disclosure
D. Recommendations On Structured Deposits
E. Training And Competency
Contents
F. Fit And Proper Criteria

G. Segregation Of Activities
H. Requirements Under The Banking Act (Cap.19)
4. Guidelines On Switching Of Designated Investment
Products [Guideline No: FAA-G10]
A. General Obligations
B. Disclosure Requirements
C. Monitoring Of Switching Of Designated Investment
Products
D. Remuneration Structure
5. Guidelines On Fair Dealing - Board And Senior
Management Responsibilities For Delivering Fair Dealing
Outcomes To Customers [Guideline No: FAA-G11]
A. Fair Dealing Outcome One
B. Fair Dealing Outcome Two
C. Fair Dealing Outcome Three
D. Fair Dealing Outcome Four
E. Fair Dealing Outcome Five
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Table Of Contents
6. Guidelines On The Remuneration Framework For

Representatives And Supervisors (“Balanced Scorecard
Framework”), Reference Checks And Pre-Transaction
Checks [Guideline No: FAA-G14]
B. Definition
C. Adoption Of Higher Standards By Financial Advisers
D. Guidance On Post-Transaction Checks Carried Out
By The ISA Unit
E. Classification Of Infractions
F. Representatives Assigned A Balanced Scorecard
Grade Of “E” And Supervisors Assigned A Balanced
Scorecard Grade Of “Unsatisfactory” Under The
Balanced Scorecard Framework
G. Reference Checks On Representatives And
Supervisors
H. Recruitment Of Representatives Assigned A
Balanced Scorecard Grade Of “E” And Supervisors
Assigned A Balanced Scorecard Grade Of
“Unsatisfactory” Under The Balanced Scorecard
Framework
I. Pre-Transaction Checks By Supervisors
Annexes
Chapter 11 MAS Guidelines – Part III [Guidelines Nos: 467

FAA-G13; FAA-G15; FAA-G16; CMG-G02 & FSG-G02]
Chapter Outline
Key Learning Points
1. Introduction
2. Guidelines On Addressing Conflicts Of Interest Arising From
Contents
Issuing Or Promulgating Research Analyses Or Research Reports
[Guideline No: FAA-G13]
3. Guidelines On The Online Distribution Of Life Policies With No
Advice [Guideline No: FAA-G15]
4. Guidelines On Application For Approval Of Arrangements Under
Regulation 32CB Of The Financial Advisers Regulations (RG2)
5. Guidelines On Provision Of Digital Advisory Services [Guideline
No: CMG-G02]
6. Guidelines On Standards Of Conduct For Marketing And
Distribution Activities By Financial Institutions [Guideline No:
FSG-G02]
Appendices
Chapter 12 Revised Code On Collective Investment Schemes 519

Chapter Outline
Key Learning Points
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1. Introduction
2. Key Changes Introduced
A. The Revised CIS Code
3. The Manager
A. Functions And Responsibilities
B. Operational Obligations
C. Delegation
D. Investments in Other Schemes
E. Payments
F. Performance Fees
4. The Scheme
A. Name Of Scheme
B. Prohibited Activities
C. Limited Liability
D. Investment: Core Requirements
E. Advertisements
5. Accounts And Reports
A. Accounts
B. Reports
6. Dealing And Valuation
A. Dealing In Units
B. Suspension Of Dealings
C. Resumption Of Dealings
D. Valuation
E. Valuation Errors And Compensation
7. Breaches
A. Rectification
B. Notification
8. Recognised Schemes And Authorised Schemes Which
Feed Into An Underlying Scheme
A. Disclosure in Marketing Material
Contents
B. Ongoing Notification
9. Core Investment Requirements For All Authorised
Schemes
A. Permissible Investments
B. Spread Of Investments
C. Use of Financial Derivatives
D. Counterparty Of Financial Derivatives
E. Efficient Portfolio Management Techniques
F. Borrowings
G. Disclosure Requirements
10. Appendix 3 of the Code – Hedge Funds
11. Appendix 4 of the Code – Capital Guaranteed Funds
Chapter 13 Central Provident Fund (CPF) 579

Chapter Outline
Key Learning Points
1. Central Provident Fund (CPF)
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Table Of Contents
A. Background
B. CPF Contributions
C. CPF Accounts
2. Five Pillars Of Financial Security Under The CPF
A. Retirement Adequacy
B. Healthcare Financing
C. Property Ownership
D. Asset Enhancement
E. Family Protection
3. Other Schemes Under The CPF
A. Education Scheme
B. Workfare Income Supplement (WIS) Scheme
C. Workfare Training Support (WTS) Scheme
D. Supplementary Retirement Scheme (SRS)
Appendix
Chapter 14 Needs Analysis 603

Chapter Outline
Key Learning Points
1. Introduction
2. Benefits Of Conducting Needs Analysis
3. Stages Of Needs Analysis
4. Stage One – Establish And Define Client-Representative
Relationship
5. Stage Two – Gather Data, Including Goals
A. Client’s Financial Needs
B. Main Sources Of Money To Meet The Client’s Needs
C. Fact-Finding
6. Stage Three – Analyse And Evaluate Financial Status
A. Identify And Quantify Client’s Needs
Contents
7. Stage Four – Develop And Present Recommendations
A. Product Recommendations
8. Stage Five – Implement Recommendations
A. Types Of Products Available To Meet Client’s Needs
B. Presenting Your Recommendations
9. Stage Six – Review With Client Periodically
A. Benefits Of Periodic Client Review
Appendix
VERSION CONTROL RECORD
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Contents Module 5: Rules And Regulations For Financial Advisory Services
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1. The Regulatory Bodies And Associations
CHAPTER 1
THE REGULATORY BODIES AND ASSOCIATIONS
CHAPTER OUTLINE
1. Introduction
2. Monetary Authority Of Singapore (MAS)
3. Singapore Exchange Limited (SGX)
4. Investment Management Association Of Singapore (IMAS)
5. Life Insurance Association Of Singapore (LIA)
6. Association Of Banks In Singapore (ABS)
7. Association Of Financial Advisers (Singapore) – [AFA(S)]
KEY LEARNING POINTS
After reading this chapter, you should be able to:

 describe the roles, mission and principal objectives of the MAS
 understand the roles and regulatory functions of SGX
 know the objectives of IMAS and its Code of Ethics and Standards of Professional
Conduct
 know the vision and mission of LIA, as well as the values under pinning LIA and its
members
 know the roles of ABS and [AFA(S)]
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1. INTRODUCTION
1.1 In this chapter, we will provide an overview of the various regulatory bodies and
trade associations in the financial advisory services arena.
2. MONETARY AUTHORITY OF SINGAPORE (MAS)
2.1 The MAS was formed on 1 January 1971 after Parliament passed the Monetary
Authority of Singapore (MAS) Act in 1970. The Act gives the MAS the authority
to regulate all elements of monetary, banking and financial aspects of Singapore,
with the purpose of centralising all the various monetary functions associated
with a central bank performed by several government departments and agencies
under one single control.
2.2 The roles of the MAS have been expanding since its formation. In April 1977, the
Government decided to bring the regulation of the insurance industry under the
ambit of the MAS. The regulatory functions under the Securities Industry Act
(1973) were also transferred to the MAS in September 1984. From 1 October
2002, the Board of Commissioners of Currency, Singapore was fully integrated
with the MAS which took over the responsibility of currency issuance.
2.3 The mission of the MAS is to sustain non-inflationary economic growth and
promote a sound and progressive financial services sector.
2.4 Its principal objectives are:

(a) to act as the central bank of Singapore, including the conduct of monetary
policy, the issuance of currency, the oversight of payment systems, and
serving as the banker to and financial agent of the Government;
(b) to conduct integrated supervision of financial services and financial stability
surveillance;
(c) to manage the official foreign reserves of Singapore; and
(d) to develop Singapore as an international financial centre.
A. Classification Of Instruments Issued By The MAS
2.5 As the regulator of the financial services industry, various instruments under the
Acts are issued and administered by the MAS. The following sections show the
classification of instruments adopted by the MAS.
2 Copyright reserved by Singapore College of Insurance Limited [Version 1.0]

A1. Acts
2.6 The Acts contain statutory laws under the purview of the MAS, which are passed
by Parliament. These have the force of law and are published in the Government
Gazette. Examples of such Acts that the MAS are responsible in administering
are:
 Banking Act (Cap. 19);

 Business Trusts Act (Cap. 31A);
 Deposit Insurance and Policy Owners’ Protection Schemes Act 2011;
 Exchange (Demutualisation and Mergers) Act (Cap. 99B);
 Finance Companies Act (Cap.108);
 Financial Advisers Act (Cap. 110);
 Government Securities Act (Cap. 121A);
 Insurance Act (Cap. 142);
 Monetary Authority of Singapore Act (Cap.186);
 Money-Changing and Remittance Businesses Act (Cap.187);
 Securities and Futures Act (Cap. 289); and
 Trust Companies Act (Cap. 336).
A2. Subsidiary Legislation (which includes regulations, orders, declarations and

notifications)
2.7 Subsidiary legislation spells out in greater detail the requirements that financial
institutions or other specified persons (e.g. a financial adviser's representative)
have to adhere to. Subsidiary legislation has the force of law and may specify
that a contravention is a criminal offence.
A3. Directions
2.8 Directions ensure compliance by explaining specific instructions in detail to

financial institutions or other specified persons. They have legal effect, meaning
that the MAS can specify whether a contravention of a direction is a criminal
offence.
2.9 Directions consist of the following:

 directives which primarily impose legally binding requirements on an
individual financial institution or a specified person; and
 notices which primarily impose legally binding requirements on a specified
class of financial institutions or persons.
A4. Guidelines
2.10 Guidelines set out principles or "best practice standards" that govern the conduct
of specified institutions or persons. While they do not have any legal effect,
specified institutions or persons are encouraged to observe the spirit of these
guidelines.

A5. Codes
2.11 Codes set out a system of rules governing the conduct of certain specified
activities. Codes are non-statutory and do not have the force of law. A failure to
abide by a code does not in itself amount to a criminal offence, but may have
certain consequences.
A6. Practice Notes
2.12 Practice Notes are meant to guide specified institutions or persons on

administrative procedures relating to, such as licensing, reporting and compliance
matters. They do not have any legal effect, unless a procedure stated in the
practice note is also required by an Act or regulation.
A7. Circulars
2.13 Circulars are documents which are sent to specified persons for their information
or are published on the MAS website for public information. Circulars have no
legal effect.
A8. Policy Statements
2.14 Policy statements outline broadly the major policies of the MAS.
B. Tenets Of Effective Regulation1
2.15 On 8 June 2010, the MAS issued a monograph on Tenets of Effective Regulation
to communicate the MAS’ approach to developing effective regulation. The
Tenets of Effective Regulation guide the design and formulation of regulation, and
explains the MAS’ balanced regulatory approach, which continues to be relevant
and effective in achieving the outcome of a sound and progressive financial
services sector. The six Tenets are:
(a) Tenet 1: “Outcome Focused” commits the MAS to uphold sound regulation
of a high standard, but also acknowledges that there is no one way to do
this. Good regulatory outcomes can sometimes be best achieved by
prescriptive and clear rules, and at other times, by laying down broad
principles and placing responsibility on financial institutions to deliver the
regulatory outcomes. There are also different circumstances when one-size-
fits-all rules, or differentiated rules are more appropriate. Sometimes,
regulation is aimed specifically at impacting market practices in a significant
way and even changing them. At other times, the impact of regulation is
more appropriately calibrated and mitigated. An outcome focused approach
calls on the MAS to give consideration to all of the six Tenets, and to exercise
appropriate judgement as to how and in what measure that the Tenets should
be applied in the particular circumstances of each new regulation, so that
good regulatory outcomes can be achieved. Tenet 1 flows from all four of
1
Adapted from: https://www.mas.gov.sg/

the broad principles of financial supervision – “Risk-Focused”, “Stakeholder-

Reliant”, “Disclosure-Based” and “Supportive of Enterprise”.
(b) Tenet 2: “Shared Responsibility” describes the MAS’ belief that regulation
alone is insufficient, and that in many instances, regulatory outcomes can be
more effectively achieved with the MAS, financial institutions, investors and
consumers, each taking on specific responsibilities and shared ownership of
supervisory objectives and outcomes. In addition to the MAS’ prescription of
specific behaviours through regulation, reliance and responsibility can be
placed, where appropriate on financial institutions individually, their boards
and senior management, through their governance, and on the industry
collectively, to address supervisory concerns directly. Where appropriate and
effective, the MAS will also consider, as an alternative to regulating an
activity, placing reliance on disclosure of timely and adequate information, so
that informed consumers, investors and other stakeholders may exercise
choice and market discipline.
The design of regulation should, wherever appropriate, provide for rather than
take away from financial institutions and stakeholders’ responsibility and
incentives to contribute towards regulatory outcomes. Tenet 2 flows from
the principles of “Disclosure Based” and “Stakeholder-Reliant”.
(c) Tenet 3: “Risk Appropriate”. Regulation should set standard, baseline
requirements of broad application and provide for the exercise of supervisory
judgement to set higher standards or permit exemptions when merited by the
particular circumstances of a financial institution. For example, more
demanding regulation may be appropriate for systemically important financial
institutions in which failure can cause widespread disruption to the financial
system compared to a small institution in the same licence category with
simple operations. Tenet 3 flows from the principle of “Risk-Focused”.
(d) Tenet 4: “Responsive to Change and Cycles”. Regulation should be updated
expeditiously as industry and market practices change and as new risks
emerge. Regulation should also require the pre-emptive build-up of prudential
buffers in financial institutions to weather a downturn or stress event, and to
effectively address macro-prudential risks. Tenet 4 flows from the principle
of “Risk-Focused”.
(e) Tenet 5: “Impact Sensitive”. The costs and impact of regulation should be
considered alongside the benefits and desired outcomes of regulation, so that
the costs are not disproportionate to the benefits. Regulation should be
targeted clearly at specific and material risks to the objectives of financial
supervision. The design of regulation should take into account market
realities, so that unintended and unnecessary disruption to market practices
is minimised. Even in instances where regulation is specifically aimed at
changing market practices, care will be taken to avoid placing undue burden.
Tenet 5 flows from the principles of “Risk-Focused” and “Supportive of
Enterprise”.
(f) Tenet 6: “Clear and Consistent”. Regulation should be clear, so that financial
institutions have reasonable certainty as to their legal obligations. Regulation
should not be subject to frequent and sudden changes that cause uncertainty
and disruption to business and market practices. Where appropriate, like

activities conducted by regulated institutions from different sectors should

be subject to similar and consistent regulation. Tenet 6 flows from the
principle of “Supportive of Enterprise”.
2.16 In summary, the Tenets are intended to be generally applicable to all areas of the
MAS’ regulatory development work. The regulatory framework will be targeted
at and sensitive to the risks that it is aimed at, and more responsive to changes
and risks in the industry. It will also be sufficiently flexible to set requirements
that will commensurate with the risk profile and unique circumstances of
particular financial institutions.
2.17 Rules will be clear and not subject to frequent disruptive change, as well as
consistently applied to like activities conducted across sectors.
3. SINGAPORE EXCHANGE LIMITED (SGX)
A. Introduction
3.1 SGX is the first demutualised, integrated securities and derivatives exchange in
the Asia Pacific. Formed on 1 December 1999 by the merger of the Stock
Exchange of Singapore (SES) and the Singapore International Monetary Exchange
Limited (SIMEX), the SGX has since built up a presence and prominence that
extends beyond the borders of Singapore.
3.2 SGX owns and operates the only integrated securities exchange (SGX Securities
Trading Limited or SGX-ST) and derivatives exchange (SGX Derivatives Trading
Limited or SGX-DT) in Singapore and their related clearing houses.
3.3 SGX-ST operates the first fully electronic and floorless exchange in Asia. Besides
facilitating the listing of leading companies in Singapore, it has also attracted
listings of other companies from other countries.
3.4 SGX-DT over the years has expanded its range of international products and
trading activities, making it one of the leading derivatives exchanges in Asia. It
has also developed a reputation for being committed to an innovative and pro-
market approach.
3.5 SGX-DT offers the widest range of Asian derivatives in the world and also the
widest range of international derivatives in the Asia Pacific. These instruments
include futures and options on interest rates, stock indices, energy and
commodities.
3.6 Together, the securities and derivatives exchanges serve a wide array of
international and domestic investors and end users, including many of the world’s
largest financial institutions. They are also among the most innovative exchanges
in the world in technological and new product development.

3.7 On 23 November 2000, SGX became the first exchange in the Asia Pacific to be
listed via a public offer and a private placement. Listed on the SGX itself, the
SGX stock is a component of benchmark indices, such as the MSCI Singapore
Free Index and the Straits Times Index.
3.8 Aside from equity investments (stocks) and derivatives, other classes of products
that can be traded through the SGX include Exchange Traded Funds (ETFs), Real
Estate Investment Trust (REITs), Global Depository Receipts (GDRs, which are
certificates representing an issuer’s underlying shares), Company Warrants,
Structured Warrants, Certificates (which are issuer-led structured financial
products that offer investment opportunities, based on different market themes
and expectations), Extended Settlements, and Equity Index Futures / Options.
B. SGX Regulatory Functions
3.9 The SGX regulatory functions include:

(a) Issuer Regulation – to review listings applications, monitor ongoing
compliance with listing requirements, and provide support on regulatory
issues to listed companies;
(b) Member Supervision – to process membership applications and permits,
monitor members' compliance with the SGX rules and provide support on
regulatory issues to members, and investigate complaints concerning
members;
(c) Market Surveillance – to maintain surveillance of all trading activities;
(d) Enforcement – to investigate suspected infractions and complaints, and
perform necessary disciplinary follow-up;
(e) Risk Management – to monitor and manage the SGX's counterparty risk
exposure to clearing members for the SGX trades;
(f) Catalist Regulation – to promote a high standard of disclosure and corporate
governance by listed companies; and
(g) Clearing Risk – to develop and enhance the risk frameworks for product and
service offerings in the SGX.
3.10 In its surveillance function, SGX monitors trading activities of the securities and
derivatives markets to detect unusual trading activities, and prohibited trading
practices or conduct, including insider trading and market manipulation.
3.11 In its enforcement function, SGX investigates alleged misconduct by members,

their directors, employees and trading representatives. Where the investigation
reveals a possible breach of the SGX rules or bye-laws, disciplinary action may
be taken against the offender. SGX initiates disciplinary actions before a
disciplinary committee, which may reprimand, fine, suspend and/or expel a
member or trading representative. Where the matter also involves a violation of
the law, the matter will be referred to the relevant authorities for further action.
3.12 In its regulation function, SGX conducts annual on-site inspections of its members
to ensure that the rules and regulations relating to trading in securities and

derivatives are complied with, and that comprehensive internal controls are in
place. SGX also monitors the financial health of its members to ensure that they
have adequate capital for their operations. Members must file financial reports
with SGX periodically.
3.13 Listed companies are required to observe the SGX-ST listing rules, which are
designed to promote a high standard of disclosure and corporate governance by
listed companies. SGX monitors compliance with the listing rules. The listing rules
are reviewed periodically to ensure that they meet the changing needs of the
market and reflect international best practices.
3.14 To ensure adequate and timely disclosure of information, SGX monitors news
reports by the media and announcements, financial results and annual reports
issued by listed companies. Other regulatory activities include reviewing new and
additional listing applications to ensure compliance, reviewing prospectuses,
offering memoranda and shareholder circulars for adequacy of disclosure,
providing guidance to prospective or listed companies, and dealing with other
matters concerning the listing rules.
3.15 In its risk management function, the SGX securities and derivatives clearing
houses guarantee the contract performance of all trades done on the respective
exchanges (SGX-ST or SGX-DT) which are cleared through the clearing members.
This allows the clearing members to provide assurance of contract performance
to the trading members which in turn provide assurance to their customers.
3.16 In addition, SGX monitors members' risk exposure, collect collateral as

appropriate; and perform stress tests to ensure that the clearing funds could meet
their obligations should there be a default of a clearing member.
3.17 In its catalist regulation function, the SGX reviews and approves Sponsor and
Registered Professional applications, and monitors their continuing obligations
under Catalist rules.
3.18 Sponsors and Registered Professionals are required to maintain adequate systems
and resources to discharge their obligations and act with due care in advising
Catalist issuers on compliance with the listing rules.
3.19 In its clearing risk function, the SGX consults business units, external parties and
the regulator closely for greater assurance that the risk framework is effective,
relevant and robust.
3.20 As collateralization and adequate financial resources are necessary to safeguard

the clearing system effectively, the clearing risk department is responsible for
developing and implementing the margin framework. It also reviews and enhances
the clearing fund structures to support the growth of clearing activities with
optimal resources.

4. INVESTMENT MANAGEMENT ASSOCIATION OF SINGAPORE (IMAS)
4.1 The Investment Management Association of Singapore (IMAS) was registered as

a society in Singapore on 22 September 1997.
4.2 It is a representative body of investment managers spearheading the development

and growth of the industry in Singapore.
A. Objectives Of IMAS
4.3 The main objectives of IMAS are to:

(a) promote professionalism and exemplary practice among its members in their
conduct of the investment management business;
(b) provide a forum for its members to discuss issues or matters relating to the
investment management industry;
(c) represent its members collectively in discussions with, or assist any member
to make any representation or recommendation to, any of its government,
government representative, supervisory authority, whether local or foreign,
which are concerned with the investment management industry;
(d) promote the education of the investing public on investments and the
investment management industry;
(e) improve professionalism and standards of research and fund management
expertise in Singapore; and
(f) promote the investment and fund management industry.
B. Code Of Ethics And Standards Of Professional Conduct
4.4 In keeping with its objective to foster high standards of professionalism among
practitioners, IMAS has drawn up the Code of Ethics and Standards of
Professional Conduct.
4.5 IMAS believes that the Code of Ethics and Standards of Professional Conduct are
necessary to enhance professionalism of the fund management industry, as well
as to reinforce investors’ protection. In this respect, members of IMAS are
therefore required to comply with the Code of Ethics and Standards of
Professional Conduct, and are encouraged to influence the industry to achieve
even higher standards of professionalism.
B1. IMAS Code of Ethics

(a) IMAS members shall conduct themselves with integrity and professionalism
and act in an ethical manner in all dealings with the public, clients, employers,
employees, regulators and fellow members;
(b) IMAS members shall act with competence and should strive to maintain and
improve their competence and that of others in the profession; and

(c) IMAS members shall exercise due diligence and professional judgement with
proper care in the conduct of their business.
4.6 The IMAS Standards of Professional Conduct cover the following areas:
(a) investment manager;
(b) business conduct;
(c) client relations; and
(d) investment conduct.
5. LIFE INSURANCE ASSOCIATION OF SINGAPORE (LIA)
5.1 Established in 1962, the Life Insurance Association, Singapore (LIA) is the not-
for-profit trade body of life insurance product providers and life reinsurance
providers based in Singapore, and licensed by the Monetary Authority of
Singapore.
A. Vision And Mission Of LIA
5.2 The vision of LIA member companies is to provide individuals with peace of mind
and to promote a society where every person is prepared for life’s changing cycles
and for those situations unforeseen.
5.3 They are committed to being a progressive life insurance industry by collectively
enhancing consumer understanding, promoting industry best practices, and
through the association fostering a spirit of collaboration and mutual respect with
government and business leaders.
A1. Values Underpinning LIA And Its Members

(a) Unified in their resolve to deliver innovative solutions where every individual’s
needs are best met;
(b) Professional in the way they conduct themselves and in the counsel they
give;
(c) Ethical in ensuring policy owners’ interests are managed with utmost
integrity;
(d) Fair in how they strive to provide favourable outcomes to both their policy
owners and shareholders;
(e) Open & Honest in all that they do to build an environment of trust and
transparency; and
(f) Proactive in the steps that they take to give their people the skills and
knowledge to provide sound solutions at all times.

6. ASSOCIATION OF BANKS IN SINGAPORE (ABS)
6.1 The Association of Banks in Singapore (ABS) plays an active role in promoting
and representing the interests of the banking community in Singapore. It also
works closely with the Monetary Authority of Singapore and other government
bodies in supporting their role, in developing and maintaining a sound financial
system in Singapore.
6.2 Formed in 1973, ABS has over the many years, established standards of good
practice through benchmarking and setting guidelines to enhance the operational
effectiveness of banks in Singapore. It also works with various bodies on projects
of mutual benefit to face the challenges of the financial and banking community
in Singapore.
6.3 Further information on ABS is available on its website at: www.abs.org.sg
7. ASSOCIATION OF FINANCIAL ADVISERS (SINGAPORE) – [AFA(S)]
7.1 Formed in 2001, the Association of Financial Advisers (Singapore) – [AFA(S)] is

a trade association representing Financial Advisers in Singapore. The member
firms contribute the majority of businesses done by all authorised representatives
associated with Financial Advisers in Singapore. AFA(S) was formed primarily to
represent licensed Financial Advisers that provide advice on and engage in the
sale of Financial Products (Exempt Financial Advisers are Associate members); to
provide a forum for its members, to develop opinions, recommendations and
educational programmes, which contribute to the further development of the
financial services industry for the benefit of the Singapore public.


2. Financial Advisers Act And Financial Advisers Regulations - Financial Advisers And Representatives
CHAPTER 2
FINANCIAL ADVISERS ACT AND FINANCIAL ADVISERS REGULATIONS – FINANCIAL
ADVISERS AND REPRESENTATIVES
CHAPTER OUTLINE
1. Financial Advisers Act (FAA)

2. Financial Advisers Regulations (FAR)
3. Principles Of The FAA And FAR
4. Need For Financial Adviser’s Licence
5. Application For Grant Of Financial Adviser’s Licence
6. Exempt Persons (Third Schedule Of The FAA)
7. Use Of The Term “Financial Adviser” Or “Life Insurance Broker”
8. Use Of The Term “Independent”
9. Launch Of Representative Notification Framework (RNF)
10. Who Are Representatives?
11. Appointed Representative
12. Provisional Representative
13. Differences Between Appointed Representative And Provisional Representative
14. Notification Procedure
15. Power Of The MAS To Refuse Entry Or Revoke Or Suspend Status Of Appointed Or
Provisional Representative
16. Power Of The MAS To Impose Conditions Or Restrictions
17. False Statements In Relation To Notification Of Appointed Or Provisional
Representative
18. Appeals
KEY LEARNING POINTS

 understand the principles and requirements of the FAA and the FAR, including the:
- financial adviser’s licence
- exempt persons
- use of the terms “financial adviser”, “life insurance broker” and “independent”
- Representative Notification Framework (RNF)
- representatives
- notification procedure
- power of the MAS
- penalties for false statements
- appeals

1. FINANCIAL ADVISERS ACT (FAA)
1.2 On 1 October 2002, a new legislation known as the Financial Advisers Act (Cap.
110) came into operation to regulate the sale of investment products in
Singapore. The FAA consolidates the previous regulatory regimes governing the
provision of financial advisory services in respect of securities, futures and life
policies, which were contained in three different Acts, namely, Securities Industry
Act (“SIA”) (Cap. 289), Futures Trading Act (“FTA”) (Cap. 116) and Insurance
Intermediaries Act (Cap. 142A), into a single piece of legislation. This has
provided a consistent set of requirements and regulations for market
intermediaries engaging in similar activities across investment products.
1.3 The FAA governs financial advisory activities in respect of investment products
and the distribution or marketing of specific functionally similar investment
products, namely life insurance policies and collective investment schemes,
including unit trusts. It also governs the business conduct of persons providing
financial advisory services.
1.4 The FAA has gone through several phases of reviews and amendments, so as to
keep updated on the changes in the financial environment and the changing needs
of the consumers. The latest amendments to the FAA (which can be found on
the MAS website) were made to enhance MAS’ supervisory oversight of capital
market services and financial advisers’ licence holders; and to further enhance
the responsiveness of MAS’ regulatory framework to market innovation.
1.5 In this study guide, we will cover highlights of the FAA and its subsidiary
legislation. Financial Advisers and their representatives are advised to familiarise
themselves with the entire legislation, a copy of which is available on the MAS
website at: www.mas.gov.sg In this chapter, we will cover Parts I and II of the
FAA and related regulations, and the rest of the Parts to the FAA in the next
chapter.
2. FINANCIAL ADVISERS REGULATIONS (FAR)
2.1 On 1 October 2002, the Financial Advisers Regulations (“FAR”) came into effect
as a subsidiary legislation. It is prescribed by the MAS to give effect to the
provisions of the FAA and sets out the rules on the application of the FAA. It
provides for, among other things, exemptions from the requirements relating to
licensing, approval or registration requirements, the application of the provisions
under the FAA, and the revocation or variation of any condition or restriction
under the FAA.
2.2 The MAS has also issued the Financial Advisers (Amendment) Regulations to
amend the regulations in the existing FAR. As these amendments issued

frequently, it is recommended to visit the MAS website for the latest

amendments: http://www.mas.gov.sg
3. PRINCIPLES OF THE FAA AND FAR
3.2 The principles underpinning the FAA and the FAR will be discussed in the
following subsections.
A. Customers’ Interest
3.3 Financial Advisers must first and foremost, give due regard to the interests of the
customers. The provision of financial advice must be conducted in a fair,
professional and ethical manner. One practical application of this principle is that
financial advisers are required to have a reasonable basis for their
recommendations. This is to ensure that due consideration has been given to the
person’s investment objectives, financial situation and particular needs.
3.4 The first element under this concept is the “Know Your Client” requirement in
respect of his financial objectives, risk tolerance, employment status, financial
situation, current investment portfolio and number of dependants. Subsequently,
in conducting a Needs Analysis process, a financial adviser representative should
analyse the information provided by the client, and identify appropriate
investment products for the client. Proper documentation and record keeping of
client information and recommendations should underpin this process to meet the
objective of providing good advice to the customers.
B. Consistency
3.5 The FAA is an integrated regulatory framework. Its scope cuts across a number
of financial services industries involved in the provision of financial advice relating
to investment products. The concept of consistency presents itself in at least
two ways. Firstly, consistency must apply to processes for the same product.
This means for the same investment product, such as life insurance, advisers
from different distribution channels, would be subject to the same rules and
standards. Secondly, consistency would apply to similar products. The sale of
functionally similar products, such as single premium investment-linked policies
and unit trusts, would be subject to similar rules and standards.
C. Accountability
3.6 The principle of accountability is essential to ensure that there is a higher-level

entity or person who would be accountable for the professional and ethical
conduct of a representative of the financial adviser. This principle is captured in
the “Representative To Act For Only One Principal” rule under the FAA. Each
financial adviser representative can represent only one principal. Hence, if a

person is a tied agent, he cannot be a licensed financial adviser representative at

the same time. The principal is responsible for developing, supervising and
monitoring the conduct of its representatives at all times, including aspects of
market conduct and competence. This is to ensure that there is absolute clarity
to the investors as to the status of the financial adviser representative. In this
way, consumers will understand who will be accountable for his professional
behaviour as a financial adviser representative.
R
D. Independence
3.7 The concept of independence has been considered by many to be an important

condition for customer interests. However, experience from other established
markets has shown that this has not been borne out. Therefore, it has been
considered more important that representatives of financial advisers put
customers’ interests at the forefront by giving good objective advice and be
guided by the concept of reasonable basis in providing advice. Consequently, the
principles and guidelines on the determination of “independent” have been laid
down in Regulation 21 of the FAR and the “Guidelines On The Use Of The Term
“Independent” By Financial Advisers” [Guideline No: FAA-G05].
FINANCIAL ADVISERS ACT (FAA) AND FINANCIAL ADVISERS REGULATIONS (FAR)
4. NEED FOR FINANCIAL ADVISER’S LICENCE
4.1 Under Section 6(1) of the FAA, no person shall act as a financial adviser in
Singapore in respect of any financial advisory service, unless he is authorised to
do so in respect of that financial advisory service by a financial adviser’s licence,
or is an exempt financial adviser. Please refer to Section 4.2 of this chapter for
details on exempt financial advisers.
4.2 Under Section 22(1) of the FAA, no person shall hold himself out to be a financial
adviser unless he is a licensed financial adviser, an exempt financial adviser or a
person specified in the First Schedule.
4.3 In the next few sections of this chapter, we will further explain:
(a) who is a financial adviser (FA);
(b) who is an exempt financial adviser; and
(c) who is an excluded financial adviser under the FAA.
4.4 We will then list the types of financial advisory services regulated under the FAA.
A. Who Is A Financial Adviser?
4.5 Under Section 2(1) of the FAA, a “financial adviser” means a person who carries
on a business of providing any financial advisory service, but does not include
any person specified in the First Schedule.
4.6 “Person” mentioned above refers to a corporation and not an individual.

B. Exempt Financial Advisers And Their Representatives
4.7 Section 23(1) of the FAA provides that the following persons shall be exempted
from holding a financial adviser’s licence to act as a financial adviser in Singapore
in respect of any financial advisory service:
(a) A bank licensed under the Banking Act (Cap. 19);
(b) A merchant bank approved as a financial institution and approved to carry on
a business of providing any financial advisory service under the Monetary
Authority of Singapore Act (Cap. 186);
(c) A company or co-operative society licensed under the Insurance Act (Cap.
142);
(d) A holder of a capital markets services licence under the Securities and Futures
Act (Cap. 289);
(e) A finance company which has been granted an exemption from Section 25(2)
of the Finance Companies Act (Cap. 108) to carry on a business of providing
any financial advisory service;
(f) an approved exchange, a recognised market operator, or an approved holding
company, in respect of the provision of any financial advisory service that is
solely incidental to its operation of an organised market, or to its performance
as an approved holding company, as the case may be; and
(g) such other persons or classes of persons as may be prescribed.
C. Excluded Financial Advisers (First Schedule Of The FAA)
4.8 Under the First Schedule of the FAA, the following persons are defined as
“excluded financial advisers” and do not fall within the definition of “financial
adviser” under the FAA:
(a) (i) Any advocate and solicitor, Singapore law practice, Joint Law Venture,
Formal Law Alliance or Qualifying Foreign Law Practice, which is
approved or registered under the Legal Profession Act (Cap 161); or
(ii) any public accountant who is registered under the Accountants Act (Cap.
2), or accounting corporation which is approved under that Act,
whose carrying on of the business of providing any financial advisory service
is solely incidental to its legal or accounting practice, as the case may be.
(b) Any company licensed under the Trust Companies Act (Cap. 336) whose
carrying on of the business of providing any financial advisory services is
solely incidental to its carrying on of the business for which it is licensed
under that Act.
(c) Any person who is a proprietor of a newspaper and holder of a permit under
the Newspaper and Printing Presses Act (Cap. 206), where:
(i) the newspaper is distributed generally to the public in Singapore;
(ii) any advice given, or analysis or report issued or promulgated, is given,
issued or promulgated only through that newspaper;
(iii) that person receives no commission or other consideration, apart from any
fee received from subscription to or purchase of the newspaper, for giving
the advice, or for issuing or promulgating the analysis or report; and

(iv) the advice is given, or the analysis or report is issued or promulgated, solely
as incidental to the conduct of that person’s business as a newspaper
proprietor.
(d) Any person who owns operates or provides an information service through
an electronic, or a broadcasting or telecommunications medium, where:
(i) the service is generally available to the public in Singapore;
(ii) any advice given, or analysis or report issued or promulgated, is given,
issued or promulgated only through that service;
(iii) that person receives no commission or other consideration, apart from any
fee received from subscription to the service, for giving the advice, or for
issuing or promulgating the analysis or report; and
(iv) the advice is given, or the analysis or report is issued or promulgated, solely
as incidental to that person’s ownership, operation or provision of that
service.
(e) Any person who provides credit rating services, where any analysis or report
issued or promulgated by that person:
(i) is issued or promulgated solely as incidental to the conduct of that person’s
business of providing credit rating services; and
(ii) does not contain any specific recommendation with respect to the
acquiring of, disposing of, subscribing for, or underwriting of, any capital
markets products.
(f) Any public statutory corporation established under any Act in Singapore.
(g) Any approved trustee under Division 2 of Part XIII of the Securities and
Futures Act (Cap. 289).
(h) The Official Assignee in exercising his powers under the Bankruptcy Act
(Cap. 20).
(i) The Public Trustee in exercising his powers under the Public Trustee Act
(Cap. 260).
(j) Any person acting in relation to a company as its liquidator, provisional
liquidator, receiver, receiver and manager, or judicial manager.
(k) Any foreign company (within the meaning of Section 4(1) of the Companies
Act (Cap. 50) whose provision of any financial advisory service is effected
under an arrangement between the foreign company (on the one hand) and
its related corporation which is licensed under the FAA or exempt under
Section 23 of the FAA [other than subsection (1)(ea) and (f)] (on the other
hand), where such arrangement is approved by the MAS.
D. Types Of Financial Advisory Services (Second Schedule Of The FAA)
4.9 The types of financial advisory services regulated under the FAA are as follows:
(a) Advising others, either directly or through publications or writings, and
whether in electronic, print or other form, concerning any investment
product, other than:
(i) in the manner set out in point (b) below; or
(ii) advising on corporate finance within the meaning of the Securities &

(b) Advising others by issuing or promulgating research analyses or research

reports, whether in electronic, print or other form, concerning any investment
product.
(c) (Deleted by S658/2018 wef 08/10/2018)
(d) Arranging of any contract of insurance in respect of life policies, other than
a contract of reinsurance.
E. Products Regulated Under The FAA
4.10 The range of products under the ambit of the FAA includes only products that
are of an investment nature. Section 2(1) of the FAA provides that “investment
product” means:
(a) any capital market products1 as defined in Section 2(1) of the Securities and
Futures Act (Cap. 289);
(b) spot foreign exchange contracts other than for the purposes of leveraged
foreign exchange trading;
(c) any life policy; or
(d) any other products as may be prescribed.
4.11 Under the Financial Advisers (Structured Deposits – Prescribed Investment

Product and Exemption) Regulations 2005, structured deposit has been classified
as an investment product with effect from 2 December 2005.
F. Excluded Products
4.12 The following products are excluded from the definition of investment products:
(a) General insurance policies;
(b) Deposit-taking products; and
(c) Loans and mortgages.
4.13 General insurance policies (as opposed to life insurance policies) are not
considered investment products as they are consumption-based. Deposit-taking
products offered by banks are excluded as such products are at the low end of
the risk spectrum and are well understood. Loans and mortgages do not have any
investment element and relates more to liability management.
5. APPLICATION FOR GRANT OF FINANCIAL ADVISER’S LICENCE
5.1 This section of the chapter deals with application and the minimum financial
requirements for grant of a financial adviser’s licence.
5.2 Section 8(1) of the FAA read with Regulation 6 and 7 of the FAR provides that
an application for the grant of a financial adviser’s licence shall be made to the
MAS in Form 1 and manner as may be prescribed and accompanied by a non-
1
“Capital markets products” means any securities, units in a collective investment scheme,
derivatives contracts, spot foreign exchange contracts for the purposes of leveraged foreign
exchange trading, and such other products as the MAS may prescribe as capital markets
products.

refundable application fee of a prescribed amount, which shall be paid in the

manner as specified by the MAS. Form 1 is available on the MAS website.
5.3 In assessing an application for a financial adviser's licence, the MAS takes into
consideration the following factors:
(a) track record, management expertise and financial soundness of the applicant
and its parent company or major shareholders;
(b) ability to meet the minimum financial requirements and professional
indemnity insurance requirements as prescribed under the FAA (also see
Sections A. and D. below);
(c) strength of internal compliance systems;
(d) business plans and projections; and
(e) fitness and propriety.
In respect of factor (e) above, the applicant shall satisfy the MAS that:
(i) it is a fit and proper person to be licensed;
(ii) all of its directors and chief executive officer are fit and proper persons
to hold the office; and
(iii) all of its substantial shareholders and representatives are fit and proper
persons.
5.4 With effect from 26 November 2010, all existing financial adviser’s licences
would no longer have to be renewed. Instead, once issued the licence would
continue to be valid, subject to the payment of an annual licence fee, unless:
 the licence holder ceases to carry on business in any of the regulated
activities to which the licence relates;
 the licence lapses (due to the winding-up of the licence holder or other
prescribed circumstances); or
 the licence is revoked or suspended by the MAS.
5.5 Additional information on the criteria for the grant of a financial adviser’s licence,
as well as professional indemnity requirements, can also be found in a later
chapter of this study guide which covers the FAA-G01 (Guidelines On Criteria For
The Grant Of A Financial Adviser’s Licence).
A. Need For Professional Indemnity Insurance Policy
5.6 Section 9(2)(b) of the FAA states that “Professional Indemnity Insurance policy”
means a contract of insurance with an insurer under which a person is indemnified
in respect of the liabilities arising out of or in the course of his business as a
financial adviser.
5.7 This is supported by Section 10(1) of the FAA which stipulates that a licensed
financial adviser shall:
(a) maintain, at all times during the currency of its licence, such minimum
financial requirements or such other requirements as may be prescribed under
Section 9(1)(b) of the FAA; and
(b) have in force, at all times during the currency of its licence, a Professional
Indemnity Insurance policy, the cover of which is consistent with such limit
and deductible requirements as may be prescribed, or any other measure as

may be approved by the Authority in lieu of a Professional Indemnity

Insurance policy, under Section 9(1)(c) of the FAA.
B. Grounds For Refusal To Grant Financial Adviser’s Licence
5.8 Section 9(1) of the FAA states that the MAS may refuse an application for the
grant of a financial adviser’s licence if:
(a) the applicant is not a corporation;
(b) the applicant is unable to meet or continue to meet such minimum financial
requirements or such other requirements as the MAS may prescribe, either
generally or specifically;
(c) the applicant does not have in force a professional indemnity insurance
policy, the cover of which is consistent with such limit and deductible
requirements as may be prescribed, or any other measure as may be approved
by the MAS in lieu of a professional indemnity insurance policy;
(d) the applicant has not furnished the MAS with such information or documents
as may be required under section 8(2) of the FAA, or such other information
or documents relating to it or any person employed by or associated with it
for the purposes of its business or relating to any circumstance likely to affect
its manner of conducting business as may be required by the MAS;
(da) any information or document that is furnished by the applicant to the MAS
is false or misleading;
(e) the applicant or any of its substantial shareholders is in the course of being
wound up or otherwise dissolved, whether in Singapore or elsewhere;
(f) a receiver, receiver and manager, judicial manager or an equivalent person
has been appointed, whether in Singapore or elsewhere, in relation to, or in
respect of any property of, the applicant or any of its substantial
shareholders;
(g) the applicant or any of its substantial shareholders has, whether in Singapore
or elsewhere, entered into a compromise or scheme of arrangement with its
creditors, being a compromise or scheme of arrangement that is still in
operation;
(h) execution against the applicant or any of its substantial shareholders in
respect of a judgment debt has been returned unsatisfied in whole or in part;
(i) the MAS is not satisfied as to the educational qualification or experience of
the officers or employees of the applicant who are to perform duties in
connection with the holding of the financial adviser’s licence;
(j) the MAS has reason to believe that the applicant, or any of its officers or
employees, will not perform the functions of a financial adviser efficiently,
honestly or fairly;
(k) a prohibition order under section 59 of the FAA has been made by the MAS,
and remains in force, against the applicant;
(l) the applicant or any of its substantial shareholders or officers —
(i) has been convicted, whether in Singapore or elsewhere, of an offence
involving fraud or dishonesty or the conviction for which involved a finding
that it or he acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under this Act;

(m) the applicant fails to satisfy the MAS —

(i) that it is a fit and proper person to be licensed; or
(ii) that all of its officers, employees and substantial shareholders are fit and
proper persons;
(n) the MAS has reason to believe that the applicant may not act in the best
interests of its clients, having regard to the reputation, character, financial
integrity and reliability of the applicant or any of its officers, employees or
substantial shareholders;
(o) the MAS is not satisfied as to —
(i) the financial standing of the applicant or any of its substantial
shareholders;
(ii) the manner in which the applicant’s business is to be conducted; or
(iii) the record of past performance or expertise of the applicant, having
regard to the nature of the business which the applicant may carry on in
connection with the holding of the licence;
(p) there are other circumstances which are likely —
(i) to lead to the improper conduct of business by the applicant, or any of its
officers, employees or substantial shareholders; or
(ii) to reflect discredit on the manner of conduct of the business of the
applicant or any of its substantial shareholders; or
(q) the Authority is of the opinion that it would be contrary to the public interest
to grant the licence.
C. Grounds For Refusal To Grant Financial Adviser’s Licence Without Opportunity

To Be Heard
5.9 Section 9(4) of the FAA stipulates that the MAS may refuse an application for
the grant of a financial adviser’s licence on any of the following grounds without
giving the applicant an opportunity to be heard:
(a) the applicant is in the course of being wound up or otherwise dissolved,
whether in Singapore or elsewhere;
(b) a receiver, a receiver and manager or an equivalent person has been
appointed, whether in Singapore or elsewhere, for or in respect of any
property of the applicant;
(c) a prohibition order under Section 59 of the FAA has been made by the MAS,
and remains in force, against the applicant; and/or
(d) the applicant has been convicted, whether in Singapore or elsewhere, of an
offence involving fraud or dishonesty or the conviction for which involved a
finding that it had acted fraudulently or dishonestly.
D. Minimum Financial Requirements
5.10 Regulation 15 of the FAR states that for the purposes of Section 9(1)(b) of the
FAA, the applicant shall meet the following minimum financial requirements for
the grant of a financial adviser’s licence:
(a) in the case of an applicant which intends to carry on or which, as a licensed
financial adviser, is carrying on, a business of providing any or all of the
following financial advisory services;

(i) advising others [other than in the manner specified in sub-paragraph (ii)],
either directly or through publications or writings, and whether in
electronic, print or other form, concerning —
(A) futures contracts;
(B) spot foreign exchange contracts; or
(C) OTC derivatives contracts the value of which is determined by
reference to, is derived from, or varies by reference to -
▪ the value or amount of one or more currencies; or
▪ fluctuations in the values or amounts of one or more currencies
or currencies indices;
(ii) advising others by issuing or promulgating research analyses or research
reports, whether in electronic, print or other form, concerning -
(A) futures contracts;
(B) spot foreign exchange contracts; or
(C) OTC derivatives contracts the value of which is determined by
reference to, is derived from, or varies by reference to -
▪ the value or amount of one or more currencies; or
▪ fluctuations in the values or amounts of one or more currencies
or currencies indices;
the paid-up capital of the applicant is not less than S$300,000 or, where
the applicant is a foreign company, its net head office funds are not less
than S$300,000, or
(b) in any other case, the paid-up capital of the applicant is not less than
S$150,000 or, where the applicant is a foreign company, its net head office
funds are not less than S$150,000.
A licensed financial adviser shall not reduce its paid-up capital without the
prior approval of the MAS.
Any licensed financial adviser which contravenes the above requirements

shall be guilty of an offence and shall be liable on conviction to a fine not
exceeding S$50,000.
D1. Continuing Financial Requirements
5.11 Regulation 16 of the FAR states that a licensed financial adviser, not being a
foreign company, shall at all times maintain a net asset value of not less than:
(a) in the case where it does not have an immediately preceding financial year,
three-quarters of the minimum paid-up capital required under Regulation 15
of the FAR; or
(b) in any other case:
(i) one-quarter of its relevant annual expenditure of the immediately
preceding financial year; or
(ii) three-quarters of the minimum paid-up capital required under Regulation
15 of the FAR,
whichever is the higher.

5.12 A licensed financial adviser which is a foreign company shall at all times maintain
net head office funds of not less than:
(a) in the case where it does not have an immediately preceding financial year,
the minimum net head office funds required under Regulation 15 of the FAR;
or
(b) in any other case:
(i) one-quarter of its relevant annual expenditure of the immediately
preceding financial year; or
(ii) the minimum net head office funds required under Regulation 15 of the
FAR,
whichever is the higher.
5.13 For the purpose of the above requirements, the relevant annual expenditure of a
licensed financial adviser for the immediately preceding financial year means the
total expenditure of the financial adviser for that year less the following:
(a) staff bonuses (except to the extent that they are guaranteed);
(b) employees’ and directors’ shares in profits (except to the extent that they
are guaranteed); and
(c) any commission or fee paid to its representatives which is directly related to
the commission or fee received by the financial adviser.
5.14 Any licensed financial adviser which contravenes the above requirements shall be
guilty of an offence.
6. EXEMPT PERSONS (THIRD SCHEDULE OF THE FAA)
6.1 The FAA also provides for a category of persons to be exempted from holding a
financial adviser’s licence. This group of persons called “exempt persons” are
persons who are referred to in Section 4.7(f) of this chapter.
6.2 In the case of an exempt fund manager who is also an exempt financial adviser,
the total number of qualified investors and accredited investors served should not
exceed 30 in total.
A. Prerequisites To Be Met By Exempt Persons
6.3 Under the Securities and Futures (Licensing and Conduct of Business) Regulations
(Rg 14A) [“SFR”] and the FAR (Rg 14A), it is a requirement for an exempt person
to be fit and proper. In this regard, an exempt person must be able to satisfy and
demonstrate to the MAS that it meets the fit and proper criteria in respect of
honesty, integrity and reputation; competence and capability; and financial
soundness, as stated in the Guidelines on Fit and Proper Criteria [Guidelines No:
FSG-G01]. The fit and proper requirements have to be met on an on-going basis,
and are also applicable to the exempt person's substantial shareholders or
persons who have decision-making power in the company; directors or equivalent
persons; and representatives who conduct regulated activities on behalf of the
exempt person.
6.4 As required under the Second Schedule to the SFR and the FAR, an exempt
person must maintain its operations in Singapore, and have adequate resources,
including compliance arrangements commensurate with the size and scale of its

business activities in Singapore. To demonstrate that it has meaningful operations

in Singapore and is able to satisfy the competence and capability requirement, an
exempt person is expected to operate from an office premise in Singapore and is
strongly encouraged to employ a minimum of two professionals, each with at
least five years of relevant working experience in reputable jurisdictions. An
exempt person should also have at least one resident CEO or executive director
who exercises management oversight of its operations.
6.5 In assessing honesty, integrity and reputation, the MAS takes into account
amongst other considerations - an exempt person's and its key persons' or
representatives' disciplinary and compliance records in Singapore and other
jurisdictions. To demonstrate minimum financial viability, an exempt person is
expected to ensure that it is able to pay its debts in full as they fall due and that
the value of its assets is not less than the value of its liabilities (including
contingent liabilities) at all times.
6.6 Please note that the fulfilment of the minimum expectations illustrated above
does not necessarily imply that an entity satisfies all the criteria expected of an
exempt person. The MAS reserves the right to require an exempt person to fulfil
additional requirements or put in place further safeguards to take into account
any other considerations or risks specific to the exempt person and its business
model.
B. Representation Made By Exempt Persons
6.7 An exempt person, including its representatives, cannot represent itself, nor
cause to be represented, to any person as being licensed, regulated, supervised,
or registered by the MAS, whether verbally or in writing.
C. Definitions Of Accredited And Qualified Investors
6.8 An “accredited investor” as stated in:

(I) Section 4A(1)(a) of the SFA refers to:
(a) an individual:
(i) whose net personal assets exceed S$2 million in value (or its
equivalent in a foreign currency) or such other amount as the
Authority may prescribe in place of the first amount; or
(ii) whose financial assets (net of any related liabilities) exceed in
value $1 million (or its equivalent in a foreign currency) or such
other amount as the Authority may prescribe in place of the first
amount, where “financial asset” means -
(A) a deposit as defined in section 4B of the Banking Act;
(B) an investment product as defined in section 2(1) of the
Financial Advisers Act; or
(C) any other asset as may be prescribed by regulations made
under section 341; or
(iii) whose income in the preceding 12 months is not less than
S$300,000 (or its equivalent in a foreign currency) or such other
amount as the Authority may prescribe in place of the first
amount;

(b) a corporation with net assets exceeding S$10 million in value (or its
equivalent in a foreign currency) or such other amount as the Authority
may prescribe, in place of the first amount, as determined by:
(i) the most recent audited balance-sheet of the corporation; or
(ii) where the corporation is not required to prepare audited accounts
regularly, a balance-sheet of the corporation certified by the
corporation as giving a true and fair view of the state of affairs of
the corporation as of the date of the balance-sheet, which date
shall be within the preceding 12 months;
(c) the trustee of such trust as the Authority may prescribe, when acting
in that capacity; or
(d) such other person as the Authority may prescribe;
(II) Regulation 2 of the Securities And Futures (Classes Of Investors)

Regulations 2018 refers to:
(1) For the purposes of section 4A(1)(a)(iii) of the Act, the following trusts
are prescribed:
(a) any trust all the beneficiaries of which are accredited investors
within the meaning of section 4A(1)(a)(i), (ii) or (iv) of the Act;
(b) any trust all the settlors of which —
(i) are accredited investors within the meaning of section
4A(1)(a)(i), (ii) or (iv) of the Act;
(ii) have reserved to themselves all powers of investment and
asset management functions under the trust; and
(iii) have reserved to themselves the power to revoke the trust;
(c) any trust the subject matter of which exceeds $10 million (or
its equivalent in a foreign currency) in value.
(2) For the purposes of section 4A(1)(a)(iv) of the Act, the following
persons are prescribed:
(a) an entity (other than a corporation) with net assets exceeding
$10 million (or its equivalent in a foreign currency) in value;
(b) a partnership (other than a limited liability partnership) in which
every partner is an accredited investor;
(c) a corporation the entire share capital of which is owned by one
or more persons, all of whom are accredited investors;
(d) a person who holds a joint account with an accredited investor,
in respect of dealings through that joint account.
(3) To avoid doubt, any reference to “trust” in paragraph (1)(a), (b) and
(c) includes a bare trust.
6.9 A “qualified investor”, as stated in the Second Schedule to the Securities and
Futures (Licensing and Conduct of Business) Regulations 2018 refers to:
(a) an accredited investor, other than:
(i) one who is a participant in a collective investment scheme referred to in
paragraph (b);
(ii) one who is a holder of a unit in a closed-end fund, or in an arrangement
mentioned in paragraph (aa) of the definition of “closed-end fund” in
section 2(1) of the Act as mentioned in paragraph (c);

(iii) one which is a corporation mentioned in Section 4A(1)(a)(ii) of the Act

or an entity mentioned in Regulation 3(c) of the Securities and Futures
(Classes of Investors) Regulations 2018:
(A) which is related to or controlled by a person exempted from the
requirement to hold a capital markets services licence to carry on
business in fund management under paragraph 5(1)(i), or a key
officer or substantial shareholder of such person; and
(B) the shares or debentures of which are, after 28 May 2008, the
subject of an offer or invitation for subscription or purchase made to
any person who is not an accredited investor; or
(iv) a corporation or an entity which is a collective investment scheme or a
closed-end fund the units of which are, after 28 May 2008, the subject
of an offer or invitation made to any person who is not an accredited
investor;
(b) a collective investment scheme the units of which are the subject of an offer
or invitation for subscription or purchase made —
(i) in Singapore only to accredited investors, to institutional investors, or to
both accredited investors and institutional investors; or
(ii) elsewhere if, after 28 May 2008, such offer or invitation is made only to
accredited investors (or investors in an equivalent class under the laws
of the country or territory in which the offer or invitation is made), to
institutional investors, or to both accredited investors and institutional
investors;
(c) a closed-end fund or an arrangement mentioned in paragraph (aa) of the
definition of “closed-end fund” in Section 2(1) of the Act, the units of which
are the subject of an offer or invitation for subscription or purchase made
only to accredited investors (or investors in an equivalent class under the
laws of the country or territory in which the offer or invitation is made), to
institutional investors, or to both accredited investors and institutional
investors;
(d) an institutional investor, other than a collective investment scheme; or
(e) a limited partnership, where the limited partners comprise solely of accredited
investors (or investors in an equivalent class under the laws of the country
or territory in which the partnership is formed), of institutional investors, or
of both accredited investors and institutional investors.
(Note: An exempt person is required to conduct its own due diligence to verify
that its clients are of qualified or accredited status. The due diligence checks
should be supported by documentary evidence for proper audit trail).
7. USE OF THE TERM “FINANCIAL ADVISER” OR “LIFE INSURANCE BROKER”
7.1 The following contents in regard to the “Use Of The Term “Financial Adviser” Or
“Life Insurance Broker”” are extracted from the Financial Advisers Regulations
from MAS website:
21(1) No person, other than:

(a) licensed financial adviser;
(b) an exempt financial adviser; or

(c) a person, or a person belonging to a class of persons, approved by the

Authority,
shall –
(i) use the words “financial adviser” in any language, or any other word
indicating that that person carries on business as a financial adviser, in
the name, description or title under which it carries on business in
Singapore; or
(ii) make any representation to such effect in any bill head, letter paper,
notice, advertisement, publication or writing, whether in electronic, print
or other form.
(2) Nothing in this section shall prohibit —

(a) an appointed or provisional representative of a licensed financial adviser
or exempt financial adviser; or
(b) a representative of an exempt financial adviser referred to in
section 23(1)(ea) or (f),
from using the words “financial adviser” together with the word
“representative” or any other word indicating that he is a representative of a
financial adviser.
(3) No person, other than —

(a) a licensed financial adviser which is authorised by its licence to provide
any financial advisory service in respect of life policies;
(b) an exempt financial adviser which provides any financial advisory service
in respect of life policies; or
(c) a person, or a person belonging to a class of persons, approved by the
Authority,
shall –
(i) use the words “life insurance broker” or any of its derivatives in any
language, or any other word indicating that that person carries on business
of providing any financial advisory service in respect of life policies, in the
name, description or title under which he carries on business in Singapore;
or
(ii) make any representation to such effect in any bill head, letter paper,
notice, advertisement, publication or writing, whether in electronic, print
or other form.
(4) Nothing in this section shall prohibit —

(a) an appointed or provisional representative of a licensed financial adviser
or exempt financial adviser which provides any financial advisory service
in respect of life policies; or
(b) a representative of an exempt financial adviser referred to in
section 23(1)(ea) or (f) which provides any financial advisory service in
respect of life policies,
from using the words “life insurance broker” together with the word
“representative” or any other word indicating that he is a representative of a
financial adviser providing any financial advisory service in respect of life
policies.
(5) Any person who contravenes subsection (1) or (3) shall be guilty of an offence
and shall be liable on conviction to a fine not exceeding $12,500 and, in the
case of a continuing offence, to a further fine not exceeding $1,250 for every
day or part thereof during which the offence continues after conviction.
End of Paragraph 7.1 of this chapter.

8. USE OF THE TERM “INDEPENDENT”
8.1 The following contents in regard to the “Use of the Term “Independent”” are
extracted from the Financial Advisers Regulations from MAS website:
21.—(1) No licensed financial adviser or exempt financial adviser shall use the word
“independent” or any of its derivatives in any language, or any other word or expression
in any language that is of like import to “independent” —
(a) in the name, description or title under which it carries on business in

Singapore;
(b) to promote or advertise its services; or
(c) in respect of its provision of any financial advisory service,
unless —
(i) the financial adviser does not receive any commission or other benefit from
a product provider which may create product bias and does not pay any
commission to or confer other benefit upon its representatives which may
create product bias;
(ii) the financial adviser operates free from any direct or indirect restriction
relating to any investment product which is recommended; and
(iii) the financial adviser operates without any conflict of interest created by
any connection to or association with any product provider.
(2) Where a licensed financial adviser or an exempt financial adviser —

(a) is prohibited from using the word “independent” under paragraph (1); or
(b) is not prohibited from using the word “independent” under paragraph (1)
but decides not to do so,
it shall ensure that its representatives do not use the word “independent” or any of its
derivatives in any language, or any other word or expression in any language that is of
like import to “independent” in the manner specified in paragraph (1)(a), (b) or (c).
(3) No representative of a licensed financial adviser or an exempt financial

adviser shall use the word “independent” or any of its derivatives in any
language, or any other word or expression in any language that is of like
import to “independent”, in acting as a representative of the financial
adviser if the financial adviser has informed him that it may not do so.
(4) Any financial adviser which contravenes paragraph (1) shall be guilty of an
offence.
(4A) Any financial adviser which, without reasonable excuse, contravenes
paragraph (2) shall be guilty of an offence.
(5) Any representative who contravenes paragraph (3) shall be guilty of an

offence.
9. LAUNCH OF REPRESENTATIVE NOTIFICATION FRAMEWORK (RNF)
9.1 The MAS launched the Representative Notification Framework [“RNF”] on 26

November 2010. This took the form of amendments to the FAA and FAR as well
as the FAA Notices and Guidelines. Under the RNF, financial institutions intending
to appoint a financial adviser representative will have to lodge a notice of intent

with the MAS and provide a “fit and proper” certification in respect of that
representative.
9.2 Before 26 November 2010, the licensing and regulatory regime for
representatives was operated on the basis that each representative of a financial
adviser has to be himself licensed to engage in the activity for which his company
(the principal) holds a licence from the MAS. From 26 November 2010, with the
introduction of the new RNF (to be found in the new Division 2 to Part II of the
FAA), representatives no longer need to do so.
9.3 The onus is now on the principals to accept only fit and proper individuals as their
representatives. The change also brings the regulatory regime in line with the
prevailing regime for representatives that are employed by exempt financial
institutions under the FAA. It also places a heavier emphasis on the role and
responsibilities of principals to ensure that their representatives are fit and proper.
A. Applicability Of RNF Regime
9.4 The RNF Regime is applicable to individuals carrying out financial advisory
activities as representatives of:
(a) licensed financial advisers; and
(b) financial advisers which are exempted by the FAA from having to apply for
a licence (this category includes banks, merchant banks, finance companies,
insurance companies, insurance brokers registered under the Insurance Act
and holders of a capital markets services licence under the Securities and
Futures Act (Cap 289).
9.5 Please refer to later sections in this chapter which cover Section 23C of the FAA.
These provisions relate to appointed representatives; similar provisions also exist
for provisional representatives.
9.6 The RNF regime does not apply to entities which are exempt from licensing
pursuant to regulations issued under the FAA. Please refer to Section 23B(1)(b)
of the FAA. Examples include fund managers who serve no more than 30 qualified
investors or financial advisers who serve no more than 30 accredited investors.
B. Public Register Of Representatives
9.7 Under the new RNF, representatives providing financial advice will have their
names recorded on a public register of representatives. The MAS will cease to
issue licences to representatives of licensed financial advisers. Underpinning the
new framework is the Public Register of Representatives (“The Public Register”)
established under the new Section 63A of the FAA for representatives engaged
in financial advisory services. Details of what is included in the register are listed
below.
9.8 Under Section 63A(1) of the FAA, the MAS shall keep in such form as it thinks
fit records of the following information of each appointed representative and
provisional representative:
(a) his name;
(b) the name of his current principal and every past principal (if any);
(c) the current and past types of financial advisory service provided by him, and
the date of commencement and cessation (if any) of such service;

(d) where the business of the principal for which he acts is carried on under a
name of style other than the name of the principal, the name or style under
which the business is carried on;
(e) disciplinary proceedings or other action taken by the MAS against him and
published under Section 67 of the FAA; and
(f) such other information as may be prescribed by the MAS.
9.9 The Public Register is accessible to the public through the MAS website. The
Public Register is consistent with the MAS stated philosophy of promoting greater
transparency within the financial sector, and encourages consumers to take their
own initiative in verifying the status of the representatives whom they are dealing
with.
10. WHO ARE REPRESENTATIVES?
10.1 Representatives are individuals who actually perform the activities that their
principals are engaged in and for which they are regulated by the MAS under the
FAA.
10.2 Section 2(1) of the FAA states that “representative” means a person, by
whatever name called, in the direct employment of, or acting for, or by
arrangement with, a financial adviser, who performs on behalf of the financial
adviser any financial advisory service, whether or not he is remunerated, and
whether his remuneration, if any, is by way of salary, wages, commission or
otherwise, and includes any officer of the financial adviser who performs for the
financial adviser any financial advisory services whether or not he is remunerated,
and whether his remuneration, if any, is by way of salary, wages, commission or
otherwise.
A. Representative To Act For Only One Principal
10.3 Section 23G of the FAA states that, unless otherwise approved by the MAS in
writing, no appointed representative or provisional representative shall at any one
time be a representative of more than one principal.
10.4 However, an appointed representative may be a representative of more than one

principal if the principals are related corporations.
10.5 The MAS may request information or documents, as considered necessary in

relation to the application for approval, to be provided to them.
10.6 The objectives of this rule are two-fold:

(a) to secure clarity for the investors about the status of the representatives, the
financial advisers that they represent, and more importantly, where the
responsibility rests for complaints and redresses; and
(b) to ensure that the financial advisers closely monitor and supervise their
representatives at all times.
10.7 Any person who contravenes the above rule shall be guilty of an offence and
shall be liable on conviction to a fine not exceeding S$25,000 or to imprisonment
for a term not exceeding 12 months or to both and, in the case of a continuing
offence, to a further fine not exceeding S$2,500 for every day or part thereof
during which the offence continues after conviction.

B. Types Of Representatives
10.8 The FAA provides for two classes of representatives – appointed and provisional.
B1. Appointed Representatives
10.9 They are persons who meet in full the entry and examination requirements
prescribed by the MAS. These requirements are prescribed in the “Notice on
Minimum Entry and Examination Requirements for Representatives of Licensed
Financial Advisers and Exempt Financial Advisers (Notice No: FAA-N13); or
B2. Provisional Representatives
10.10 They are persons who meet the entry requirements, but who have not yet passed
the relevant examinations. As a policy, they are given a grace period of three
months to pass the requisite examinations. This category of representatives was
introduced to accommodate the relocation of experienced individuals currently
licensed in an overseas jurisdiction. Do refer to a later chapter of this study guide
which covers the Notice on Entry Requirements of a Provisional Representative,
Notice No: FAA-N12.
C. Criteria To Be A Representative
10.11 Individuals who wish to provide financial advisory services on behalf of a licensed
financial adviser or an exempt financial adviser under Section 23(1)(a) to (e) of
the FAA are required to be appointed as an appointed or provisional representative
in respect of that type of financial advisory service.
10.12 Individuals must fulfil the following requirements before they can be an appointed
representative:
(a) be at least 21 years old;
(b) satisfy the minimum academic qualification and examination requirements as
prescribed in the Notice on Minimum Entry and Examination Requirements
for Representatives of Licensed Financial Advisers and Exempt Financial
Advisers [Notice No: FAA - N13];
(c) satisfy the fit and proper criteria set out in the Guidelines on Fit and Proper
Criteria [Guideline No: FSG-G01] issued by the MAS; and
(d) any other criteria stipulated by the MAS.
D. Acting As Representative
10.13 No individual will be allowed to act as a representative or to hold himself out as

a representative of a financial adviser unless:
(a) he meets the entry and examination requirements specified by the MAS for
the relevant type of financial advisory service; and
(b) his name is entered in the Public Register for the FAA.
10.14 Section 23B(1) of the FAA provides that no person shall act as a representative
in respect of any type of financial advisory service or hold himself out as doing
so, unless he is:
(a) an appointed or provisional representative; or

(b) a representative of an exempt financial adviser referred to in Section

23(1)(ea) or (f) of the FAA, in so far as the type, scope and manner in which
the financial advisory service provided are the same as the exempt financial
adviser.
10.15 The MAS may exempt any person or class of persons from the above
requirements, subject to such conditions or restrictions as may be imposed by
the MAS.
10.16 An individual who contravenes the above rule commits an offence. Under Section
23B(4) of the FAA, he will be liable on conviction to a fine not exceeding
S$25,000 or to imprisonment for a term not exceeding 12 months or to both
and, in the case of a continuing offence, to a further fine not exceeding S$2,500
for every day or part thereof during which the offence continues after conviction.
10.17 Section 23B(3) of the FAA provides that a principal shall not permit any individual
to provide any type of financial advisory service on its behalf unless:
(a) the individual is an appointed or provisional representative in respect of that
type of financial advisory service; or
(b) the principal is an exempt financial adviser under Section 23(1)(ea) or (f) of
the FAA and —
(i) the type and scope of the financial advisory service provided by the
individual are within the type and scope of, or are the same as, that
provided by the exempt financial adviser (in his capacity as an exempt
financial adviser); and
(ii) the manner in which the individual provides that type of financial
advisory service is the same as the manner in which the exempt
financial adviser (in his capacity as an exempt financial adviser) provides
that type of financial advisory service.
10.18 Likewise, a licensed financial adviser (as principal) commits an offence if it
permits any such individual to carry on business in any type of financial advisory
service. Under Section 23B(5) of the FAA, the penalty for the principal is a fine
not exceeding S$50,000 and in the case of a continuing offence, to a further fine
not exceeding S$5,000 for every day or part thereof during which the offence
continues after conviction.
11. APPOINTED REPRESENTATIVE
A. Criteria To Be An Appointed Representative
11.1 Section 23C(1) of the FAA provides that an appointed representative in respect
of a type of financial advisory service is an individual:
(a) who satisfies such entry and examination requirements for that type of
financial advisory service, the fact of which has been notified to the MAS
either in the document lodged under Section 23F(1) of the FAA, or under
Section 23D(5) of the FAA within the time prescribed under that provision;
(b) whose name is entered in the public register of representatives as an
appointed representative;
(c) whose status as an appointed representative has not currently been revoked
or suspended and who has not currently been prohibited by the MAS from
providing that type of financial advisory service;

(d) whose entry in the public register of representatives indicates that he is

appointed to provide that type of financial advisory service and does not
indicate that he has ceased to be so; and
(e) whose principal:
(i) is licensed to provide that type of financial advisory service; or
(ii) provides that type of financial advisory service in its capacity as a person
exempted from the requirement to hold a financial adviser’s licence under
Section 23(1)(a), (b), (c), (d) or (e) of the FAA.
11.2 For the purpose of subsection (a) above, the MAS shall specify the examination
requirements for each type of financial advisory service.
B. Cessation Of Status Of Appointed Representative
11.3 Section 23C(4) of the FAA states that an individual shall cease to be an appointed
representative in respect of any type of financial advisory service on the date:
(a) he ceases to be the principal’s representative or to provide that type of
financial advisory service on behalf of the principal, the fact of which has
been notified to the MAS;
(b) his principal ceases to provide that type of financial advisory service;
(c) the licence of his principal is revoked or lapses or a prohibition order under
Section 59 of the FAA is made against his principal prohibiting it from
(d) the individual dies; or
(e) of the occurrence of such other circumstances as the MAS may prescribe.
11.4 Regulation 8A of the FAR provides that for the purpose of Section 23C(4)(e) of
the FAA, unless the MAS has revoked the status of an individual as an appointed
representative under Section 23J(1) of the FAA or suspended that status under
Section 23J(2)(a) of the FAA, the individual shall cease to be an appointed
representative in respect of all types of financial advisory service if:
(a) before the end of the period of 6 months (or such longer period as the MAS
may allow in any particular case) starting on the date on which the
individual’s name was entered in the public register of representatives as an
appointed representative, the appointed representative has not commenced
to act as a representative in at least one of the financial advisory services
that the individual was appointed to provide as a representative; or
(b) the appointed representative:
(i) has ceased to act as a representative; and
(ii) has not resumed acting as a representative for a continuous period of
one month from the date of cessation,
and his principal has not notified the MAS.
11.5 Section 23C(5) of the FAA states that an individual shall not be treated as an
appointed representative during the period in which the licence of his principal is
suspended.
11.6 Section 23C(8) of the FAA read with Regulation 12A of the FAR provides that a
principal shall, no later than the next business day after the day:
(a) an individual ceases to be his representative; or

(b) an individual who is his representative ceases to provide any type of financial
advisory service, which he is appointed to provide,
furnish particulars of such cessation to the MAS, in the prescribed form (Form
10) and manner. Form 10 is available on the MAS website.
12. PROVISIONAL REPRESENTATIVE
A. Criteria To Be Appointed As A Provisional Representative
12.1 Section 23D(1) of the FAA provides that a provisional representative in respect
of a type of financial advisory service is an individual:
(a) who satisfies the entry requirements;
(b) who intends to undergo an examination in order to satisfy the examination
requirements;
(c) whose name is entered in the public register of representatives as a
provisional representative;
(d) whose status as a provisional representative has not currently been revoked
or suspended and who has not currently been prohibited by the MAS from
(e) whose entry in the public register of representatives indicates that he is
appointed to provide that type of financial advisory service and does not
indicate that he has ceased to be so;
(f) whose principal:
(i) is licensed to provide that type of financial advisory service; or
(ii) provides that type of financial advisory service in its capacity as a person
exempted from the requirement to hold a financial adviser’s licence under
Section 23(1)(a), (b), (c), (d) or (e) of the FAA;
(g) who has not previously been appointed as a provisional representative by the
MAS; and
(h) who is not disqualified from acting as a provisional representative.
12.2 Section 23D(2) of the FAA read with Regulation 4B(1) of the FAR provides that
an individual shall only be a provisional representative for a period not exceeding
three months from the date his name is entered in the public register of
representatives.
B. Cessation Of Status Of Provisional Representative
12.3 Section 23D(3) of the FAA provides that a provisional representative shall
immediately cease to be one:
(a) upon the expiry of the period of time as specified by the MAS;
(b) if he fails to comply with any condition or restriction imposed on him under
Section 23K of the FAA;
(c) upon his principal informing the MAS of the satisfaction of the examination
requirements as specified for that or any other type of financial advisory
service; or
(d) on the occurrence of such other circumstances, as the MAS may prescribe.

12.4 Section 23D(4) of the FAA states that Section 23C(3) to (8) of the FAA [other
than subsection (4)(e)] shall apply to a provisional representative:
(a) as if the reference in Section 23C(6) to Section 23C(1) of the FAA were a
reference to Section 23D(1) of the FAA; and
(b) with such other modifications and adaptations as the differences between
provisional representatives and appointed representatives require.
12.5 Section 23D(5) of the FAA read with Regulation 4B(2) of the FAR provides that,
where a provisional representative has satisfied the examination requirements,
his principal shall inform the MAS of this fact in Form 3D and within the three
month grace period. Form 3D is available on the MAS website.
13. DIFFERENCES BETWEEN APPOINTED REPRESENTATIVE AND PROVISIONAL

REPRESENTATIVE
13.1 Appointed representatives are required to satisfy the minimum entry and
examination requirements as set out in the Notice on Minimum Entry and
Examination Requirements for Representatives of Licensed Financial Advisers and
Exempt Financial Advisers [Notice No: FAA-N13]. The status as appointed
representative is valid until it ceases under the circumstances as described in this
chapter.
13.2 Provisional representatives are given a grace period of three months to pass the
requisite examinations applicable to appointed representatives as stipulated in the
MAS’ Notice No: FAA-N13. During the three months grace period, they are
allowed to provide financial advisory services. The objective of the provisional
representative scheme is to facilitate the relocation of experienced professionals
to Singapore and allow them to begin working as soon as possible. In addition to
education and work experience-related admission criteria, a provisional
representative must be currently or previously licensed, authorised or otherwise
regulated for at least 12 months (and not more than 12 months ago) in relation
to a comparable type of financial advisory service in an overseas jurisdiction, with
a regulatory regime that is comparable to that of Singapore. The principal is also
required to undertake to properly supervise the provision of financial advisory
service by the provisional representative.
13.3 The appointment of a provisional representative is valid for a period of up to three

months after his name is entered into the Public Register as a provisional
representative. The provisional representative can continue to provide financial
advisory service as an appointed representative after:
(a) his principal has notified the MAS (within the three-month grace period) of
the representative’s fulfilment of the relevant examination requirements via
a one-time lodgement of Form 3D (Form 3D is available on the MAS website);
and
(b) his name has been entered in the Public Register as an appointed
representative.
13.4 Do refer to the MAS Notice No: FAA-N12 for more details.

14. NOTIFICATION PROCEDURE
A. Documents To Be Lodged With The MAS
14.1 Section 23F(1) of the FAA provides that a principal who desires to appoint an
individual as an appointed or provisional representative in respect of any type of
financial advisory service shall lodge the following documents with the MAS in
such form (Forms 3A and 3B) and manner as the MAS may prescribe:
(a) a notice of intent by the principal to appoint the individual as an appointed or
provisional representative;
(b) a certificate by the principal that the individual is a fit and proper person; and
(c) in the case of a provisional representative, an undertaking by the principal to
undertake such responsibilities in relation to the representative as may be
prescribed.
14.2 Section 23F(1) of the FAA shall not apply to a principal who desires to appoint,
as an appointed representative in respect of any type of financial advisory service,
an individual who is a provisional representative in respect of that type of financial
advisory service, if —
(a) that individual has satisfied the examination requirements specified for that
type of financial advisory service; and
(b) the principal has informed the Authority of that fact in the prescribed form
and manner under Section 23D(5) of the FAA.
14.3 Note that there are penalties if the documents are not lodged in accordance with
the FAA.
14.4 Forms 3A and 3B are available on the MAS website.
B. Entry Into The Public Register
14.5 The MAS will then enter in the public register of representatives the name of the
representative, whether he is an appointed or provisional representative, the type
of financial advisory service which he may provide, and such other particulars as
the MAS considers appropriate.
14.6 The MAS may refuse to enter in the public register of representatives the
particulars referred to in the paragraph above of the representative if the fee
referred to in Section 23H(1) or (3) of the FAA is not paid.
C. Retention Period
14.7 Regulation 4A(3) of the FAR provides that a principal who submits a certificate
shall keep, in such form and manner, copies of all information and documents
which the principal relied on in giving the certificate, for a period of five years
from the date of lodgment.
14.8 Where a change occurs in any particulars of the appointed or provisional

representative in any document required to be furnished to the MAS, the principal
shall, no later than 14 days after the occurrence of such change, furnish
particulars of such change to the MAS, in the prescribed form (Form 18) and
manner. Form 18 is available on the MAS website.
14.9 A principal who contravenes the above requirements shall be guilty of an offence.

D. Undertaking Of Responsibilities For Provisional Representatives
14.10 Regulation 4A(4) of the FAR provides that for the purpose of Section 23F(1)(c)
of the FAA, a principal shall undertake all of the following responsibilities in
relation to its provisional representatives:
(a) To put in place measures to properly supervise the activities and conduct of
the representative, including measures to ensure that all obligations assumed
and liabilities incurred by him are properly fulfilled, whether actual or
contingent and howsoever arising, in relation to the provision of any financial
advisory service;
(b) To put in place measures, including proper training, to ensure that the
representative understands and complies with all Singapore laws that are
relevant to the financial advisory service provided by him;
(c) To ensure that the representative is accompanied at all times by an authorised
person (referred to in Regulation 4A(5) of the FAR as the appointed
representative, director or officer of the principal) when meeting any client or
member of the public in the course of providing any financial advisory service;
(d) To ensure that the representative sends concurrently to any of the authorised
persons all electronic mail that he sends to any client or member of the public
in the course of providing any financial advisory service; and
(e) To ensure that the representative does not communicate by telephone with
any client or member of the public when providing any financial advisory
service, other than by telephone conference in the presence of any of the
authorised persons.
15. POWER OF THE MAS TO REFUSE ENTRY OR REVOKE OR SUSPEND STATUS

OF APPOINTED OR PROVISIONAL REPRESENTATIVE
A. Conditions For Refusal To Enter Details In The Public Register
15.1 Under Section 23J(1)(a) to (f) of the FAA, the MAS may refuse to enter the name
and other particulars of an individual in the public register of representatives, or
refuse to enter an additional type of financial advisory service for an appointed
representative in that register, or revoke the status of an individual as an
appointed or provisional representative if:
(a) being a representative, he fails or ceases to act as a representative in respect
of all of the types of financial advisory services that were notified to the MAS
as services which he is appointed to provide as a representative;
(b) he or his principal has not provided the MAS with such information or
documents as the MAS may require;
(a) he is an undischarged bankrupt, whether in Singapore or elsewhere;
(d) execution against him in respect of a judgement debt has been returned
unsatisfied in whole or in part;
(e) he has, whether in Singapore or elsewhere, entered into a compromise or
scheme of arrangement with his creditors, being a compromise or scheme of
arrangement that is still in operation; and/or

(f) he:
involving fraud or dishonesty or the conviction for which involved a
finding that he had acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under the FAA.
15.2 Section 23J(1)(g) of the FAA also provides the MAS the power to refuse entry
into the public register, in the case of the proposed appointment of an appointed
or provisional representative, or of an application to enter an additional type of
financial advisory service for an appointed representative, under any of the
following circumstances:
(a) the MAS is not satisfied as to his educational or other qualification or
experience having regard to the nature of the duties that he is to perform in
relation to that type of financial advisory service;
(b) he or his principal fails to satisfy the MAS that he is a fit and proper person
to be an appointed or provisional representative or to perform that type of
financial advisory service;
(c) the MAS is not satisfied as to his record of past performance or expertise
having regard to the nature of the duties which he is to perform in relation to
that type of financial advisory service; or
(d) the MAS has reason to believe that he will not perform that type of financial
advisory service efficiently, honestly or fairly.
15.3 In addition, the MAS stipulates additional requirements for provisional

representatives. Section 23J(1)(s)(i) and (ii) of the FAA read with Regulation
4B(3) of the FAR provides that the MAS may refuse to enter the name and other
particulars of the individual in the public register of representatives as a
provisional representative if:
(a) he is not or was not previously licensed, authorised or regulated as a
representative in a foreign jurisdiction for a continuous period of at least 12
months;
(b) the period between the date of his ceasing to be so licensed, authorised or
regulated in a foreign jurisdiction and the date of his proposed appointment
as a provisional representative exceeds 12 months; or
(c) the MAS is not satisfied that the laws and practices of the jurisdiction under
which the individual is or was so licensed, authorised or regulated provide
protection to investors.
16. POWER OF THE MAS TO IMPOSE CONDITIONS OR RESTRICTIONS
16.1 Section 23K of the FAA also empowers the MAS to impose conditions or
restrictions on the financial adviser’s representative.
17. FALSE STATEMENTS IN RELATION TO NOTIFICATION OF APPOINTED OR

PROVISIONAL REPRESENTATIVE
17.1 Section 23L(1) of the FAA provides that if a principal or an individual lodges any
document to the MAS and:
(a) makes a statement which is false or misleading; or

(b) omits to state any material matter without which the document is misleading,

exceeding S$50,000.
17.2 Section 23L(4) of the FAA provides that a person referred to above shall not be
guilty of an offence if he proves that he:
(a) made all inquiries (if any) that were reasonable in the circumstances; and
(b) after doing so, believed on reasonable grounds that the statement made or
the omission to state the matter or thing was not false or misleading.
18. APPEALS
18.1 Section 23M of the FAA states that any person who is aggrieved by:
(a) the refusal of the MAS under Section 23J(1) of the FAA to enter his name
and other particulars in the public register of representatives, or to enter an
additional type of financial advisory service for him in that register; or
(b) the revocation or suspension of his status as an appointed or provisional
representative under Section 23J(1) or (2)(a) of the FAA,
may, within 30 days after he is notified of the decision of the MAS, appeal to the
Minister whose decision shall be final.

3. Financial Advisers Act And Financial Advisers Regulations
- Conduct Of Business, Powers Of Authority And Offences
CHAPTER 3
FINANCIAL ADVISERS ACT AND FINANCIAL ADVISERS REGULATIONS – CONDUCT OF
BUSINESS, POWERS OF AUTHORITY AND OFFENCES
CHAPTER OUTLINE
1. Introduction
2. Obligation To Disclose Product Information To Clients
3. Statements By Licensed Financial Advisers
4. Recommendations By Licensed Financial Advisers
5. Receipt Of Client’s Money Or Property
6. Obligation To Furnish Information To The MAS
7. Insurance Broking Premium Accounts
8. Negotiation And Placement Of Risk With Unlicensed Insurers
9. Representations By Licensed Financial Advisers
10. Licensed Financial Advisers To Disclose Certain Interests In Specified Products
11. Unsecured Advances, Unsecured Loans, And Unsecured Credit Facilities
12. Approval Of Chief Executive Officer And Director Of Licensed Financial Adviser
13. Removal Of Officer Of Licensed Financial Adviser
14. Power Of Authority To Issue Written Directions
15. Prohibition Orders
16. Power Of Authority To Publish Information
17. Corporate Offenders And Unincorporated Associations
18. Offence By Officers
19. Falsification Of Records By Officers, etc.
KEY LEARNING POINT

 understand the requirements of the FAA and FAR with regard to the conduct of
business, powers of authority and offences

1. INTRODUCTION
1.1 In this chapter, we will cover Parts III, V, & VIII of the FAA on conduct of
business, powers of authority and offences respectively, as well as, Part IV,
Regulation 18 of the FAR.
PART III OF THE FAA: CONDUCT OF BUSINESS
DIVISION 1 – GENERAL
2. OBLIGATION TO DISCLOSE PRODUCT INFORMATION TO CLIENTS
2.1 Section 25(1) of the FAA read together with Section 23(4) and Section 37 of the
FAA provides that a licensed financial adviser shall disclose, to every client and
prospective client, all material information relating to any designated investment
product that the licensed financial adviser recommends to such person, including:
(a) the terms and conditions of the designated investment product;
(b) the benefits to be, or likely to be, derived from the designated investment
product and the risks that may arise from the designated investment product;
(c) the premiums, costs, expenses, fees or other charges that may be imposed
in respect of the designated investment product;
(d) where the designated investment product is a unit in a collective investment
scheme, the name of the manager of the scheme and the relationship
between the licensed financial adviser and the manager;
(e) where the designated investment product is a life policy, the name of the
licensed insurer under the life policy and the relationship between the licensed
financial adviser and the insurer; and
(f) such other information as the MAS may prescribe.
3. STATEMENTS BY LICENSED FINANCIAL ADVISERS
3.1 The principles on the type of statements that a licensed financial adviser can
make are highlighted in Section 26 of the FAA read together with Section 23(4)
and Section 37 of the FAA, which states that:
(a) No licensed financial adviser shall, with intent to deceive, make a false or
misleading statement as to:
 any amount that would be payable in respect of a proposed contract in
respect of any investment product; or
 the effect of any provision of a contract or a proposed contract in respect
of any investment product; or
 the connection with the provision of any financial advisory service;
(b) Making a misleading statement includes a reference to omitting to disclose
any matter that is material to the statement; and

(c) Any licensed financial adviser who contravenes Section 26 of the FAA shall
notwithstanding that a contract does not come into being, be guilty of an
offence and shall be liable on conviction to a fine not exceeding S$50,000,
or to imprisonment for a term not exceeding 12 months or to both.
4. RECOMMENDATIONS BY LICENSED FINANCIAL ADVISERS
FAA provides that no licensed financial adviser shall make a recommendation,
with respect to any investment product, to a person who may reasonably be
expected to rely on the recommendation, if the licensed financial adviser does
not have a reasonable basis for making the recommendation to that person.
4.2 Section 27(2) of the FAA provides that a licensed financial adviser is said to have
a reasonable basis for making a recommendation to a person if:
(a) it has, for the purpose of ascertaining that the recommendation is
appropriate, having regard to the information possessed by it concerning the
investment objectives, financial situation and particular needs of the person,
given such consideration to, and conducted such investigation of, the subject
matter of the recommendation as is reasonable in all the circumstances; and
(b) the recommendation is based on the consideration and investigation referred
to in (a) above.
4.3 Section 27(3) of the FAA provides that where:

(a) a licensed financial adviser, in making a recommendation to a person, does
not have a reasonable basis for making the recommendation;
(b) the person, in reliance on the recommendation, does a particular act, or
refrains from doing a particular act;
(c) it is reasonable, having regard to the recommendation and all other relevant
circumstances, for the person to do that act, or to refrain from doing that
act, as the case may be, in reliance on the recommendation; and
(d) the person suffers loss or damage as a result of doing that act, or refraining
from doing that act, as the case may be,
then, without prejudice to any other remedy available to that person, the licensed
financial adviser is liable to pay damages to that person in respect of that loss or
damage.
5. RECEIPT OF CLIENT’S MONEY OR PROPERTY
5.1 The law in relation to “receipt of client’s money or property” is in Section 28 of

the FAA.
5.2 Section 28(4) of the FAA read together with Section 23(4) of the FAA provides
that “client’s money or property” means money received or retained by, or

property deposited with, a licensed financial adviser in the course of his business
as such, for which he is liable to account to another person.
A. Section 28 Of The FAA
5.3 Section 28(1) of the FAA provides that the MAS may, by regulations:
(a) determine the manner in which a licensed financial adviser may receive or
deal with client’s money or property; or
(b) prohibit the licensed financial adviser from receiving or dealing with client’s
money or property in specified circumstances or in relation to specified
activities.
5.4 Section 28(2) of the FAA states that a lien or claim on client’s money or property
in any account, which may be required to be established by any licensed financial
adviser under regulations made under Paragraph 5.3, shall be void, unless the
moneys in the account are for fees due and owing to the licensed financial
adviser.
5.5 Section 28(3) of the FAA states that a charge or mortgage on client’s money or
property in any account, which may be required to be established by any licensed
financial adviser under regulations made under Paragraph 5.3, shall be void.
6. OBLIGATION TO FURNISH INFORMATION TO THE MAS
6.1 Under Section 29(1) of the FAA read together with Section 23(4) and Section 37
of the FAA, the MAS may, in writing, require any licensed financial adviser to
furnish it with information about any matter related to its business whether
carried on in Singapore or elsewhere, if, in the opinion of the MAS, it requires the
information for the discharge of its function under the FAA.
6.2 Under Section 29(2) of the FAA, a licensed financial adviser which has been
required to furnish information to the Authority under subsection (1) shall comply
with such requirement.
6.3 Under Section 29(3) of the FAA, any person who, without reasonable excuse,
contravenes subsection (2) shall be guilty of an offence and shall be liable on
conviction to a fine not exceeding S25,000 or to imprisonment for a term not
exceeding 12 months or to both and, in the case of a continuing offence, to a
further fine not exceeding S$2,500 for every day or part thereof during which
the offence continues after conviction.
PART III OF THE FAA: CONDUCT OF BUSINESS
DIVISON 2 – LIFE INSURANCE

7. INSURANCE BROKING PREMIUM ACCOUNTS
A. Separate Bank Accounts
7.1 Section 32(1) of the FAA read together with Section 23(4) of the FAA provides
that every licensed financial adviser which receives any insurance moneys shall
establish and maintain a separate account with a bank licensed under the Banking
Act (Cap. 19) for its life insurance broking premiums.
7.2 The detailed application of this provision is found in the FAR. Under Regulation
20(1) of the FAR, a financial adviser shall pay into a bank account maintained by
it under Section 32(1) of the FAA all moneys received by it from or on behalf of:
(a) an insured or intending insured for or on account of an insurer in connection
with a contract of insurance or proposed contract of insurance; or
(b) an insurer for or on account of an insured or intending insured.
B. Conditions For Withdrawal
7.3 Regulation 20(3) of the FAR states that no financial adviser shall withdraw
moneys from a bank account maintained by it, unless for any of the following
circumstances:
(a) any payment to or for a person entitled to receive payment of the moneys,
including itself in so far as it is entitled to receive payment for itself;
(b) any payment to or for an insurer in respect of amounts due to the insurer
under or in relation to a contract of insurance;
(c) any investment by way of deposits placed with any bank licensed under the
Banking Act (Cap. 19); or
(d) any repayment of moneys that were paid into the account in error.
C. Refund Of Loss On Investment
7.4 Regulation 20(4) and (5) of the FAR provides that a financial adviser shall pay
moneys received from the realisation of any investment made as stated in
Regulation 20(3)(c) of the FAR into a bank account maintained by it under Section
32(1) of the FAA. If upon the realisation of any investment, the amount of
moneys received in respect of the realisation is less than the amount of moneys
invested, the financial adviser shall pay, into the account from which the moneys
were withdrawn for investment, an amount equal to the difference between the
amount invested and the amount realised.
D. Retention Of Interest And Income
7.5 Regulation 20(6) of the FAR provides that a financial adviser shall pay into, or
retain in, a bank account maintained by it, any interest or other income that is
received by it under the bank account or from any deposit made under Regulation
20(3)(c) of the FAR.

7.6 Regulation 20(7) of the FAR provides that interest or other income arising from
any payment which is due to the insurer under or in relation to a contract of
insurance, where the cover commences on or after 1 October 2002, that is
received by a financial adviser from:
(a) any bank account maintained by it under Section 32(1) of the FAA; or
(b) any deposit made under Regulation 20(3)(c) of the FAR,
shall belong to the insurer, but may be retained by the financial adviser for its
own benefit with the insurer’s prior consent, and need not be paid into, or
retained in, a bank account maintained by it.
7.7 However, under Regulation 20(8) of the FAR, such interest or income received
after the credit period shall not be retained by the financial adviser and shall be
immediately be paid over to the insurer to whom such payment is due.
7.8 Regulation 20(9) of the FAR provides that a financial adviser can retain such
interest or income if it is received before 1 October 2002.
7.9 Regulation 20(13) of the FAR defines “credit period” as the period within which
the financial adviser has agreed with the insurer to make payment of any amount
due to the insurer under or in relation to a contract of insurance; or 90 days from
the date of commencement of cover under the contract of insurance, whichever
is earlier.
8. NEGOTIATION AND PLACEMENT OF RISK WITH UNLICENSED INSURERS
8.1 Section 33(1) of the FAA read together with Section 23(4) of the FAA stipulates
that no licensed or exempt financial adviser shall negotiate any contract of
insurance with an insurer, whether directly or indirectly, except with licensed
insurer acting in the course of his business. This is a prohibition against the
negotiation and placement of risk with unlicensed insurers, except where
specifically permitted by the MAS.
8.2 The contract of insurance referred to above shall not apply to reinsurance,
businesses relating to risk outside of Singapore, or such other risks as may be
prescribed.
8.3 Section 3 of the Insurance Act (Cap. 142) generally prohibits the carrying on of
any class of insurance business in Singapore as insurer by a person unless that
person is licensed by the MAS under the Insurance Act (Cap. 142) in respect of
that class of business. A contravention of Section 3 of the Insurance Act (Cap.
142) is a criminal offence.
8.4 The above requirements are to target the increased use of the Internet for the
sale and distribution of financial products, including insurance, which is done by
persons outside of Singapore, but directed at consumers in Singapore.

8.5 However, in any particular case where the MAS is satisfied that, by reason of the
exceptional nature of the risk or other exceptional circumstances, it is not
reasonably practicable to comply with the above law, the MAS may permit any
licensed or exempt financial adviser:
(a) to negotiate the contract of insurance with such insurer, as the licensed
financial adviser sees fit; and
(b) if, in the opinion of the MAS that the case requires it, to effect the contract
of insurance and receive the premium in Singapore on behalf of such insurer.
8.6 Furthermore, Section 6(2) of the FAA provides that a person shall be deemed to
be acting as a financial adviser in Singapore, if he engages in any activity or
conduct that is intended to or likely to induce the public in Singapore or any
section thereof, to use any financial advisory service provided by the person,
whether or not the activity or conduct is intended to or likely to have that effect
outside of Singapore.
A. Rationale For The Above Law
8.7 Individuals are not prohibited from purchasing life policies from unlicensed
overseas insurers. However, financial advisers are required to seek the approval
of the MAS, should they wish to place their clients’ life insurance risks with
unlicensed overseas insurers. This is to ensure that no financial adviser is being
used by unlicensed overseas insurers to assist them to write domestic Singapore
risks, since unlicensed overseas insurers are not allowed to carry on insurance
business in Singapore as an insurer.
8.8 Generally, the life insurance needs of the domestic market are adequately met by
licensed life insurers in Singapore. However, where there are special needs that
cannot be met by our local insurance industry, the MAS is prepared to permit
such risks to be placed directly with unlicensed overseas insurers on a case-by-
case basis.
9. REPRESENTATIONS BY LICENSED FINANCIAL ADVISERS
9.1 Section 34 of the FAA read together with Section 23(4) and Section 37 of the
FAA deals with representations made by a financial adviser in relation to a
proposed contract of insurance with the insurer. It sets out the provisions
governing the conduct of a financial adviser in relation to a proposed contract of
insurance.
A. Proposed Contract Of Insurance
9.2 Section 34(1) of the FAA provides that no licensed financial adviser shall, with
intent to deceive, in relation to a proposed contract of insurance:
(a) write on a form, being a form that is given or sent to an insurer, any matter
that is material to the contract and is false or misleading in a material
particular;

(b) omit to disclose to the insurer any matter that is material to the proposed
contract;
(c) advise or induce the intending insured to write on a form, being a form that
is given or sent to the insurer, any matter that is false or misleading in a
material particular; or
(d) advise or induce the intending insured to omit to disclose to the insurer any
matter that is material to the proposed contract.
B. Claim Under A Contract Of Insurance
9.3 Furthermore, Section 34(2) of the FAA states that no licensed financial adviser
shall, with intent to deceive, in relation to a claim under a contract of insurance:
(a) fill up, in whole or in part, a form, being a form that is given or sent to an
insurer, in such a way that the form is false or misleading in a material
particular;
(b) omit to disclose to the insurer any matter that is material to the claim;
(c) induce the insured to fill up, in whole or in part, a form, being a form that is
given or sent to the insurer, in such a way that the form is false or misleading
in a material particular; or
(d) advise or induce the insured to omit to disclose to the insurer any matter that
is material to the claim.
9.4 Any licensed financial adviser who contravenes this section shall,
notwithstanding that a contract of insurance does not come into being, be guilty
of an offence and shall be liable on conviction to a fine not exceeding S$25,000
or to imprisonment for a term not exceeding 12 months or to both.
PART III OF THE FAA – CONDUCT OF BUSINESS
DIVISION 3 - SPECIFIED PRODUCTS
10. LICENSED FINANCIAL ADVISER TO DISCLOSE CERTAIN INTERESTS IN

SPECIFIED PRODUCTS
10.1 The provision in Section 36 of the FAA is to avoid conflict of interest situations.
A financial adviser should act in the best interests of its clients in providing
services to them. Where such conflict of interest situations cannot be avoided,
the financial adviser should ensure that its clients are treated fairly and equitably.
A. Disclosure Of Potential And Actual Conflict Of Interest
FAA states that where a licensed financial adviser sends a circular or written
communication in which he makes a recommendation, whether expressly or by
implication, with respect to any Specified Products, he shall include in the circular
or other communication, in type not less legible than that used in the remainder

of the circular or other communication, a concise statement of the nature of any

interest in, or any interest in the acquisition or disposal of the Specified Products
that he, or a person associated with or connected to him, has at the date on
which the circular or other communication is sent.
10.3 The licensed financial adviser has a duty to disclose potential and actual conflict
of interest to its clients or prospects. Before establishing a client relationship, a
financial adviser should fully:
(a) disclose all material information or facts that may compromise its objectivity
or independence, or impair its ability to make unbiased and objective
recommendations; and
(b) disclose to the clients its relationship with the financial institutions in respect
of the products which it is providing advice on or recommending.
B. Defence For Failure To Disclose Conflict Of Interest
10.4 Under Section 36(2) of the FAA, should a licensed financial adviser be charged
with failure to disclose conflict of interest, it shall be a defence for him if he could
prove that, at the time of the representation, he was not aware and could not
reasonably be expected to have been aware:
(a) that he had an interest in, or an interest in the acquisition or disposal of, the
Specified Products; or
(b) that the person associated with or connected to him had an interest in, or an
interest in the acquisition or disposal of the Specified Products.
10.5 Disclosure should be seen as part of the efforts by the MAS aimed at helping the
customers to make informed decisions.
C. Penalty For Contravening “Conflict Of Interests”
10.6 Section 36(8) of the FAA states that a licensed financial adviser who contravenes
this “conflict of interests” section shall be guilty of an offence and be liable on
conviction to a fine not exceeding S$25,000, or to imprisonment for a term not
exceeding 12 months or to both.
D. Register Of Interests In Listed Specified Products
10.7 A related issue here is that the MAS also imposes a condition that all licensed
financial advisers and its representatives who provide financial advisory service
in respect of Listed Specified Products would have to maintain a register of its
interests in Listed Specified Products. Regulation 20A(1) of the FAR requires the
licensed financial adviser and its representatives to:
(a) maintain a register of his interests in Listed Specified Products;
(b) enter in the register, within seven days after the date that he acquires any
interest in Listed Specified Products, particulars of the Listed Specified
Products in which he has an interest and particulars of his interest in those
Listed Specified Products;

(c) retain that entry in an easily accessible form for a period of not less than five
years after the date on which such entry was first made; and
(d) ensure that a copy of the register is kept in Singapore.
10.8 Furthermore, when there is any change in any interest in Listed Specified
Products, the relevant person is required to enter the particulars of the change in
the register within seven days from the date of the change and retain the entry
for five years.
10.9 At the same time, Regulation 20B of the FAR stipulates that the relevant person
shall keep the register of his interest in listed specified products referred to in
Regulation 20A of the FAR—
(a) in the case of an individual, at his principal place of business; or
(b) in the case of a corporation, at any of its places of business.
10.10 The register of interests in listed specified products may be kept in electronic
form if the relevant person ensures that full access to such register may be gained
by the Authority (MAS) at the place referred to in above Paragraph 10.9(a) or
10.9(b) of this chapter, as the case may be.
10.11 A relevant person who is a licensed financial adviser shall maintain records of the
places at which its representatives keep their registers of their interests in listed
specified products and the places at which copies of those registers are kept in
Singapore under Regulation 20A(1)(iv) of the FAR.
10.12 A relevant person who is a licensed financial adviser shall, upon the Authority’s
(MAS) request —
(a) produce for the Authority’s inspection the records referred to in Paragraph
10.11 of this chapter; and
(b) allow the Authority to make a copy of, or take extracts from, such records.
10.13 Any person who contravenes Paragraph 10.9 to 10.12 of this chapter shall be
guilty of an offence.
PART IV OF THE FAR - CONDUCT OF BUSINESS
11. UNSECURED ADVANCES, UNSECURED LOANS, AND UNSECURED CREDIT

FACILITIES
A. Conditions For Granting Unsecured Advances, Loans And Credit Facilities
11.1 Regulation 18(1) of the FAR states that no licensed financial adviser shall grant
any unsecured advance, unsecured loan or unsecured credit facility:
(a) to a director of the licensed financial adviser who is not an employee of the
licensed financial adviser; or

(b) to any other officer or an employee of the licensed financial adviser (including
a director who is its employee) or any of its representatives,
which in the aggregate and outstanding at any one time, exceeds S$3,000.
B. Definition Of Terms Used In Regulation 18 Of The FAR
11.2 Regulation 18(2) of the FAR provides that:

(a) “director” includes the spouse, father, step-father, mother, step-mother, son,
adopted son, step-son, daughter, adopted daughter, step-daughter, brother,
step-brother, sister or step-sister, of the director;
(b) ”market value”, in relation to assets which are specified products listed for
quotation, or quoted, on an approved exchange or an overseas exchange,
means:
(i) the last transacted price of the specified products traded on the approved
exchange or overseas exchange on the immediately preceding business
day;
(ii) if there was no trading in the specified products on the immediately
preceding business day, then, subject to point (iii), the lower of the last
transacted price and last bid price of the specified products in the
immediately preceding 30 days; or
(iii) if there was no trading in the specified products in the immediately
preceding 30 days:
▪ the value of the specified products as estimated by the exchange; or
▪ in the absence of such a value, zero value or any other value as
approved by the Authority before the grant of the advance, loan or
credit facility as mentioned in Paragraph 11.1 of this Chapter, or
provision of those assets as fresh security, as the case may be;
(c) “unsecured advance”, “unsecured loan” or “unsecured credit facility”
includes:
(i) any advance or loan made without security;
(ii) any advance, loan or credit facility made with security, where the
advance, loan or credit facility or any amount due and owing thereunder
at any time exceeds:
(A) the market value of the assets constituting that security; or
(B) where the MAS is satisfied that there is no established market value
for those assets, on the basis of a valuation of those assets as
approved by the MAS and notified to the licensed financial adviser,
before the grant of the advance, loan or credit facility;
(iii) any guarantee or performance bond entered into by the licensed financial
adviser, or the provision of any security by the licensed financial adviser,
in connection with any advance, loan or credit facility made by another
party to any of its officers, employees or representatives; and

(iv) any credit facility without security, whether it has been drawn-down or
not.
PART V OF THE FAA – POWERS OF AUTHORITY
12. APPROVAL OF CHIEF EXECUTIVE OFFICER AND DIRECTOR OF LICENSED

FINANCIAL ADVISER
12.1 Section 56(1) of the FAA provides that licensed financial advisers are required to
seek the prior approval of the MAS (via the submission of Form 11) for the
appointment of its chief executive officer or director or when changing the nature
of a director from one that is non-executive to one that is executive.
12.2 The above requirements do not apply to the appointment of a director of a foreign
company, or the change in the nature of the appointment of a director (not based
in Singapore) of a foreign company and is not directly responsible for the financial
adviser’s business in Singapore.
A. Criteria To Be Appointed As Chief Executive Officer Or Director
12.3 Regulation 13(2) of the FAR provides that for the purposes of Section 56(2) of
the FAA, the MAS shall have regard to the following criteria in determining
whether to grant its approval in respect of an application made:
(a) whether the licensed financial adviser has provided the MAS with such
information relating to the appointee or director as the MAS may require;
(aa) whether the appointee or director has had a prohibition order under Section
59 of the FAA made against him that still remains in force;
(b) whether the appointee or director is an undischarged bankrupt in Singapore
or elsewhere;
(c) whether execution against the appointee or director in respect of a judgment
debt has been returned unsatisfied in whole or in part;
(d) whether the appointee or director has, in Singapore or elsewhere, entered
into a compromise or scheme of arrangement with his creditors, being a
compromise or scheme of arrangement that is still in operation;
(e) whether the appointee or director:
involving fraud or dishonesty or the conviction for which involved a
finding that he had acted fraudulently or dishonestly; or
(ii) has been convicted of an offence under the FAA;
(f) the educational or other qualification, experience or expertise of the
appointee, having regard to the nature of the duties he is to perform as a
chief executive officer, director or executive director of the licensed financial
adviser;

(g) whether the appointee or director is a fit and proper person to be a chief
executive officer, director or executive officer of the licensed financial
adviser;
(h) the financial standing of the appointee or director;
(i) the past performance of the appointee or director, having regard to the nature
of the duties he is to perform as a chief executive officer, director or
executive director of the licensed financial adviser; and/or
(j) whether there is reason to believe that the appointee or director will not
conduct himself with professionalism or act in an ethical manner in
discharging the duties that he is to perform as a chief executive officer,
director or executive director of the licensed financial adviser.
12.4 The Chief Executive Officer and director may be re-appointed immediately upon
the earlier term, without the approval of the MAS. Under Section 56(7A) of the
FAA, without prejudice to the MAS’s power to impose conditions or restrictions
under Section 13 of the FAA, the MAS may at any time, by notice in writing to
a licensed financial adviser, impose on it a condition requiring it to notify the MAS
of a change to any specified attribute (such as residence and nature of
appointment) of its chief executive officer or director, and vary any such
condition.
B. Duties Of Chief Executive Officer And Director
12.5 Regulations 14 of the FAR states that a licensed financial adviser shall —
(a) comply with all laws and rules governing the operations of the financial
adviser; and
(b) in a manner that is commensurate with the nature, scale and complexity of
its business —
(i) implement and ensure compliance with, effective written policies on
all operational areas of the financial adviser, including the financial
adviser’s financial policies, and accounting and internal controls; and
(ii) put in place compliance function and arrangements including
specifying the roles and responsibilities of officers and employees of
the financial adviser in helping to ensure its compliance with all
applicable laws, codes of conduct and standards of good practice in
order to protect investors and reduce its risk of incurring legal or
regulatory sanctions that may be imposed by the MAS or any other
public authority, financial loss, and reputational damage;
(iii) identify, address and monitor the risks associated with the business
activities of the financial adviser;
(iv) ensure that the business activities of the financial adviser are subject
to compliance checks;
(v) set out in writing the limits of the discretionary powers of each officer,
committee, sub-committee or other group of persons of the financial
adviser empowered to commit the financial adviser to any financial
undertaking or to expose the financial adviser to any reputational risk;

(vi) keep a written record of the steps taken by the financial adviser to
monitor compliance with its policies, its accounting and operating
procedures, and the limits on discretionary powers;
(vii) ensure the accuracy, correctness and completeness of any report,
return or statement submitted by the financial adviser to the MAS;
and
(viii) ensure effective controls and segregation of duties to mitigate
potential conflicts of interest that may arise from the operations of the
financial adviser.
12.6 Any licensed financial adviser which contravenes paragraph (1) shall be guilty of
an offence.
C. Criteria For Determining If Chief Executive Officer Or Director Of Licensed

Financial Adviser Has Breached Duties
12.7 Under Regulations 14AA of the FAR, for the purposes of Section 57(2) of the
FAA and without prejudice to any other matter that the MAS may consider
relevant, the MAS shall, in determining whether a chief executive officer or a
director of a licensed financial adviser has failed to discharge the duties or
functions of his office, have regard to whether the chief executive officer or
director has ensured compliance by the financial adviser with each of the duties
specified in Regulation 14 of the FAR.
13. REMOVAL OF OFFICER OF LICENSED FINANCIAL ADVISER
13.1 The fit and proper criterion is a continuing requirement. Under Section 57(1)(h)
of the FAA, where the MAS is of the view that any officer of a licensed financial
adviser does not measure up to this benchmark, it may direct the company to
remove such an officer from his office, if the MAS thinks it necessary in the
public interest or for the protection of the investors to do so.
14. POWER OF AUTHORITY TO ISSUE WRITTEN DIRECTIONS
14.1 Section 58(1) of the FAA provides that the MAS may, if it thinks it necessary or
expedient in the interests of the public or a section of the public or for the
protection of investors, issue written directions, either of a general or specific
nature, to -
(a) any licensed financial adviser;
(b) any person exempt under Section 23 or 100 of the FAA;
(c) any representative;
(d) any supervisor of a financial adviser; or
(e) any class of the persons referred to in (a), (b), (c) or (d) above,
to comply with such requirements as the MAS may specify in the written
directions, or for any other purpose. Written directions includes a circular or
notice.

15. PROHIBITION ORDERS
15.1 The objective of a prohibition order is to keep unfit persons from engaging in any
or all of the financial advisory services regulated under the FAA, or taking part in
the management of, or acting as a director or substantial shareholder of a licensed
or exempt financial adviser. An order will be issued only in cases where very
serious offences have been committed.
A. Power Of Authority To Make Prohibition Orders
15.2 Under Section 59(2) of the FAA, a prohibition order made under subsection 59(1)
of the FAA do one or both of the following:
(a) prohibit the person, whether permanently or for a specified period, from —
(i) providing any financial advisory service, or providing such financial
advisory service in specified circumstances or capacities; or
(ii) taking part, directly or indirectly, in the management of, acting as a
director of, or becoming a substantial shareholder of a licensed financial
adviser or exempt financial adviser; and
(b) include a provision allowing the person, subject to any condition specified
in the order —
(i) to do specified acts; or
(ii) to do specified acts in specified circumstances,
that the order would otherwise prohibit him from doing.
B. Effect Of Prohibition Orders
15.3 Section 60(2) of the FAA states that where a prohibition order is made against a
person and notified to a licensed financial adviser or exempt financial adviser, the
licensed financial adviser or exempt financial adviser shall not employ the person
to provide any financial advisory service or use his service, to the extent that is
prohibited by the order. Any licensed financial adviser or exempt financial adviser
which contravenes this shall be guilty of an offence and shall be liable on
conviction to a fine not exceeding S$50,000.
C. Variation Or Revocation Of Prohibition Orders
15.4 Under Section 61(1) of the FAA, the MAS may vary or revoke a prohibition order,
by giving written notice to the person against whom the order was made, if the
Authority is satisfied that it is appropriate to do so because of a change in any of
the circumstances based on which the Authority made the order.
15.5 Under Section 61(2) of the FAA, the MAS may vary or revoke a prohibition order
under subsection 61(1) of the FAA —
(a) on its own initiative; or
(b) if the person against whom the order was made lodges with the Authority
an application for the Authority to do so, accompanied by such document
or fee as may be prescribed.

15.6 Under Section 61(3) of the FAA, the MAS shall not vary a prohibition order made
against a person under subsection 61(2)(a) of the FAA without giving the person
an opportunity to be heard.
15.7 Under Section 61(4) of the FAA , any person who is aggrieved by the decision of
the MAS to vary a prohibition order made against him under subsection 61(2)(a)
of the FAA may, within 30 days of the decision, appeal in writing to the Minister.
16. POWER OF AUTHORITY TO PUBLISH INFORMATION
16.1 Section 67 of the FAA provides that the MAS may, from time to time and in such
form or manner as it considers appropriate, publish information relating to all or
any of the following:
(a) the lapsing, revocation or suspension of the licence of any person under
Section 19 of the FAA;
(b) the removal of any officer under Section 57 of the FAA;
(c) the making of any prohibition order against any person under Section 59 of
the FAA;
(d) the acceptance by any person of an offer to compound an offence under
Section 89 of the FAA;
(e) the reprimand of any person under Section 97 of the FAA;
(f) the revocation or withdrawal of any exemption granted under the FAA;
(g) the conviction of any person for any offence under the FAA;
(h) the conviction of any licensed financial adviser for any offence, whether in
Singapore or elsewhere; and/or
(i) any other action as may have been taken by the MAS against any person
under the FAA;
and any other information, as the MAS may consider necessary or expedient to
publish in the public interest.
PART VIII OF THE FAA – OFFENCES
17. CORPORATE OFFENDERS AND UNINCORPORATED ASSOCIATIONS
17.1 Under Section 83(1) of the FAA, where an offence committed by a body
corporate has been proven with the consent or connivance of, or to be
attributable to any neglect on the part of, an officer of the body corporate, the
officer, as well as the body corporate, shall be guilty of that offence and shall be
liable to be proceeded against and punished accordingly.
17.2 Under Section 83(5) of the FAA, an “officer”, in relation to a body corporate,
means a director, member of the committee of management, chief executive,
manager, secretary, or other similar officer of the body, and includes a person

purporting to act in any such capacity. An “officer”, in relation to an

unincorporated association (other than a partnership), means the president,
secretary and members of the committee of the association or a person holding
a position analogous to that of president, secretary, or members of a committee,
and includes a person purporting to act in any such capacity.
17.3 Throughout the FAA, various provisions have stipulated the penalty to the body
corporate. Examples of this can be found in the sections “Obligation To Furnish
Information To Authority” (Section 29(3) of the FAA), “Negotiation And
Placement Of Risk With Unlicensed Insurer” (Section 33(5) of the FAA), and
“Representation By Licensed Financial Advisers” (Section 34(3) of the FAA).
18. OFFENCE BY OFFICERS
18.1 In addition to the penalty of body corporate, Section 84(1) of the FAA also
stipulates that any officer of a licensed financial adviser who fails to take all
reasonable steps to secure:
(a) compliance with any provision of the FAA; or
(b) the accuracy and correctness of any statement submitted to the MAS, or
such other person as may be required under the FAA,
exceeding S$100,000 or an imprisonment for a term not exceeding two years or
both.
A. Defence On Reasonable Grounds
18.2 Section 84(2) of the FAA states that in any proceedings against an officer under
the paragraph above, it shall be a defence for the officer to prove that he had
reasonable grounds for believing that another person was charged with the duty
of securing compliance with the requirements of the FAA, or with the duty of
ensuring that those statements were accurate, as the case may be, and that that
person was competent, and in a position, to discharge that duty.
18.3 An officer shall not be sentenced to imprisonment for any offence under the
paragraph above unless, in the opinion of the court, he has committed the offence
wilfully.
19. FALSIFICATION OF RECORDS BY OFFICERS, ETC.
19.1 Section 85(1) of the FAA stipulates that any officer, auditor, employee, or agent
of a licensed financial adviser or an exempt financial adviser who:
(a) wilfully makes, or causes to be made, a false entry in any book, or in any
report, slip, document or statement of the business, affairs, transactions,
conditions or assets of that financial adviser;

(b) wilfully omits to make an entry in any book, or in any report, slip, document
or statement of the business, affairs, transactions, conditions or assets of
that financial adviser, or wilfully causes any such entry to be omitted; or
(c) wilfully alters, extracts, conceals or destroys an entry in any book, or in any
report, slip, document or statement of the business, affairs, transactions,
conditions or assets of that financial adviser, or wilfully causes any such
entry to be altered, extracted, concealed or destroyed,

exceeding S$100,000 or to imprisonment for a term not exceeding 2 years or to
both.
19.2 In subsection 85(1) of the FAA, “officer” includes a person purporting to act in
the capacity of an officer.

4. MAS Notices – Part I [Notice Nos: FAA-N16; FAA-N03 & FAA-N11]
CHAPTER 4
MAS NOTICES – PART I [NOTICE NOS: FAA-N16; FAA-N03 & FAA-N11]
CHAPTER OUTLINE
1. Introduction
2. Notice On Recommendations On Investment Products [Notice No: FAA-N16]
3. Notice On Information To Clients And Product Information Disclosure [Notice No:
FAA-N03]
4. Notice On Dual Currency Investments [Notice No: FAA-N11]
Annex 1 of Notice No : FAA-N16 Excluded Investment Products
Annex 2 of Notice No : FAA-N16 Criteria For The Satisfaction Of The Customer
Knowledge Assessment
Annex 3 of Notice No : FAA-N16 Criteria For The Assessment Of A Customer Account
Review
Annex 4 of Notice No : FAA-N16 Risk Warning Statement For Overseas-listed
Investment Products
Annex A of Notice No : FAA-N03 Future And Past Performance Of Collective
Investment Schemes (CIS)
KEY LEARNING POINTS

 understand the requirements and purposes of the following Notices:
- Notice On Recommendations On Investment Products [Notice No: FAA-N16]
- Notice On Information To Clients And Product Information Disclosure [Notice No:
FAA-N03]
- Notice On Dual Currency Investments [Notice No: FAA-N11]
Copyright reserved by the Singapore College of Insurance Limited [Version 1.0] 59

1. INTRODUCTION
1.1 Section 58(1) of the FAA states that the MAS may, if it thinks necessary or
expedient in the public interest, issue written directions, either of a general or
specific nature to:
(a) any licensed financial adviser;
(b) any person exempt under Section 23 or 100 of the FAA (i.e. exempt financial
advisers or any other classes of people exempted by the MAS);
(c) any representative;
(d) any supervisor of a financial adviser; or
(e) any class of the persons referred to above.
1.2 Section 58(2) of the FAA provides that the MAS is also empowered to issue
written directions on the standards relating to qualifications, experience and
training of representatives, and the reporting of misconduct, among others.
A. MAS Notices Relating To The FAA
1.3 The following are the in-force MAS Notices relating to the FAA:
(a) Notice On Recommendations On Investment Products [Notice No: FAA-N16];
(b) Notice On Appointment And Use Of Introducers By Financial Advisers [Notice
No: FAA-N02];
(c) Notice On Information To Clients And Product Information Disclosure [Notice
No: FAA-N03];
(d) Notice To Financial Advisers On Prevention Of Money Laundering And
Countering The Financing Of Terrorism [Notice No: FAA-N06];
(e) Notice On Prohibited Representations Made By Persons Exempted Under
Regulation 27(1)(d) Of The Financial Advisers Regulations (Rg 2) [Notice No:
FAA-N10];
(f) Notice On Dual Currency Investments [Notice No: FAA-N11];
(g) Notice On Entry Requirements Of A Provisional Representative [Notice No:
FAA-N12];
(h) Notice On Minimum Entry And Examination Requirements For
Representatives Of Licensed Financial Advisers And Exempt Financial
Advisers [Notice No: FAA-N13]; and
(i) Notice On Reporting Of Misconduct Of Representatives By Financial Advisers
[Notice No: FAA-N14].
1.4 In this chapter, we will cover MAS Notices, FAA-N16, FAA-N03 and FAA-N11
relating to Recommendations on Investment Products, Information to Clients &
Product Information Disclosure, as well as Dual Currency Investments, and we
will cover the remaining in-force MAS Notices in the following chapters.
60 Copyright reserved by the Singapore College of Insurance Limited [Version 1.0]

2. NOTICE ON RECOMMENDATIONS ON INVESTMENT PRODUCTS [NOTICE NO:

FAA-N16]
A. Introduction
2.1 This Notice (“FAA-N16”) is issued pursuant to section 58 of the Financial

Advisers A (Cap.110) ["the Act"]. FAA-N16 took effect on 1 January 2012.
Notice No:FAA-N16 was last updated on 4 January 2019.
2.2 The Monetary Authority of Singapore (MAS) has introduced new requirements
since 28 July 2011 for every intermediary to formally assess a retail customer's
investment knowledge and experience before selling certain investment products
to the customer.
2.3 These new requirements will apply to the sale of Specified Investment Products
(SIPs), which are all investment products other than those listed in the Annex 1
of Notice No: FAA-N16. These include listed SIPs such as futures and exchange
traded funds, and unlisted SIPs such as investment-linked life insurance policies.
2.4 Under the new measures, the intermediary must conduct a Customer Knowledge
Assessment to assess whether a customer has the relevant knowledge or
experience to understand the risks and features of an unlisted SIP. In the case of
listed SIPs, the intermediary must conduct a Customer Account Review to
ascertain whether the customer has the relevant knowledge or experience to
understand the risks and features of derivatives, before approving the customer’s
account to trade such products. The intermediary will inform the customer if he
is assessed not to possess the relevant knowledge or experience. If the customer
still intends to proceed with the transaction, the intermediary must offer advice
to the customer. MAS will not allow “execution only” service for such a case.
Safeguards, such as a lower trading limit than what the intermediary would
otherwise have imposed, will also be put in place before the customer is allowed
to proceed with the transaction. Intermediaries must comply with the new
requirements in their dealings with all customers, new and existing.
2.5 MAS has introduced these stronger measures and enhanced requirements to
further safeguard customers’ interests, and ensure that intermediaries
recommend suitable investment products to customers, particularly those who
may not have the relevant investment knowledge or experience.
B. Applicability Of Notice No: FAA-N16
2.6 Notice No: FAA-N16 shall apply to the following classes of persons:
(a) licensed financial advisers;
(b) exempt financial advisers;
(c) representatives of financial advisers;
(d) persons who are exempt under Regulation 29 of the Financial Advisers
Regulations [“FAR”]; and

(e) representatives of persons who are exempt under Regulation 29 of the FAR.
2.7 Notice No: FAA-N16 shall not apply to the following classes of persons:
(a) Persons as specified above who are exempted from complying with Section
27 of the FAA under Regulations 18A, 27A, 28, 31(4), 31(5), 31(7), 31(8),
32B, 33A, 34 and 36 of the FAR only in respect of the activities for which
they are exempt under these regulations.
C. Circumstances Where Notice No: FAA-N16 Does Not Apply
2.8 Notice No: FAA-N16 does not apply to the following circumstances:
(a) any recommendation made with respect to simple life policies sold as an
ancillary product to loans with a simple payment basis for the insurance
cover. These include policies that cover outstanding loans through personal
loans, car loans and credit card balances, but exclude mortgage reducing
term assurance plans; and
(b) to any transaction where:
(i) only factual information is provided with respect to any Excluded
Investment Product, including the marketing of any designated
investment products through the use of direct response advertising
communications through any medium, including mail, print, TV, radio,
and electronic media referred to in paragraph 29 of the Notice on
Information to Clients and Product Information Disclosure [Notice No:
FAA-N03], and
(ii) prior to such transaction no advice or recommendation is made by the
licensed financial adviser, exempt financial adviser or their
representatives to the client.
2.9 Notice No: FAA-N16 sets out the standards to be maintained by financial advisers
and their representatives with respect to recommendations made on investment
products.
D. Representatives Of Financial Advisers
2.10 Unless otherwise specified, a representative shall comply with any requirement
imposed on a financial adviser in Notice No: FAA-N16 when acting on its behalf.
E. Recommendations On Investment Products
2.11 Section 27 of the Act requires licensed financial advisers to have a reasonable
basis for any recommendation made, with respect to any investment product, to
a person who may reasonably be expected to rely on the recommendation1. In
particular, the licensed financial adviser shall give due consideration to the
person's investment objectives, financial situation and particular needs.
1
Sections 23(4) and 37 of the FAA provides that Section 27 of the FAA also applies to exempt
financial advisers, appointed and provisional representatives.

2.12 Where the investment product recommended is a Specified Investment Product,

the financial adviser shall also give due consideration to the person’s knowledge
or experience in the Specified Investment Product.
2.13 A financial adviser that is involved in making recommendations on investment

products to clients shall comply with the requirements set out in the “Notice On
Recommendations On Investment Products [Notice No: FAA-N16]” in relation to
the following aspects:
(a) know your client;
(b) needs analysis; and
(c) documentation and record keeping.
E1. Know Your Client
2.14 The following contents in regard to “Know Your Client” has been entirely
extracted from the Notice No: FAA-N16 from the MAS website:
11 In order for a financial adviser to make a recommendation that takes into account
a client’s investment objectives, financial situation and particular needs, the
financial adviser, except in the circumstances provided in paragraph 11A, shall
take reasonable steps to collect and document the following information from
the client:
(a) the financial objectives of the client;
(b) the risk tolerance of the client;
(c) the employment status of the client;
(d) the financial situation of the client, including assets, liabilities, cash flow
and income;
(e) the source and amount of the client’s regular income;
(f) the financial commitments of the client;
(g) the current investment portfolio of the client, including any life policy;
(h) whether the amount to be invested is a substantial portion of the client’s
assets; and
(i) for any recommendation made in respect of life policies, the number of
dependants of the client and the extent and duration of financial support
required for each of the dependants.
[FAA-N16 (Amendment No. 3) 2018]
11A A financial adviser who makes a recommendation on investment products to a

client through a digital advisory platform, may elect not to collect and document
any of the information referred to in paragraph 11(c) to (i) from the client,
provided that:
(a) the entire process by which the recommendation is made to the client is
electronically automated on the platform, and there is no intervention by
any person in the process, except to the extent that intervention is
necessary to provide technical assistance to the client or to resolve any
inconsistent responses which are detected pursuant to paragraph (c);

(b) the platform is programmed with compulsory questions, which are

answered by the client, to effectively identify and preclude the making of a
recommendation to any client whose financial objectives or risk tolerance is
unsuitable for the investment products;
(c) the platform is programmed to be able to detect any inconsistent responses
provided by the client, and all inconsistent responses are resolved before
any recommendation is made to the client;
(d) at the point when the recommendation is made to the client, the
recommendation is accompanied by a risk disclosure statement to alert the
client that the recommendation does not take into account the client’s
financial situation and particular needs, as may be determined from the
information referred to in paragraph 11(c) to (i), insofar as the financial
adviser has elected not to collect and document such information; and
(e) the recommendation is limited to units in a collective investment scheme in
which the manager of the collective investment scheme complies with all
the investment restrictions referred to in paragraph 2 of the Schedule to the
Securities and Futures (Capital Markets Products) Regulations 2018, even
if the CIS documents of the collective investment scheme do not require
this.
12 For the purpose of collecting and documenting information referred to in

paragraph 11, a financial adviser may rely on information previously provided by
the client to the financial adviser only if the client confirms at the time of the
transaction that there are no material changes to the information.
13 Paragraph 11 does not apply to a financial adviser who is also a dealer in respect
of his carrying on the business of providing execution-related advice, provided
that –
(a) the information referred to in paragraph 11 shall already have been collected
from the client and documented by the financial adviser at the time when
the relationship was first established with the client; and
(b) the financial adviser shall update the client’s profile in respect of the
information referred to in paragraph 11 at least on an annual basis or as and
when informed by the client of any change in the client’s profile.
14 A financial adviser shall highlight the following in writing to its client:

(a) the information provided by the client will be the basis on which the
recommendation will be made; and
(b) any inaccurate or incomplete information provided by the client may affect
the suitability of the recommendation.

E2. Customer Knowledge Assessment
2.15 The following contents in regard to “Customer Knowledge Assessment” has been
entirely extracted from the Notice No: FAA-N16 from the MAS website:
15 A financial adviser shall ensure that it has been informed by the issuer of an
investment product which is not approved in-principle for listing and quotation
on, or listed for quotation or quoted on, an organised market, as to whether the
investment product is a Specified Investment Product, before making any
recommendation on that investment product. The financial adviser shall keep
proper records of such information and shall accordingly convey this information
to a client who intends to transact in that investment product.
[FAA-N16 (Amendment) 2012]
16 Subject to paragraph 27, where the investment product is an unlisted Specified

Investment Product, a financial adviser shall conduct a Customer Knowledge
Assessment based on the criteria set out in Annex 2 to this Notice before making
a recommendation on the unlisted Specified Investment Product concerned to a
client.
17 For the purpose of the Customer Knowledge Assessment, a financial adviser

shall take into consideration information on a client’s educational qualifications,
investment experience and work experience. Where a client does not provide
information on his educational qualifications, investment experience or work
experience, the financial adviser shall deem the client not to possess knowledge
or experience in the unlisted Specified Investment Product concerned.
17A When conducting a Customer Knowledge Assessment for a new client, or for a
client whose previous Customer Knowledge Assessment is no longer valid in
accordance with paragraph 26, a financial adviser shall assess a client’s
investment experience according to:
(a) the classification of the investment product(s) previously transacted by the
client; and
(b) the listing status of such investment product(s), at the time that the client
had transacted in such investment product(s).
18 A financial adviser shall highlight in writing to the client that any inaccurate or
incomplete information provided by the client may affect the outcome of the
Customer Knowledge Assessment.
19 Subject to paragraphs 24 and 25, a financial adviser shall not allow a client to
transact in an unlisted Specified Investment Product unless it is satisfied, on the

basis of the outcome of the Customer Knowledge Assessment referred to in

paragraph 16 or 27, that the client has knowledge or experience in the unlisted
Specified Investment Product, as set out in Annex 2 to this Notice.
20 Notwithstanding a positive outcome of the Customer Knowledge Assessment,

the financial adviser shall offer to provide advice concerning the unlisted
Specified Investment Product to the client.
21 Where the client does not wish to receive advice concerning the unlisted
Specified Investment Product from the financial adviser, the financial adviser
shall document the decision of the client and highlight to the client in writing
that it is the client’s responsibility to ensure the suitability of the unlisted
Specified Investment Product selected. The financial adviser shall also warn the
client in writing that the client has chosen not to receive advice and will therefore
not be able to rely on section 27 of the Act to file a civil claim in the event he
alleges he has suffered a loss, and confirm in writing if the client wishes to
proceed without advice.
Requirements where Clients are Assessed Not to Possess Knowledge or Experience in

Unlisted Specified Investment Products
22 Where a financial adviser assesses a client not to possess knowledge or

experience in an unlisted Specified Investment Product pursuant to the Customer
Knowledge Assessment, it shall inform the client of the outcome of the
Customer Knowledge Assessment.
23 Where a client, after being informed of the outcome of the Customer Knowledge
Assessment in accordance with paragraph 22, nevertheless intends to proceed
to transact in the unlisted Specified Investment Product, the financial adviser
shall provide advice to the client, taking into account the client's investment
objectives, financial situation and particular needs, as well as the outcome of
the Customer Knowledge Assessment.
24 If a client, who is assessed as not possessing the knowledge or experience in

the unlisted Specified Investment Product pursuant to the Customer Knowledge
Assessment, nevertheless chooses to transact in an unlisted Specified
Investment Product which is not recommended by the financial adviser, the
financial adviser shall:
(a) inform the client in writing of the outcome of the Customer Knowledge
Assessment;
(b) obtain the client’s written confirmation that the client still intends to proceed
to transact in the unlisted Specified Investment Product despite the outcome
of the Customer Knowledge Assessment; and

inform the client in writing that it is the client’s responsibility to ensure the
suitability of the product selected.
25 In respect of such a client as referred to in paragraph 24 who has confirmed

that he intends to proceed to transact in the unlisted Specified Investment
Product (referred to in paragraphs 25 and 25A as “relevant trade”), the financial
adviser shall not allow the client to proceed with the relevant trade unless its
senior management, who is not involved in that relevant trade and is not a
connected person to the client:
(a) has confirmed with the client that the client has been properly informed of
all relevant facts as required under paragraphs 22 and 24, and that the client
is aware of the implications and consequences of proceeding with that
relevant trade;
(b) is satisfied that the financial adviser has complied with the requirements set
out in paragraphs 22 and 24; and
(c) has given approval for the financial adviser to proceed with the client’s
request,
whether personally, or by means of any designated person or any written

framework approved pursuant to paragraph 25A.
25A For the purpose of paragraph 25, the senior management of the financial adviser
may:
(a) designate any person who is not its senior management, and who is not
involved in that relevant trade and is not a connected person to the client
(referred to in paragraphs 25 and 25A as “designated person”) to fulfil the
requirements set out in paragraph 25(a), (b) and (c) on behalf of its senior
management, so long as its senior management ensures that the designated
person fulfils those requirements; or
(b) approve a written framework stipulating the circumstances under which
approval for the financial adviser to proceed with a client’s request under
paragraph 25(c) may be given by a designated person or by an automated
process on behalf of its senior management, so long as its senior
management ensures that the framework is sufficiently robust to fulfil the
requirements set out in paragraph 25(a) and (b).
Validity of the Outcome of Customer Knowledge Assessment
26 Where a client is assessed to have the knowledge or experience to transact in

an unlisted Specified Investment Product, the financial adviser may allow the
client to transact in such unlisted Specified Investment Product for a period of
one year from the date of the Customer Knowledge Assessment. After a year

has elapsed, the financial adviser shall conduct a new Customer Knowledge
Assessment on the client, or rely on a new Customer Knowledge Assessment
conducted by a third party for the client under paragraph 27, before it provides
any recommendation on any unlisted Specified Investment Product to the client.
Reliance on a Third Party Customer Knowledge Assessment
27 Where a client of a financial adviser has previously undergone a Customer

Knowledge Assessment with a third party, the financial adviser may, instead of
conducting a Customer Knowledge Assessment, rely on the Customer
Knowledge Assessment previously conducted by the third party for such client,
if the following conditions are met:
(a) the financial adviser is satisfied that the third party had complied with the
criteria set out in Annex 2 to this Notice and the requirements set out in
paragraphs 17 to 18 when the third party conducted the Customer
Knowledge Assessment for such client;
(b) the third party is not one which the financial adviser has been specifically
precluded by the Authority from relying on; and
(c) the third party is able and willing to provide, without delay, upon the
financial adviser’s request, any data, documents, or information obtained by
the third party with respect to the Customer Knowledge Assessment
conducted for such client, which the financial adviser would be required or
would want to obtain.
27A For the purposes of conducting the Customer Knowledge Assessment provided
in paragraphs 15 to 26 and 27D, the reference to a “client” in those paragraphs
only refers to a natural person.
27B Before relying on the Customer Knowledge Assessment previously conducted

by a third party as referred to in paragraph 27, the financial adviser shall –
(a) document the basis for its satisfaction that the criteria and requirements
referred to in paragraph 27(a) had been met; and
(b) obtain from the third party the documentation for the Customer Knowledge
Assessment referred to in paragraph 40.
27C For the avoidance of doubt, notwithstanding its reliance on the Customer
Knowledge Assessment previously conducted by a third party, a financial
adviser shall remain responsible for its Customer Knowledge Assessments
obligations in this Notice.

Jointly Transacting in Unlisted Specified Investment Products
27D Where two or more clients intend to jointly transact in an unlisted Specified
Investment Product, the requirements to conduct the Customer Knowledge
Assessment as provided in paragraphs 15 to 27C shall apply to the financial
adviser in respect of each of the clients before making a recommendation on
such unlisted Specified Investment Product.
E3. Customer Account Review
2.16 The following contents in regard to “Customer Account Review” has been entirely
27E Subject to paragraph 27Q, a financial adviser shall conduct a Customer Account
Review based on criteria set out in Annex 3 to this Notice before making a
recommendation on any Listed Specified Investment Product.
27F For the purpose of the Customer Account Review, a financial adviser shall take
into consideration information on a client’s educational qualifications,
investment experience and work experience. Where a client does not provide
information on his educational qualifications, investment experience or work
experience, the financial adviser shall deem the client not to possess knowledge
or experience in derivatives.
27G When conducting a Customer Account Review for a client for the first time, or
for a client whose previous Customer Account Review is no longer valid in
accordance with paragraph 27T, a financial adviser shall assess a client’s
investment experience according to:
(a) the classification of the capital markets product(s) previously transacted by
the client; and
(b) the listing status of such capital markets product(s), at the time that the
client had transacted in such capital markets product(s).
27H A financial adviser shall highlight to the client in writing that any inaccurate or
incomplete information provided by the client may affect the outcome of the
Customer Account Review.
27I Subject to paragraphs 27N and 27O, a financial adviser shall not allow a client
to transact in a Listed Specified Investment Product unless it is satisfied, on the

basis of the outcome of the Customer Account Review referred to in paragraph

27E or 27Q, that the client has knowledge or experience in the Listed Specified
Investment Product, as set out in Annex 3 to this Notice.
27J Notwithstanding a positive outcome of the Customer Account Review, the

financial adviser shall offer to provide advice concerning the Listed Specified
Investment Product to the client.
27K Where the client does not wish to receive advice concerning the Listed Specified
Investment Product from the financial adviser, the financial adviser shall
document the decision of the client and highlight to the client in writing that it
is the client’s responsibility to ensure the suitability of the Listed Specified
Investment Product selected. The financial adviser shall also warn the client in
writing that the client has chosen not to receive advice and will therefore not be
able to rely on section 27 of the Act to file a civil claim in the event he alleges
he has suffered a loss, and confirm in writing if the client wishes to proceed
without advice.
Requirements where Clients are Assessed Not to Possess Knowledge or Experience in

Derivatives
27L Where a financial adviser assesses a client not to possess knowledge or

experience in derivatives pursuant to the Customer Account Review, it shall
inform the client of the outcome of the Customer Account Review.
27M Where a client, after being informed of the outcome of the Customer Account
Review, in accordance with paragraph 27L, nevertheless intends to proceed to
transact in a Listed Specified Investment Product, the financial adviser shall
provide advice to the client, taking into account the client's investment
objectives, financial situation and particular needs, as well as the outcome of
the Customer Account Review.
27N If a client, who is assessed as not possessing knowledge or experience in

derivatives pursuant to the Customer Account Review, nevertheless chooses to
transact in a Listed Specified Investment Product which is not recommended by
the financial adviser, the financial adviser shall:
(a) inform the client in writing of the outcome of the Customer Account Review;
(b) obtain the client’s written confirmation that the client still intends to proceed
to transact in the Listed Specified Investment Product despite the outcome
of the Customer Account Review; and inform the client in writing that it is
the client’s responsibility to ensure the suitability of the product selected.

27O In respect of such a client as referred to in paragraph 27N who has confirmed
that he intends to proceed to transact in the Listed Specified Investment Product
(referred to in paragraphs 27O and 27P as “relevant trade”), the financial adviser
shall not allow the client to proceed with the relevant trade unless its senior
management, who is not involved in that relevant trade and is not a connected
person to the client:
(a) has confirmed with the client that the client has been properly informed of
all relevant facts as required under paragraphs 27L and 27N, and that the
client is aware of the implications and consequences of proceeding with that
relevant trade;
(b) is satisfied that the financial adviser has complied with the requirements set
out in paragraphs 27L and 27N; and
(c) has given approval for the financial adviser to proceed with the client’s
request,
whether personally, or by means of any designated person or any written

framework approved pursuant to paragraph 27P.
27P For the purpose of paragraph 27O, the senior management of the financial
adviser may:
(a) designate any person who is not its senior management, and who is not
involved in that relevant trade and is not a connected person to the client
(referred to in paragraphs 27O and 27P as “designated person”), to fulfil the
requirements set out in paragraph 27O(a), (b) and (c) on behalf of its senior
management, so long as its senior management ensures that the designated
person fulfils those requirements; or
(b) approve a written framework stipulating the circumstances under which
approval to proceed with a client’s request under paragraph 27O(c) may be
given by a designated person or by an automated process on behalf of its
senior management, so long as its senior management ensures that the
framework is sufficiently robust to fulfil the requirements set out in
paragraph 27O(a) and (b).
Reliance on a Third Party Customer Account Review
27Q Where a client of a financial adviser has previously undergone a Customer

Account Review with a third party, the financial adviser may, instead of
conducting a Customer Account Review, rely on the Customer Account Review
previously conducted by the third party for such client, if the following
conditions are met:
(a) the financial adviser is satisfied that the third party had complied with the
criteria set out in Annex 3 to this Notice and the requirements set out in
paragraphs 27F to 27H when the third party conducted the Customer
Account Review for such client;

(b) the third party is not one which the financial adviser has been specifically
precluded by the Authority from relying on; and
(c) the third party is able and willing to provide, without delay, upon the financial
adviser’s request, any data, documents, or information obtained by the third
party with respect to the Customer Account Review conducted for such
client, which the financial adviser would be required or would want to
obtain.
27R Before relying on the Customer Account Review previously conducted by a third
party as referred to in paragraph 27Q, the financial adviser shall –
(a) document the basis for its satisfaction that the criteria and requirements
referred to in paragraph 27Q(a) had been met; and
(b) obtain from the third party the documentation for the Customer Account
Review referred to in paragraph 40.
27S For the avoidance of doubt, notwithstanding its reliance on the Customer
Account Review previously conducted by a third party, a financial adviser shall
remain responsible for its Customer Account Review obligations in this Notice.
Validity of the Outcome of Customer Account Review
27T No financial adviser shall make a recommendation to a client to transact in a

Listed Specified Investment Product after 3 years has expired from the date of
the conduct of the Customer Account Review for the client concerned, until and
unless –
(a) the financial adviser has checked and is satisfied that –
(i) the client has transacted in a Listed Specified Investment Product more
than once during the preceding 3-year period; and
(ii) in every subsequent 3-year period, the client has transacted in a Listed
Specified Investment Product more than once during that 3-year period;
or
(b) the financial adviser has conducted a new Customer Account Review for
the client concerned by repeating the steps in paragraphs 27E to 27O, or
the financial adviser has relied on a new Customer Account Review
conducted by a third party for the client concerned under paragraph 27Q.
Jointly Transacting in Listed Specified Investment Products
27U Where two or more clients intend to jointly transact in a Listed Specified
Investment Product, the requirements to conduct the Customer Account Review
as provided in paragraphs 27E to 27T shall apply to the financial adviser in

respect of each of the clients before making a recommendation on such Listed

Specified Investment Product.
27V For the purposes of conducting the Customer Account Review provided in
paragraphs 27E to 27U, any reference to a “client” in those paragraphs only
refers to a natural person.
E4. Needs Analysis
2.17 The following contents in regard to “Needs Analysis” has been entirely extracted
from the Notice No: FAA-N16 from the MAS website:
28 Section 27 of the Act requires a financial adviser to analyse the information

provided by the client and identify the product that is suitable for the client
based on the information obtained from the client.
29 A financial adviser shall put in place systems and processes for its
representatives to determine whether the product recommended is suitable for
the client based on the information obtained from the client. The financial adviser
shall take into consideration the nature of the product, key risks and other
features including the investment tenor, fees and liquidity required.
30 Where the financial adviser is unable to identify a suitable product, it shall inform
the client accordingly.
31 A financial adviser shall explain to its client the basis for its recommendation.
The basis on which the financial adviser is making the recommendation to the
client shall be documented.
32 Where a client does not want:

(a) to provide any information requested by the financial adviser in accordance
with paragraph 11; or
(b) to accept the recommendation of the financial adviser and chooses to
proceed with the transaction in another investment product which is not
recommended by the financial adviser,
the financial adviser may proceed with the client's request, but it shall document
the decision of the client and highlight to the client in writing that it is the client’s
responsibility to ensure the suitability of the product selected.

33 Where a client chooses not to receive any recommendation from a financial

adviser, the financial adviser shall ensure that there is proper documentation to
demonstrate that this is so.
34 Where a financial adviser is:

(a) making a recommendation on life policies;
(b) arranging contracts of insurance in respect of life policies; or
(c) carrying out both of the above activities,
it is expected to comply with the LIA Minimum Standard for Life Insurance
Advisory Process issued by the Life Insurance Association of Singapore.
34A Notwithstanding paragraph 34(a), where a financial adviser is making a

recommendation on a bundled product, it shall disclose to the client the option
of purchasing a comparable term life insurance product as set out in the bundled
product disclosure document.
E5. Documentation and Record Keeping
2.18 The following contents in regard to “Documentation and Record Keeping” has
been entirely extracted from the Notice No: FAA-N16 from the MAS website:
35 The financial adviser shall make reasonable efforts to document the basis for
the recommendation referred to in paragraph 36(b), and such documentation
shall include the following:
(a) the client’s statement of his investment objectives, financial situation and
particular needs;
(b) the financial adviser’s reasonable basis for making the recommendation to
the client having regard to the information obtained from the client; and
(c) the financial adviser’s assessment of the disadvantages of the investment
product based on circumstances of the client.
36 A financial adviser shall furnish to its client a document containing the following
when making a recommendation in respect of an investment product to the
client:
(a) a summary of the information gathered by the financial adviser pursuant to
paragraph 11; and
(b) any recommendation made to the client by the financial adviser and the
basis for the recommendation,
and, where applicable, also furnish to its client a statement that the client does
not want to:
(i) provide any information requested by the financial adviser in accordance
with paragraph 11;

(ii) accept the recommendation of the financial adviser and has chosen to
proceed with the transaction in another investment product which is not
recommended by the financial adviser; or
(iii) receive any recommendation from the financial adviser, before the client
signs on the application form for the purchase of an investment product or
gives his consent to dispose of an investment product.
37 A financial adviser shall furnish the following documents to a client when making
a recommendation:
(a) in the case of a collective investment scheme or a debenture, a copy of the
prospectus or profile statement and product highlights sheet (if applicable)
issued in respect of the collective investment scheme or the debenture, or
any other offer document, or both (as the case may be), as may be
prescribed by the relevant laws, including:
(i) a supplementary prospectus or supplementary profile statement issued
in respect of the collective investment scheme or the debenture; and
(ii) a replacement prospectus or replacement profile statement issued in
respect of the collective investment scheme or the debenture.
(b) in the case of a life policy (including a bundled product), a copy of the cover
page, product summary, policy illustration, bundled product disclosure
document and product highlights sheet in respect of that policy, as prepared
and provided by the direct life insurer (where such documents are available
in respect of that policy).
38 The financial adviser may, with the client’s written consent, give the client an
abridged version of the document or statement referred to in paragraph 36. The
financial adviser shall also maintain a copy of this document or statement and
the abridged version of the document or statement, where applicable, for record
keeping purposes.
39 A financial adviser who is also a dealer is not required to furnish to its client the
document referred to in paragraph 36 when making recommendation in respect
of an investment product to the client.
40 A financial adviser shall document every Customer Knowledge Assessment and

every Customer Account Review conducted for each client. Such documentation
shall include the following:
(a) information collected from a client on his educational qualification, work
experience and investment experience;
(b) an assessment of the client’s knowledge and experience in derivatives or
unlisted Specified Investment Products, as the case may be;
(c) the outcome of the Customer Knowledge Assessment or the Customer
Account Review, as the case may be; and

(d) the approval of its senior management or designated person for the financial
adviser to proceed with the client’s request, where applicable.
41 A financial adviser shall maintain records of all communication between the

financial adviser and the client relating to the provision of financial advisory in
respect of a Listed Specified Investment Product, including a record in the form
of a file note or a tape recording of the telephone conversation.
F. Requirements On A Financial Adviser Providing Financial Advisory Services In

Relation To Units In A Collective Investment Scheme, The Units Of Which Are
Excluded Investment Products (“EIP-CIS”)
2.19 The following contents in regard to “Requirements On A Financial Adviser

Providing Financial Advisory Services In Relation To Units In A Collective
Investment Scheme, The Units Of Which Are Excluded Investment Products
(“EIP-CIS”)” has been entirely extracted from the Notice No: FAA-N16 from the
MAS website:
41A Where the responsible person of the EIP-CIS is required to ensure that a Customer
Account Review or a Customer Knowledge Assessment referred to in paragraph
29B(b)(i) or (ii) of the Notice on the Sale of Investment Products [Notice No. SFA
04-N12] is conducted by a financial adviser on every client who is an existing
Relevant Participant as a result of any change in investment objective,
investment focus or investment approach of the EIP-CIS which would cause the
units in an EIP-CIS to be classified as Specified Investment Products, and –
(a) a financial adviser of an existing Relevant Participant is able to demonstrate
to the responsible person concerned that it is unable to conduct a Customer
Account Review or a Customer Knowledge Assessment as referred to in
paragraph 29B(b)(i) or (ii) of the Notice on the Sale of Investment Products
[Notice No. SFA 04-N12] for reasons beyond its reasonable control, including
where it is unable to contact the existing Relevant Participant despite it
having written to that existing Relevant Participant regarding the conduct of
such Customer Account Review or Customer Knowledge Assessment and
having made repeated attempts thereafter to establish contact, or where the
existing Relevant Participant refuses to undergo a Customer Account Review
or a Customer Knowledge Assessment as referred to in paragraph 29B(b)(i)
or (ii) of the Notice on the Sale of Investment Products [Notice No. SFA 04-
N12]; or
(b) a financial adviser has conducted a Customer Account Review or a Customer
Knowledge Assessment in accordance with paragraph 29B(b)(i) or (ii) of the
Notice on the Sale of Investment Products [Notice No. SFA 04-N12], and
assesses an existing Relevant Participant not to possess the adequate

knowledge or experience pursuant to such Customer Account Review or

Customer Knowledge Assessment, as the case may be, and is unable to
allow such existing Relevant Participant to proceed to transact in the Listed
Specified Investment Product or in the unlisted Specified Investment
Product,
the financial adviser may –

(i) allow the existing Relevant Participant concerned to continue holding on to
his existing position in the EIP-CIS; or
(ii) on the instructions of the existing Relevant Participant concerned, execute a
transaction or transactions on behalf of the existing Relevant Participant
concerned to reduce his existing position in the EIP-CIS.
For the avoidance of doubt, the financial adviser shall not count such
transactions referred to in sub-paragraph (ii) as “investment experience” for the
purposes of conducting the Customer Account Review or the Customer
Knowledge Assessment for the existing Relevant Participant concerned.
G. Requirements On A Financial Adviser Providing Financial Advisory Services In

Relation To Units In An Investment-Linked Policy Sub-Fund, The Units Of Which
Are Excluded Investment Products (“EIP-ILP sub-fund”)
2.20 The following contents in regard to “Requirements On A Financial Adviser

Providing Financial Advisory Services In Relation To Units In An Investment-
Linked Policy Sub-Fund, The Units Of Which Are Excluded Investment Products
(“EIP-ILP sub-fund”)” has been entirely extracted from the Notice No: FAA-N16
from the MAS website:
41B Where the insurer issuing an investment-linked policy (ILP) that has an EIP-ILP
sub-fund within the ILP is required to ensure that a Customer Knowledge
Assessment referred to in paragraph 47B of the Notice on Investment-Linked
Policies [MAS Notice 307] is conducted by a financial adviser on every client
who is a Relevant Policyholder as a result of any change in investment objective
or investment focus of the EIP-ILP sub-fund, or investment approach of the
manager which would cause the units in the EIP-ILP sub-fund to be classified as
Specified Investment Products, and –
(a) a financial adviser of an existing Relevant Policyholder is able to demonstrate
to the insurer concerned that it is unable to conduct a Customer Knowledge
Assessment as referred to in paragraph 47B of the Notice on Investment-
Linked Policies [MAS Notice 307] for reasons beyond its reasonable control,
including where it is unable to contact the existing Relevant Policyholder
despite it having written to that existing Relevant Policyholder regarding the
conduct of such Customer Knowledge Assessment and having made
repeated attempts thereafter to establish contact, or where the existing

Relevant Policyholder refuses to undergo a Customer Knowledge

Assessment as referred to in paragraph 47B of the Notice on Investment-
Linked Policies [MAS Notice 307]; or
(b) a financial adviser has conducted a Customer Knowledge Assessment in
accordance with paragraph 47B of the Notice on Investment-Linked Policies
[MAS Notice 307], and assesses an existing Relevant Policyholder not to
possess the adequate knowledge or experience pursuant to such Customer
Knowledge Assessment, and is unable to allow such existing Relevant
Policyholder to proceed to transact in the unlisted Specified Investment
Product,
the financial adviser may –

(i) allow the existing Relevant Policyholder concerned to continue holding on
to his existing position in the EIP-ILP sub-fund; or
(ii) on the instructions of the existing Relevant Policyholder concerned, execute
a transaction or transactions on behalf of the existing Relevant Policyholder
concerned to reduce his existing position in the EIP-ILP sub-fund.
For the avoidance of doubt, the financial adviser shall not count such
transactions referred to in sub-paragraph (ii) as “investment experience” for the
purposes of conducting the Customer Knowledge Assessment for the existing
Relevant Policyholder concerned.
H. Requirements On Financial Advisers Providing Financial Advisory Services In

Relation To Overseas-Listed Investment Products
2.21 The following contents in regard to “Requirements On Financial Advisers

Providing Financial Advisory Services In Relation To Overseas-Listed Investment
Products” has been entirely extracted from the Notice No: FAA-N16 from the
MAS website:
41C A financial adviser shall provide the risk warning statement set out in Annex 4
to this Notice to its client before making a recommendation on any Overseas-
Listed Investment Product where it is the first time on or after 8 October 2018
that the financial adviser makes such recommendation to the client.
41D The financial adviser shall obtain the client’s acknowledgement of the risk
warning statement, in written form or otherwise, before making a
recommendation on any Overseas-Listed Investment Product, where it is for the
first time on or after 8 October 2018 that the financial adviser makes such
recommendation to the client.

41E The financial adviser shall maintain records of the client’s acknowledgment
referred to in paragraph 41D for a period of not less than 5 years.
41F Where a financial adviser makes a recommendation on an OverseasListed

Investment Product to its client, the financial adviser may implement a system
to identify and determine that the Overseas-Listed Investment Product is to be
classified as an Excluded Investment Product.
41G Where a financial adviser does not implement a system to identify and determine
that an Overseas-Listed Investment Product is to be classified as an Excluded
Investment Product in accordance with paragraph 41F, the Overseas-Listed
Investment Product shall be classified as a Specified Investment Product, and
the requirements set out in paragraphs 27D to 27U, with respect to the
Customer Account Review, shall apply to a financial adviser making a
recommendation on an Overseas-Listed Investment Product to its client.
41H Where a financial adviser has classified an Overseas-Listed Investment Product

as an Excluded Investment Product, it shall ensure the classification of the
Overseas-Listed Investment Product concerned remains accurate and current at
all times.
41I A financial adviser may outsource the identification and classification of an

Overseas-Listed Investment Product as an Excluded Investment Product to
another party. Where the identification and classification of an Overseas-Listed
Investment Product has been outsourced, the financial adviser shall be
responsible for the implementation of the classification system, including but
not limited to, the accuracy of the classification.
41J For the purposes of the requirements provided in paragraphs 41C to 41E, any
reference to a “client” in those paragraphs only refers to a natural person.
I. Switching of Designated Investment Products
2.22 The following contents in regard to “Switching of Designated Investment

Products” has been entirely extracted from the Notice No: FAA-N16 from the
MAS website:
42 A financial adviser shall not make a recommendation to a client to switch from

one designated investment product (referred to as “original product”) to another
designated investment product (referred to as “replacement product”) in a
manner that would be detrimental to the client. In considering whether a switch
is detrimental, the Authority may have regard to a number of factors, including:
(a) whether the client suffers any penalty for terminating the original product;

(b) whether the client will incur any transaction cost without gaining any real
benefit from such a switch;
(c) whether the replacement product confers a lower level of benefit at a higher
cost or same cost to the client, or the same level of benefit at a higher cost;
and
(d) whether the replacement product is less suitable for the client.
43 A financial adviser which makes a recommendation to a client to switch from

one designated investment product to another designated investment product
shall comply with the requirements set out in this Notice.
44 A financial adviser shall disclose, in writing, to a client any fee or charge the
client would have to bear if he were to switch from one designated investment
product to another, in order to ensure that the client is able to make an informed
decision on whether to switch.
45 This Notice shall take effect on 1 January 2012.
Note:
Under section 58(5) of the Act, any person who contravenes any requirement specified
in a written direction issued by the Authority (which would include this Notice), shall
be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000
and, in the case of a continuing offence, to a further fine not exceeding $2,500 for
every day or part thereof during which the offence continues after conviction.
3. NOTICE ON INFORMATION TO CLIENTS AND PRODUCT INFORMATION

DISCLOSURE [NOTICE NO: FAA-N03]
3.1 Notice No: FAA-N03 sets out the standards to be maintained by licensed and
exempt financial advisers and its representatives with respect to the information
that they disclose to clients. Notice No: FAA-N03 was last revised on 5 October
2018.
A. Applicability Of Notice No: FAA-N03
3.2 The following contents in regard to “Applicability Of Notice No: FAA-N03” has
2 Subject to paragraph 2A, this Notice shall apply to –

(d) persons who are exempted under regulation 29 of the Financial Advisers
Regulation (Rg 2) [“FAR”]; and
(e) representatives of persons who are exempted under regulation 29 of the
FAR.

[FAA-N03 (Amendment02) 2003]

B. Persons Exempted From Notice No: FAA-N03
3.3 The following contents in regard to “Persons Exempted From Notice No: FAA-
N03” has been entirely extracted from the Notice No: FAA-N03 from the MAS
website:
2A This Notice shall not apply to the following categories of persons:
(a) persons specified in paragraph 2 who are exempted from complying with
section 25 of the Act under regulations 27A read with section 23(4) or
23(5) of the Act, 31(4), 31(5), 31(7), 31(8), 32B, 33 and 36 of the FAR
only in respect of the activities for which they are exempted under these
regulations;
(b) persons exempt from holding a financial adviser’s licence under section
23(1)(a), (b), or (d) of the Act and their representatives, only in respect of
their carrying on the business of providing execution-related advice;
(c) persons specified in regulation 4 of the Financial Advisers (Structured

Deposits - Prescribed Investment Products and Exemption) Regulations
2005 in relation to the provision of any financial advisory service relating to
any structured deposits as defined in those Regulations;
(d) persons specified in regulation 3 of the Financial Advisers (Exemption from

Sections 25 to 29 and 36) Regulations 2004 in respect of the provision of
any financial advisory service relating to the investment products referred
to in those Regulations.
3 This Notice sets out the standards to be maintained by licensed and exempt
financial advisers and their representatives with respect to the information they
disclose to clients.
4 Deleted by FAA-N03 (Amendment) 2005.
4A Deleted by FAA-N03 (Amendment) 2004.

5 Section 25 of the Act2 imposes an obligation on licensed financial advisers to

disclose to their clients and prospective clients all material information relating
to any designated investment product recommended by the licensed financial
advisers, including the form and manner in which the information shall be
disclosed. Section 26 of the Act1 provides that no licensed financial adviser shall,
with intent to deceive, make a false or misleading statement as to any amount
that would be payable in respect of a proposed contract relating to any
investment product or the effect of any provision of a contract or proposed
contract relating to the investment product.
6 This Notice sets out the general principles that apply to all disclosures by a
financial adviser to its client. It also sets out specific requirements as to the form
and manner of disclosure that financial advisers have to comply with in relation
to sections 25 and 26 of the Act, as well as to the following matters:
(a) General information about the financial adviser and status of a
representative;
(b) Remuneration of the financial adviser;
(c) Conflicts of interest;
(d) Designated investment products;
(e) Illustration of past and future performance of designated investment
products; and
(f) Marketing materials.
C. General Disclosure Principles
3.4 The following contents in regard to “General Disclosure Principles” has been
10 In addition to the obligations under section 25 of the Act, a financial adviser

shall ensure that any statement or representation made to its clients is not false
or misleading. It shall also ensure that it does not omit to disclose any matter
that is material to the statement or representation made.
11 The general standards which a financial adviser is expected to meet in all product
information disclosures and information given to clients are as follows:
(a) Clear
(i) Information disclosed to clients in any advertisement or publicity
material in any media should be presented in plain language, and in a
manner that is easy for the client to understand.
(ii) Jargon or technical terms used should be clearly explained to clients.
2
Section 23(4) and 37 of the Act provide that section 25 and section 26 also apply to exempt
financial advisers and appointed and provisional representatives.

(b) Adequate
(i) Information disclosed to clients should meet regulatory requirements
and accord with industry best practices. In addition, the information
provided should be sufficient to help clients make an informed decision.
(ii) Warnings and important information such as the nature and objective of
the product, risks of the product, fees and charges, and contractual
rights and obligations of clients, should be prominently presented and
clearly explained.
(c) Not False or Misleading

(i) Information disclosed to clients should not be ambiguous in language or
presentation.
(ii) Information relating to investment products should be disclosed in an
objective and unbiased manner.
(iii) Where an opinion is expressed, there should be a reasonable basis for
expressing the opinion and it should be unambiguously stated that it is
a statement of opinion.
(iv) Documents to be given to clients should be kept up-to-date and
reviewed at least annually.
D. General Information About The Financial Adviser And Status Of A Representative
3.5 The following contents in regard to “General Information About The Financial
Adviser And Status Of A Representative” has been entirely extracted from the
Notice No: FAA-N03 from the MAS website:
12 A financial adviser shall disclose the following, in writing, to a client:

(a) its business name, business address and telephone number;
(b) the type or types of financial advisory service that it is authorised to provide
under the Act;
(c) the type or types of investment products in respect of which it is authorised
to provide financial advisory service;
(d) any other type of activity carried out by the financial adviser which is not
regulated by the Authority, if any; and
(e) the product providers whose products the financial adviser:
(i) procures on behalf of its client;
(ii) recommends or markets to its clients; or
(iii) markets to its client on behalf of the product providers.
A financial adviser shall inform a client, in writing, of any change to such

information in any subsequent dealings with the client.

13 A representative shall disclose the following, in writing, to the client:

(a) his name;
(b) the financial adviser(s) for which he acts;
(c) the type or types of financial advisory service that he is authorised to
provide under the Act; and
(d) the type or types of investment products in respect of which he is authorised
to provide financial advisory service.
A representative shall also inform the client, in writing, of any change to such
information in any subsequent dealings with the client.
14 Deleted by FAA-N03 (Amendment02) 2003
15 Deleted by FAA-N03 (Amendment02) 2003

E. Remuneration Of The Financial Adviser
3.6 The following contents in regard to “Remuneration Of The Financial Adviser” has
16 A financial adviser shall disclose, in writing, to a client all remuneration, including

any commission, fee and other benefits, that it has received or will receive that
is directly related to –
(a) the making of any recommendation in respect of an investment product to
the client; or
(b) executing a purchase or sale contract relating to a designated investment
product on the client’s behalf.
It is, however, not required to disclose any remuneration that it has received or
will receive in respect of any other activity that is unrelated to its provision of
17 If a financial adviser charges a fee, it shall disclose to the client at the outset
details of these charges.
18 If a financial adviser receives commissions from a product provider on products

sold on behalf of the product provider, it shall disclose to a client the amount of
commissions it receives on the investment products it recommends.
19 Where a financial adviser receives a trailer commission, soft commission or such

other benefit from a product provider, it shall disclose to a client the amount of
such commission and other benefit.

20 Where the amount of remuneration, commission, fee or benefit is not

quantifiable, the financial adviser shall furnish its client with a description of
how it will be remunerated.
21 If the precise rate of remuneration or value of commission is not known in

advance, the financial adviser shall estimate the rate likely to apply in such a
description.
22 In the case of a life policy, a financial adviser shall disclose to its client the
“distribution cost” item in the policy illustration (where a policy illustration is
available in respect of the life policy) and shall not be required to disclose the
amount and type of remuneration stated at paragraphs 16 to 21 of this Notice.
F. Conflicts Of Interest
3.7 The following contents in regard to “Conflicts Of Interest” has been entirely
23 A financial adviser shall disclose, in writing, to its clients any actual or potential
conflict of interest arising from any connection to or association with any
product provider, including any material information or facts that may
compromise its objectivity or independence in its provision of financial advisory
services.
G. Designated Investment Products
3.8 The following contents in regard to “Designated Investment Products” has been
24 When making a recommendation on any designated investment product to a

client, a financial adviser shall disclose the following information to the client in
a form and manner that is clear, adequate and not false or misleading:
(a) Nature and objective of the product

The financial adviser shall disclose and explain to the client the nature and
objective of the product, including:
(i) whether the product is a life policy or units in a collective investment
scheme;
(ii) whether the product is meant for protection, savings or investment; and
(iii) the investment strategy of the product.
(b) Details of the product provider

The financial adviser shall disclose to the client details relating to:
(i) the product provider;

(ii) the relationship between the product provider and the financial adviser;
and
(iii) the business address of the product provider.
(c) Contractual rights

The financial adviser shall disclose and explain to the client the party against
which the client may take action to enforce his rights with respect to the
product he has purchased.
In the case of a collective investment scheme where the units are held on
behalf of the client under a nominee company’s name, the financial adviser
shall disclose and explain to the client the fact that his rights may only be
enforced through the nominee company.
In the case of a life policy, the financial adviser shall disclose and explain to
the client that he is responsible for the accuracy and completeness of the
information given to the life insurer issuing the life policy:
(i) in an application for the life policy; and
(ii) when making a claim under the life policy.
The financial adviser shall also disclose and clearly explain to the client that
any mis-statement or non-disclosure of material facts may affect the validity
of the policy.
(d) Client profile

The financial adviser shall disclose and explain to the client the intended
client profile of the product, including:
(i) the product’s intended investment horizon;
(ii) the ease of converting the investment in the product to cash; and
(iii) the expected level of risk tolerance of the client.
(e) Commitment required from the client

The financial adviser shall disclose and explain to the client the amount of,
frequency with which, and period over which, payment is to be made in
respect of the product.
In the case of a life policy, the financial adviser shall disclose and explain to
the client whether the premium rate is guaranteed or non-guaranteed.
(f) Benefits of the product

The financial adviser shall disclose and explain to the client the benefits of
the product, including the amount and timing for payment of benefits by the
product provider to the client and whether the benefits are guaranteed or
non-guaranteed.
In the case of a life policy, the financial adviser shall furnish the client with
a policy illustration in respect of the life policy (where a policy illustration is

available in respect of the life policy). In such a case, the financial adviser
shall also disclose and explain the policy illustration to the client as well as
any lien imposed on the policy and any benefit excluded by the life insurer
in respect of the policy.
In the case of a collective investment scheme which is, or an investment-

linked policy invested in, a guaranteed fund, where the guaranteed value is
less than 100% of the subscription amount or premiums paid, the financial
adviser shall disclose and explain that fact to the client.
(g) Risks of the product

The financial adviser shall disclose and explain to the client the risks to be
borne by the client in the purchase of the product. In the case of a life policy,
the financial adviser shall:
(i) disclose and explain the risk factors that may result in the benefits
payable to be less than the illustrated values; and
(ii) explain the alternative scenarios as indicated in the policy illustration
(where a policy illustration is available in respect of the life policy).
In the case of a collective investment scheme, the financial adviser shall
disclose and explain to the client all the risks stated in the prospectus or
profile statement issued in respect of that scheme.
(h) Pricing of the product

In the case of a collective investment scheme and an investment-linked
policy, the financial adviser shall disclose and explain to the client whether
the units will be priced on a historical or forward basis.
The financial adviser shall also disclose and explain to the client:
(i) in the case of a dual pricing scheme, that the bid and offer prices are
the selling and buying prices respectively; and
(ii) in the case of a single pricing scheme, that the single price does not
take into account subscription or realisation fees which may be
separately payable by the client upon purchase or redemption
respectively.
(i) Fees and charges to be borne by the client

The financial adviser shall disclose and explain to the client the amount,
frequency of payment, and nature, of fees and charges payable under the
product. Where the product is subject to a deferred sales load, the financial
adviser shall explain this fact and disclose the details of the deferred sales
load to the client.

In the case of a collective investment scheme or an investment-linked policy,

the financial adviser shall disclose:
(i) the fees and charges payable by the client;
(ii) fees and charges that are payable out of the fund; and
(iii) when such fees and charges are due and payable.
The financial adviser shall also disclose and explain to the client all the fees
and charges as stated, in the case of a collective investment scheme, in the
prospectus, or in the case of an investment-linked policy, in the policy
contract or product summary (where a product summary is available in
respect of the life policy) as well as the reduction in yield in the policy
illustration (where a policy illustration is available in respect of the
investment-linked policy), where applicable.
(j) Reports to the client

Where regular reports from the product providers to the client are required
by the relevant laws, the financial adviser shall disclose and explain to the
client the frequency of the reports and the source from which the client
could reasonably be expected to receive the reports.
(k) Free-look period for life policies

The financial adviser shall disclose and explain to the client:
(i) the time frame for the client to reconsider his purchase of a life policy;
(ii) the terms and procedures for exercising the free-look provision; and
(iii) in the case of an investment-linked policy, that the risk of any fall in
value of the underlying investment during the free-look period may have
to be borne by the client.
(l) Cancellation period for unit trusts

Where the unit trust provides for a cancellation period, the financial adviser
shall disclose and explain to the client:
(i) the time frame for the client to reconsider his purchase of a unit trust;
(ii) the terms and procedures for exercising his right to cancel his purchase
of units in the scheme; and
(iii) that the risk of any fall in value of the units during the cancellation period
would have to be borne by the client.
(m) Withdrawal, surrender or claim

The financial adviser shall disclose and explain to the client the procedures,
charges and restrictions on withdrawal, surrender or claim of the product.
In the case of a collective investment scheme or an investment-linked policy

where the fund is a guaranteed fund and the guarantee is only valid at a

certain point in time, the financial adviser shall disclose and explain to the
client that the guarantee is not valid on premature withdrawal.
(n) Warnings, exclusions and disclaimers

The financial adviser shall disclose and explain to the client all warnings,
exclusions and disclaimers in relation to the product it has recommended to
the client.
H. Illustration Of Past And Future Performance Of Designated Investment Products
3.9 The following contents in regard to “Illustration of Past and Future Performance
of Designated Investment Products” has been entirely extracted from the Notice
No: FAA-N03 from the MAS website:
25 A financial adviser shall comply with the following with respect to any
illustration of past and future performance of any designated investment
product:
(a) subject to paragraph 26, the financial adviser shall not disclose (whether
orally or in writing) any matter in respect of the future performance of a
collective investment scheme, unless that matter is disclosed in the
registered prospectus of the scheme and the prospectus complies with
paragraphs 62 to 66 of the Third Schedule to the Securities and Futures
(Offers of Investments) (Collective Investment Schemes) Regulations
2005;
(b) when using any forecast on the economy, stock market, bond market and
economic trends of the markets, it shall advise the client that such a
forecast is not necessarily indicative of the future or likely performance of
the product;
(c) when using past performance of the product to illustrate possible returns
for that product, it shall advise the client that past performance is not
necessarily indicative of future performance. The source of data used in
the illustration should be provided by the product provider or an
independent agency, and be made known to the client;
(d) when advising on a life policy, it shall make reference to the policy
illustration in respect of that life policy (where a policy illustration is
available in respect of that life policy); and
(e) when advising on a collective investment scheme, it shall not make any
prediction, projection or forecast on the future or the likely performance of
the collective investment scheme, except to the extent permitted under
clause 1 of Annex A.

26 When advising on a collective investment scheme:
(a) a financial adviser may disclose orally to a client any information on past or
future performance contained in the registered prospectus of the scheme if
and only if such disclosure is made at the same time as a copy of the
prospectus is given to the client, and the financial adviser:
(i) draws the attention of the client to all assumptions, warning statements
and other information relating to the past or future performance that are
contained in the prospectus; and
(ii) where the last day of the period to which the past performance relates
is more than 3 months prior to the date of the financial adviser’s
disclosure, informs the client of this fact;
(b) in all other cases, a financial adviser may disclose orally to its client any
matter on past or future performance if and only if the financial adviser
provides to the client at the same time a written disclosure of that matter.
The financial adviser shall draw the attention of the client to all assumptions,
warning statements, and other information relating to the past or future
performance that are contained in the written disclosure; and
(c) any written disclosure by a financial adviser to its client of past or future
performance shall comply with the requirements in Annex A.
I. Marketing Materials
3.10 The following contents in regard to “Marketing Materials” has been entirely
27 A financial adviser shall ensure that all its marketing materials comply with
paragraphs 25 and 26 of this Notice. A financial adviser is also expected to
comply with the General Disclosure Principles set out at paragraph 11 of this
Notice and relevant guidelines issued by the Authority and/or industry
associations of which it is a member.
28 A representative shall only use marketing materials approved by the financial

adviser for which he acts.
29 Where a financial adviser engages in the marketing of designated investment

products using direct response advertising communications through any
medium, including mail, print, TV, radio and electronic media, that is designed
to solicit and close a sale, it shall include, in all its marketing materials, a
prominent warning that:
(a) the client may wish to seek advice from a financial adviser before making a
commitment to purchase the product; and

(b) in the event that the client chooses not to seek advice from a financial
adviser, he should consider whether the product in question is suitable for
him.
Note:
in a written direction issued by the Authority (which would include this Notice), shall
be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000
and, in the case of a continuing offence, to a further fine not exceeding $2,500 for
every day or part thereof during which the offence continues after conviction.
4. NOTICE ON DUAL CURRENCY INVESTMENTS [NOTICE NO: FAA-N11]
4.1 The following contents in regard to “Notice On Dual Currency Investments” has
been entirely extracted from the Notice No: FAA-N11 (Issue Date : 2 December
2005) from the MAS website:
1 This Notice is issued pursuant to section 58 of the Financial Advisers Act (Cap.
110) [“the Act”]
2 This Notice applies to any licensed or exempt financial adviser or its

representative, who advises on any dual currency investment, except —
(a) where advice is given to an accredited investor, expert investor or

institutional investor, as defined in regulation 2(1) of the Financial Advisers
Regulations (Rg 2);
(b) where advice is given to a high net worth individual as defined in the
Guidelines on Exemption for Specialised Units Serving High Net Worth
Individuals under Section 100(2) of the Financial Advisers Act (Guideline
No. FAA-GO7), by a separate and distinct department, division, section or
unit [“the Unit”] of the licensed or exempt financial adviser, as the case may
be, and the licensed or exempt financial adviser has been exempted from
certain provisions in Part III of the Act and certain written directions issued
pursuant to section 58 of the Act in relation to the provision of financial
advisory services by the unit; or
(c) where advice is given to any person outside Singapore who is —

(i) an individual and —
(A) not a citizen of Singapore;
(B) not a permanent resident of Singapore; and
(C) not wholly or partly dependent on a citizen or permanent resident
of Singapore; or
(ii) in any other case, a person with no commercial or physical presence in
Singapore.

A. Definitions
4.2 The following contents in regard to “Definitions” has been entirely extracted from
the Notice No: FAA-N11 from the MAS website:
3 The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same meanings as in
the Act.
4 For the purposes of this Notice:
“alternate currency”, in relation to a dual currency investment, means the

currency (other than the base currency) in which the principal sum could be
repaid;
“bank” means —
(a) a bank licensed under the Banking Act (Cap. 19); or
(b) a merchant bank approved as a financial institution under the Monetary
Authority of Singapore Act (Cap. 186);
“base currency”, in relation to a dual currency investment, means the currency

in which the initial investment is made;
“client” includes a prospective client;
“deposit” has the same meaning as in the Financial Advisers (Prescribed

Investment Products and Exemption) Regulations 2005;
“deposit-taking institution” means —

(a) a bank; or
(b) a finance company licensed under the Finance Companies Act (Cap. 108);
“dual currency investment” has the same meaning as in the Financial Advisers
(Prescribed Investment Products and Exemption) Regulations 2005.
“financial adviser” means a licensed financial adviser or a person exempt from

holding a financial adviser’s licence under section 23(1)(a), (b), (c), (d) or (e) of
the Act;
“maturity date” means the date on which the principal sum due on a dual
currency investment is repaid;
“rate-fixing date” means the date on which a deposit-taking institution that

offered a dual currency investment determines whether to pay the interest and
principal sum due on the dual currency investment in the base currency or the
alternate currency;

“rate-fixing time” means the time on the rate-fixing date at which the prevailing
exchange rate between the base currency and the alternate currency used to
determine whether the interest and principal sum due on a dual currency
investment will be paid in the base currency or the alternate currency;
“spot rate” means the prevailing exchange rate between the base currency and
the alternate currency at the time of investment;
“strike rate” means the exchange rate at which the principal sum due on a dual
currency investment is converted into the alternate currency if the principal sum
is to be repaid in the alternate currency at maturity; and
“value date” means the date from which interest on a dual currency investment
accrues.
A1. Use Of The Terms “Deposit” And “Structured Deposit”
4.3 The following contents in regard to “Use Of The Terms “Deposit” And
“Structured Deposit”” has been entirely extracted from the Notice No: FAA-N11
5 “Deposit” is defined in the Banking Act, and has a generally understood

meaning. Labeling a dual currency investment as a deposit may be misleading
as investors may misconstrue that the product is principal guaranteed in terms
of the base currency.
6 No financial adviser or its representative shall, when describing or referring to a

dual currency investment in any marketing material or product disclosure
document, use the term “deposit”, or any of its derivatives in any language, or
“structured deposit”, or any of its derivatives in any language, in the name or
description or any representation of that dual currency investment.
A2. Additional Product Information Disclosure
4.4 The following contents in regard to “Additional Product Information Disclosure ”

has been entirely extracted from the Notice No: FAA-N11 from the MAS website:
7 In addition to the Notice on Information to Clients and Product Information

Disclosure (Notice No. FAA–N03), every financial adviser and its representative
providing any financial advisory service to a client concerning a dual currency
investment shall provide the client with a fair and adequate description of all
material information, including the following:
(a) a description of the nature and mechanics of the dual currency investment,
including a statement or statements to the following effect:

(i) a dual currency investment involves a currency option which confers on

the deposit-taking institution the right to repay the principal sum at
maturity in either the base or alternate currency; and
(ii) part or all of the interest earned on this investment represents the
premium on this option;
(b) appropriate illustrations to show how foreign exchange rate movements

could result in the principal amount being repaid in the alternate currency
which could in turn result in the client receiving less than the principal
amount initially invested, when the amount in the alternate currency is
converted back to the base currency;
(c) in relation to sub-paragraph (b), the assumptions that are made, including
hypothetical examples to show what the client would receive in the event
that the prevailing exchange rate at the rate-fixing time is higher than, equal
to, or lower than, the strike rate;
(d) the potential benefits of investing in the dual currency investment and for
whom such investments would be appropriate;
(e) any minimum investment amount in relation to the dual currency

investment;
(f) the currencies from which the client can select at the time of investment;
(g) the investment duration offered by the deposit-taking institution in relation

to the dual currency investment;
(h) a statement on whether the withdrawal of the principal or any part thereof
is permitted prior to maturity. If early withdrawal is permitted, the details on
the procedures and charges applicable and where applicable, a statement to
the effect that the client may incur a loss on the principal amount upon
withdrawal;
(i) a statement on whether the investment could be terminated by the deposit-

taking institution prior to maturity. If early termination is permitted, the
details on the events that would trigger such termination, how payments to
the client will be determined at the time of termination and where applicable,
a statement to the effect that the client may incur a loss on the principal
amount upon termination;
(j) an explanation on how foreign exchange control restrictions imposed by the

home country of a foreign currency could impact the investment held by the
client;
(k) a summary of the foreign exchange control restrictions applicable to the dual
currency investment held by the client (including the payment of interest
and principal amounts) or details on how the client could obtain such

information in respect of each foreign currency offered in relation to the dual

currency investment;
(l) all other relevant risk factors.

B. Warnings
4.5 The following contents in regard to “Warnings” has been entirely extracted from
8 Every financial adviser and its representative shall provide appropriate risk
warnings to all clients in relation to a dual currency investment. At the minimum,
the warnings shall convey the following message, which shall be provided in all
marketing material and product disclosure documents, and shall be clearly
legible.
“(a) By purchasing this dual currency investment you are giving the issuer of this
product the right to repay you at a future date in an alternate currency that
is different from the currency in which your initial investment was made,
regardless of whether you wish to be repaid in this currency at that time.
(b) Dual currency investments are subject to foreign exchange fluctuations
which may affect the return of your investment. Exchange controls may
also be applicable to the currencies your investment is linked to. You may
incur a loss on your principal sum in comparison with the base amount
initially invested.
(c) You may wish to seek advice from a licensed or an exempt financial adviser
before making a commitment to purchase this product. In the event that
you choose not to seek advice from a licensed or an exempt financial
adviser, you should carefully consider whether this product is suitable for
you.”
C. Guidelines On Structured Deposits
4.6 The following contents in regard to “Guidelines On Structured Deposits” has been
9 Unless otherwise stated, every financial adviser and its representatives advising
on dual currency investments should also observe all relevant provisions in the
Guidelines on Structured Deposits.
10 This Notice shall take effect on 1 March 2006.

Annex 1 of Notice No : FAA-N16
EXCLUDED INVESTMENT PRODUCTS
1. “Excluded Investment Product” means –

(a) any capital markets products that belong to a class of capital markets products
listed in the Schedule to the Securities and Futures (Capital Markets Products)
Regulations 2018;
(b) any life policy excluding an investment-linked policy (other than an investment-
linked policy where the units in an ILP sub-fund within the investment-linked
policy are referred to in paragraph (c));
(c) any unit in an ILP sub-fund in the circumstances mentioned in paragraph 2; or
(d) two or more products specified in paragraphs (a) to (c) in this Annex that are
linked together in a stapled manner such that one product may not be transferred
or otherwise dealt without any of the other product(s).
2. For the purpose of paragraph 1(c), the circumstances are all of the following:
(a) the investment objectives and investment focus of the ILP sub-fund, and
investment approach of the manager stated in the product summary as
prescribed in Appendix A of the Notice on Investment-Linked Policies [MAS
Notice 307] require that the manager of the ILP sub-fund must not engage in any
securities lending transaction or securities repurchase transaction in relation to
the scheme, except where —
(i) the securities lending transaction or securities repurchase transaction (as
the case may be) is carried out for the sole purpose of efficient portfolio
management; and
(ii) the total value of securities subject to all the securities lending transactions
and securities repurchase transactions entered into by the manager does
not exceed 50% of the net asset value of the scheme at any time, and the
manager complies with the requirement;
(b) the product summary as prescribed in Appendix A of the Notice on Investment-
Linked Policies [MAS Notice 307] require that the manager of the ILP sub-fund
must —
(i) invest the property of the ILP sub-fund only in one or more of the following:
(A) deposits as defined in section 4B(4) of the Banking Act (Cap. 19);
(B) gold certificates, gold savings accounts or physical gold;
(C) any investment product mentioned in paragraph 1(a) to (d);
(D) any product, instrument, contract or arrangement (other than the
investment products mentioned in paragraph 1(a) to (d)) if the
investment in such product, instrument, contract or arrangement is

solely for the purpose of hedging or efficient portfolio management;

or
(ii) invest the property of the ILP sub-fund as follows:
(A) only in one or more products, instruments, contracts or
arrangements mentioned in subparagraph (i); but
(B) may invest in some other product, instrument, contract or
arrangement if —
(BA) there is any change in any written law, regulation,
direction, rule or non-statutory instrument of the
jurisdiction where the scheme is constituted, operating or
investing; and
(BB) following such change, the manager is restricted or
prohibited from investing in any of the products,
instruments, contracts or arrangements mentioned in
subparagraph (i),
and, in the case of either sub-paragraph (i) or (ii), the manager invests the
property of the ILP sub-fund only in one or more of the products,
instruments, contracts or arrangements mentioned in sub-paragraph (i).
3. Where, under paragraph 2, the manager of the ILP sub-fund invests the property of
the ILP sub-fund in any product, instrument, contract or arrangement not mentioned
in paragraph 2(b)(i), whether or not in accordance with a requirement mentioned in
paragraph 2(b)(ii)(B), then the unit in the ILP sub-fund ceases to be an Excluded
Investment Product with effect from the date of the investment.

CRITERIA FOR THE SATISFACTION OF THE CUSTOMER KNOWLEDGE ASSESSMENT
1. A client who satisfies any of the following may be assessed as possessing the
knowledge or experience in an unlisted Specified Investment Product for the purpose
of the satisfaction of the Customer Knowledge Assessment in the Specified
Investment Product concerned:
(a) The client holds a diploma or has higher qualifications in accountancy, actuarial
science, business/business administration / business management / business
studies, capital markets, commerce, economics, finance, financial engineering,
financial planning, computational finance and insurance;
(b) The client has a professional finance-related qualification3;
(c) The client has invested in the following unlisted Specified Investment
Products:
(i) For transactions in collective investment schemes (referred to as “CIS”)
and investment-linked life insurance policies (referred to as “ILPs”), the
client has transacted in CIS or ILPs at least 6 times in the preceding 3
years; or
(ii) For transactions in Specified Investment Products which are neither listed
nor quoted on a securities market or a futures market (excluding CIS and
ILPs), the client has transacted in any Specified Investment Products
which are neither listed nor quoted on a securities market or a futures
market (excluding CIS and ILPs) at least 6 times in the preceding 3 years;
(d) The client has a minimum of 3 consecutive years of working experience4 in

the past 10 years in the development of, structuring of, management of, sale
of, trading of, research on and analysis of investment products or the provision
of training in investment products. Work experience in accountancy, actuarial
science, treasury or financial risk management activities will also be considered
relevant experience.
2. Where a client is assessed to not possess knowledge or experience in an unlisted

Specified Investment Product, but subsequently demonstrates sufficient
understanding of the features and risks of that Specified Investment Product through
3
Examples of this would include the:
- Chartered Financial Analyst Examination conducted by the CFA Institute, USA;
- Association of Chartered Certified Accountants (ACCA) Qualifications;
- Associate Wealth Planner or Certified Financial Planner by the Certified Financial Planners Board of
Standards, USA;
- Certified Financial Risk Manager Programme by the Global Association of Risk Professionals, USA;
- Chartered Alternative Investment Analyst Examination conducted by the Chartered Alternative
Investment Analyst Association, USA; or
- Chartered Financial Consultant by the American College, USA.
4
Such working experience would also include the provision of legal advice or possession of legal expertise
on the relevant areas listed in limb (d).

a learning module provided by an independent body as set out in the Practice Note
on Recommendations on Investment Products [FAA PN-02], the client may be
deemed to possess the knowledge to transact in that unlisted Specified Investment
Product.

CRITERIA FOR THE ASSESSMENT OF A CUSTOMER ACCOUNT REVIEW
1. A client who satisfies any of the following may be assessed as possessing the
knowledge or experience in derivatives for the satisfaction of the Customer Account
Review in the Specified Investment Product concerned:
(a) the client holds a diploma or has higher qualifications in accountancy, actuarial
science, business / business administration / business management / business
studies, capital markets, commerce, economics, finance, financial engineering,
financial planning, computational finance and insurance;
(b) the client has a professional finance-related qualification5;
(c) the client has transacted in Listed Specified Investment Products at least 6
times in the preceding 3 years; or
(d) the client has a minimum of 3 consecutive years of working experience6 in the
past 10 years, in the development of, structuring of, management of, sale of,
trading of, research on or analysis of investment products7 , or the provision
of training in investment products. Work experience in accountancy, actuarial
science, treasury or financial risk management activities will also be considered
relevant experience.
2. Where a client is assessed to not possess knowledge or experience in derivatives,

but subsequently demonstrates sufficient understanding of the features and risks of
derivatives through a learning module provided by an independent body as set out
in the Practice Note on the Sale of Investment Products [SFA PN-01], the client may
be deemed to possess the knowledge to transact in Listed Specified Investment
Products.
5
Examples of this would include the:
- Chartered Financial Analyst Examination conducted by the CFA Institute, USA;
- Association of Chartered Certified Accountants (ACCA) Qualifications;
- Associate Wealth Planner or Certified Financial Planner by the Certified Financial Planners Board of
Standards, USA;
- Certified Financial Risk Manager Programme by the Global Association of Risk Professionals, USA;
- Chartered Alternative Investment Analyst Examination conducted by the Chartered Alternative
Investment Analyst Association, USA; or
- Chartered Financial Consultant by the American College, USA
6
Such working experience would also include the provision of legal advice or possession of legal expertise
on the relevant areas listed in limb (d).
7
As defined in section 2 of the Financial Advisers Act (Cap. 110).
RISK WARNING STATEMENT FOR OVERSEAS-LISTED INVESTMENT PRODUCTS
OVERSEAS-LISTED INVESTMENT PRODUCTS
RISK WARNING
An overseas-listed investment product* is subject to the laws and regulations of the

jurisdiction it is listed in. Before you trade in an overseas-listed investment product or
authorise someone else to trade for you, you should be aware of:
• The level of investor protection and safeguards that you are afforded in the relevant
foreign jurisdiction as the overseas-listed investment product would operate under a
different regulatory regime.
• The differences between the legal systems in the foreign jurisdiction and Singapore
that may affect your ability to recover your funds.
• The tax implications, currency risks, and additional transaction costs that you may
have to incur.
• The counterparty and correspondent broker risks that you are exposed to.
• The political, economic and social developments that influence the overseas markets
you are investing in.
These and other risks may affect the value of your investment. You should not invest in
the product if you do not understand or are not comfortable with such risks.
*An “overseas-listed investment product” in this statement refers to a capital markets

product that is approved in-principle for listing and quotation only on, or listed for
quotation or quoted only on, one or more overseas exchange(s).
1. This statement is provided to you in accordance with paragraph 41C of the Notice
on Recommendations on Investment Products [FAA-N16].
2. This statement does not disclose all the risks and other significant aspects of trading
in an overseas-listed investment product. You should undertake such transactions
only if you understand and are comfortable with the extent of your exposure to the
risks.
3. You should carefully consider whether such trading is suitable for you in light of
your experience, objectives, risk appetite, financial resources and other relevant
circumstances. In considering whether to trade or to authorise someone else to trade
for you, you should be aware of the following:
Differences in Regulatory Regimes
(a) Overseas markets may be subject to different regulations, and may operate
differently from approved exchanges in Singapore. For example, there may be
different rules providing for the safekeeping of securities and monies held by
custodian banks or depositories. This may affect the level of safeguards in place to
ensure proper segregation and safekeeping of your investment products or monies
held overseas. There is also the risk of your investment products or monies not being
protected if the custodian has credit problems or fails. Overseas markets may also
have different periods for clearing and settling transactions. These may affect the
information available to you regarding transaction prices and the time you have to
settle your trade on such overseas markets.
(b) Overseas markets may be subject to rules which may offer different investor
protection as compared to Singapore. Before you start to trade, you should be fully
aware of the types of redress available to you in Singapore and other relevant
jurisdictions, if any.
(c) Overseas-listed investment products may not be subject to the same disclosure
standards that apply to investment products listed for quotation or quoted on an
approved exchange in Singapore. Where disclosure is made, differences in
accounting, auditing and financial reporting standards may also affect the quality
and comparability of information provided. It may also be more difficult to locate up-
to-date information, and the information published may only be available in a foreign
language.
Differences in legal systems
(d) In some countries, legal concepts which are practiced in mature legal systems may
not be in place or may have yet to be tested in courts. This would make it more
difficult to predict with a degree of certainty the outcome of judicial proceedings or
even the quantum of damages which may be awarded following a successful claim.
(e) The Monetary Authority of Singapore will be unable to compel the enforcement of
the rules of the regulatory authorities or markets in other jurisdictions where your
transactions will be effected.
(f) The laws of some jurisdictions may prohibit or restrict the repatriation of funds from
such jurisdictions including capital, divestment proceeds, profits, dividends and
interest arising from investment in such countries. Therefore, there is no guarantee
that the funds you have invested and the funds arising from your investment will be
capable of being remitted.
(g) Some jurisdictions may also restrict the amount or type of investment products that
foreign investors may trade. This can affect the liquidity and prices of the overseas-
listed investment products that you invest in.
Different costs involved
(h) There may be tax implications of investing in an overseas-listed investment product.

For example, sale proceeds or the receipt of any dividends and other income may
be subject to tax levies, duties or charges in the foreign country, in Singapore, or in
both countries.
(i) Your investment return on foreign currency-denominated investment products will

be affected by exchange rate fluctuations where there is a need to convert from the
currency of denomination of the investment products to another currency, or may
be affected by exchange controls.
(j) You may have to pay additional costs such as fees and broker’s commissions for
transactions in overseas exchanges. In some jurisdictions, you may also have to pay
a premium to trade certain listed investment products. Therefore, before you begin
to trade, you should obtain a clear explanation of all commissions, fees and other
charges for which you will be liable. These charges will affect your net profit (if any)
or increase your loss.
Counterparty and correspondent broker risks
(k) Transactions on overseas exchanges or overseas markets are generally effected by

your Singapore broker through the use of foreign brokers who have trading and/or
clearing rights on those exchanges. All transactions that are executed upon your
instructions with such counterparties and correspondent brokers are dependent on
their respective due performance of their obligations. The insolvency or default of
such counterparties and correspondent brokers may lead to positions being
liquidated or closed out without your consent and/or may result in difficulties in
recovering your monies and assets held overseas.
Political, Economic and Social Developments
(l) Overseas markets are influenced by the political, economic and social developments
in the foreign jurisdiction, which may be uncertain and may increase the risk of
investing in overseas-listed investment products.
ACKNOWLEDGEMENT OF RECEIPT OF THIS RISK WARNING STATEMENT
I acknowledge that I have received a copy of the Risk Warning Statement and understand
its contents.
Signature of customer: ______________________
Name of customer: _______________________
Date: ______________________
Annex A of Notice No : FAA-N03
FUTURE AND PAST PERFORMANCE OF COLLECTIVE INVESTMENT SCHEMES (CIS)
Future Performance Of A CIS
1.-- (1) Subject to paragraph (3), any disclosure of information, in relation to a CIS, by
a financial adviser to its client shall not:
(a) include any prediction, projection or forecast as to the future or likely
performance of the scheme; and
(b) use words such as “targeted”, “expected” or any similar words or
description in relation to a rate of return.
(2) A financial adviser may disclose to its client a prediction, projection or forecast
on the economy, stock market, bond market and the economic trends of the
markets which are targeted by the scheme if the disclosure is accompanied by
a prominent statement to the effect that the prediction, projection or forecast
is not necessarily indicative of the future or likely performance of the scheme.
(3) The financial adviser may only disclose a forecast on any other matter if the
prediction, projection or forecast is contained in a prospectus issued in respect
of a scheme registered by the Authority under section 296 of the Securities and
Futures Act (Cap. 289) and shall draw to the attention of the client all
assumptions, warning statements and other information relating to the forecast
that are contained in the prospectus.
(4) Where the return on a CIS is guaranteed and such return is contained in a
prospectus issued in respect of a scheme registered by the Authority under
section 296 of the Securities and Futures Act, the financial adviser may disclose
the return set out in the prospectus and shall draw to the attention of the client
all material information relating to the guarantee that is contained in the
prospectus.
Past Performance Of A CIS
2. -- (1) Where a financial adviser discloses information on the past performance of a

CIS to its client, the disclosure shall: —
(a) include a prominent statement that the past performance of the scheme is
not necessarily indicative of the future performance of the scheme;
(b) state the return on the scheme, calculated on an offer-to-bid basis illustrated
in the Schedule or on a single pricing basis (taking into account any
subscription fee and realisation fee), and include a statement that the return
is calculated on this basis;
(c) where dividends have been declared or distributions have been made by the
scheme, state the return on the scheme, calculated on the assumption that
all dividends and distributions are reinvested, taking into account all charges
which would have been payable upon such reinvestment, and include a
statement that the return is calculated on this basis;
(d) present the return on the scheme in relation to a period of not less than a
year;
(e) where the total return on the scheme is presented for a period exceeding
one year, state the average annual compounded return on the scheme over
the same period, calculated in the manner illustrated in the Schedule; and
(f) indicate the period to which the return on the scheme relates, of which:
(i) the last day of the period shall not be earlier than three months prior to
the disclosure; and
(ii) the first day and last day of the period shall be based on –
(1) the first business day or last business day of a month; or
(2) the first dealing day or last dealing day of the scheme in a month.
(2) For the purpose of the calculation referred to in Paragraph (1)(b) above, where
the realisation fee for a CIS depends on the duration that a participant owns
units in the scheme, the realisation fee taken into account shall be that which
applies for the duration for which the return is calculated.
(3) For the purpose of Paragraph (1) above, where a scheme which has been
constituted for less than a year invests at least 90% of its funds in another CIS
(referred to as the underlying fund), and the underlying fund has a track record
of at least one year, the financial adviser may disclose information on the past
performance of the underlying fund but not otherwise.
(4) Where a financial adviser discloses any information on the past performance of
an underlying scheme, the disclosure shall:
(a) include an appropriate warning regarding its limitations as a proxy for the
past performance of the scheme; and
(b) comply with Paragraph (1) above as though the information on the past
performance of the underlying fund were information on the past
performance of the scheme.
(5) Where any past performance of a CIS is due to exceptional circumstances which
may not be sustainable, any disclosure by a financial adviser to its client shall
include a prominent warning statement to that effect.
(6) For the purposes of Paragraph (5) above, “exceptional circumstances” include,
but are not limited to —
(a) an investment in an initial public offer of securities which has a large impact
on the return on the scheme but where such return is unlikely to be
sustained; and
(b) high annual return for a particular year where the scheme has, or schemes
with a similar investment focus have, yielded a much lower, historical long-
term, average annual compounded return.
(7) A financial adviser shall not disclose to its clients any information on past
performance in relation to a CIS based on the simulated results of a hypothetical
CIS.
Comparison Of Past Performance Of CIS With That Of Another CIS Or An Index
3.-- (1) Where a financial adviser discloses to its client any comparison of the past
performance of a CIS with that of another CIS,
(a) such other CIS shall have investment objectives and an investment focus
which are similar to those of the first-mentioned scheme; and
(b) the comparison shall be made on an offer-to-bid basis and that basis shall
be stated in the disclosure.
(2) Where a financial adviser discloses to its client any comparison of the past
performance of a CIS with that of an index,
(a) such index shall be the benchmark for the scheme or an index which reflects
the investment focus of the scheme; and
(b) the comparison shall be made on an offer-to-bid basis or a bid-to-bid basis
and the basis on which the comparison is made shall be stated in the
disclosure.
(3) Any comparison of the past performance of a CIS with that of another CIS or
with an index shall be made using a common currency and where the currencies
of the schemes being compared are different, conversion to the common
currency must be based on prevailing exchange rates at the relevant time.
(4) The requirements set out in clause 2 above shall apply to the disclosure by the
financial adviser.
Comparison Of Past Performance Of The CIS With That Of Other Forms Of Investment
4.-- (1) Where a financial adviser discloses to its client any comparison of the past
performance of a CIS with that of other forms of investment,
(a) such other form of investment shall have a risk profile which is similar to
that of the scheme; and
(b) the comparison shall be made on an offer-to-bid basis and that basis shall
be disclosed.
(2) The requirements set out in clause 2 shall also apply to the disclosure.
Past Performance Of The Manager Or Submanager
5.-- (1) Where a financial adviser discloses to its client any information on the past or
present performance, skills or techniques of the manager for a CIS or a person
managing the property of the scheme on behalf of the manager (referred to in
this Appendix as a submanager), the disclosure shall:
(a) where the source of such information is a body other than the manager for
the scheme, state the source;
(b) indicate the time period to which such information relates; and
(c) include a prominent statement that the past performance of the manager or
submanager is not necessarily indicative of its future performance.
(2) The disclosure shall not present the information on the past or present
performance, skills or techniques of the manager or submanager for the CIS or
of any other CIS under the management of the manager or sub-manager in a
selective or biased way, such that any particular success is exaggerated or lack
of success is disguised.
Schedule
ILLUSTRATION
Assume the following prices for a unit in a scheme with:
- a subscription fee of 2%; and
- a realisation fee which starts at 3% in the first year and decreases by 1% every year
that an investor holds his units:
Bid S$ Offer S$
T (date of disclosure) 1.50 1.53
T0 a date no more than three months prior to T) 1.52 1.55
T3 (three years prior to T0) 1.18 1.20
T5 (five years prior to T0) 0.98 1.00
A disclosure made on T could show one of the following:
(1) TOTAL RETURN over the period from T3 to T0

Bid price at T0 Offer price
= adjusted for realisation fee — at T3 ÷ OP1
of 1% in the 3 year (BP1)
rd
(OP1)
= S$[1.50 - 1.20] ÷ 1.20

= 25%
AVERAGE ANNUAL COMPOUNDED RETURN over the period from T3 to T0

= (BP1 ÷ OP1)1/3 - 1
= ($1.50 ÷ $1.20) 1/3
- 1
= 7.7%
OR
(2) TOTAL RETURN over the period from T5 to T0

Bid price at T0 with no adjustment Offer price
= needed for realisation fee since it — at T5 ÷ OP2
would be 0% in the 5th year (BP2) (OP2)
= S$[1.52 — 1.00] ÷ 1.00

= 52%
AVERAGE ANNUAL COMPOUNDED RETURN over the period from

T5 to T0
= (BP2 ÷ OP2)1/5 - 1
= ($1.52 ÷ $1.00) 1/5
- 1
= 8.7%
5. MAS Notices – Part II [Notice Nos: FAA-N02; FAA-N10; FAA-N12; FAA-N13; FAA-N14; FAA-N15 &
FAA-N20]
CHAPTER 5
MAS NOTICES – PART II [NOTICE NOS: FAA-N02; FAA-N10; FAA-N12; FAA-
N13; FAA-N14; FAA-N15 & FAA-N20]
CHAPTER OUTLINE
1. Introduction
2. Notice On Appointment And Use Of Introducers By Financial Advisers [Notice No:
FAA-N02]
3. Notice On Prohibited Representations Made By Persons Exempted Under Regulation
27(1)(d) Of The Financial Advisers Regulations (RG 2) [Notice No: FAA-N10]
4. Notice On Entry Requirements Of A Provisional Representative [Notice No: FAA-N12]
5. Notice On Minimum Entry And Examination Requirements For Representatives Of
Licensed Financial Advisers And Exempt Financial Advisers [Notice No: FAA-N13]
6. Notice On Reporting Of Misconduct Of Representatives By Financial Advisers [Notice
No: FAA-N14]
7. Notice On Cancellation Period For Unlisted Debentures [Notice No: FAA-N15]
8. Notice On Requirements For The Remuneration Framework For Representatives And
Supervisors (“Balanced Scorecard Framework”) And Independent Sales Audit Unit
Appendix 5A – Report Of Misconduct Of Representative
Appendix 5B – Update On Report Of Misconduct Of Representative
Appendix 5C – Declaration Of Nil Return Of Misconduct Of Representatives
KEY LEARNING POINTS

 understand the requirements of the following Notices and who they apply to:
- Notice On Appointment And Use Of Introducers By Financial Advisers [Notice No:

FAA-N02]
- Notice On Prohibited Representations Made By Persons Exempted Under Regulation
27(1)(d) Of The Financial Advisers Regulations (Rg 2) [Notice No: FAA-N10]
- Notice On Entry Requirements Of A Provisional Representative [Notice No: FAA-
N12]
- Notice On Minimum Entry And Examination Requirements For Representatives Of
Licensed Financial Advisers And Exempt Financial Advisers [Notice No: FAA-N13]
- Notice On Reporting Of Misconduct Of Representatives By Financial Advisers [Notice
No: FAA-N14]
- Notice On Cancellation Period For Unlisted Debentures [Notice No: FAA-N15]
- Notice On Requirements For The Remuneration Framework For Representatives And
Supervisors (“Balanced Scorecard Framework”) And Independent Sales Audit Unit

1. INTRODUCTION
1.1 In this chapter, we will cover five of the MAS Notices relating to Representatives
and Introducers.
2. NOTICE ON APPOINTMENT AND USE OF INTRODUCERS BY FINANCIAL

ADVISERS [NOTICE NO: FAA-N02]
2.1 Notice No: FAA-N02 is issued pursuant to Section 58 of the Financial Advisers
Act (Cap. 110) [the “Act”].
2.2 The “Notice On Appointment And Use Of Introducers By Financial Advisers

[Notice No: FAA-N02]” shall apply to all licensed financial advisers and persons
who are exempt from holding a financial adviser’s licence under Section 23(1)(a),
(b), (c), (d) or (e) of the FAA.
2.3 This Notice shall not apply to the appointment and use of introducers by:
(a) persons specified in Regulation 4 of the Financial Advisers (Structured
Deposits - Prescribed Investment Products and Exemption) Regulations 2005
in relation to the provision of any financial advisory service relating to any
structured deposit as defined in those Regulations; and
(b) persons specified in Regulation 3 of the Financial Advisers (Exemption from
Sections 25 to 29 and 36 of the FAA) Regulations 2004 in respect of the
provision of any financial advisory service relating to the investment products
referred to in Regulation 3 of those Regulations.
2.4 This Notice sets out the standards to be maintained by licensed financial advisers
and persons who are exempt from holding a financial adviser’s licence under
Section 23(1)(a), (b), (c), (d), or (e) of the FAA with respect to their appointment
and use of persons carrying out introducing activities.
A. Definition
2.5 “Introducing activity” means:

(a) introducing any client to an introducee in relation to the provision of any type
or types of financial advisory service by the introducee; or
(b) the activity as referred to in (a) above and either or both of the following:
(i) recording the particulars of any client and forwarding such particulars to
an introducee with the client’s consent;
(ii) providing factual information to any client on investment products,
including (where applicable) information on the name of the investment
product, the product provider, the date on which the product is launched,
the minimum subscription amount, and any fee or charge which may be
imposed.

FAA-N20]
B. Requirements For Financial Advisers Appointing Introducers
2.6 Where a financial adviser appoints a person as an introducer, it should take

reasonable steps not to appoint an introducer whose carrying out of introducing
activities is:
(a) if the introducer is a corporation, its sole business activity; and
(b) if the introducer is an individual, his full-time occupation;
as the case may be.
2.7 A financial adviser shall ensure that none of its employees or representatives
enters into any arrangement with an introducer to carry out introducing activities,
other than on behalf of the financial adviser.
2.8 A financial adviser which engages the services of an introducer shall institute
adequate control systems and procedures to ensure the proper conduct of the
introducer, including ensuring that the introducer does not get involved in the
provision of any financial advisory service, other than to the extent of carrying
out introducing activities. In engaging an introducer to carry out introducing
activities, the financial adviser is required to comply with the following
requirements:
B1. Written Agreement
2.9 The financial adviser shall enter into a written agreement with the introducer. It
shall ensure that the agreement so entered into spells out clearly the scope of
introducing activities to be carried out by the introducer. It shall also monitor the
conduct of the introducer to satisfy itself that the introducer operates within the
specified terms and conditions of the agreement.
B2. Disclosure By Introducer
2.10 The financial adviser shall require the introducer to disclose to all clients the
following information that the introducer is required to disclose under Regulation
31 of the FAR:
(i) that the introducer, when carrying out introducing activities, is not permitted
to give advice or provide recommendations on any investment product to the
client, market any collective investment scheme, or arrange any contract of
insurance in respect of life policies, other than to the extent of carrying out
introducing activities;
(ii) whether or not the introducer is or will be remunerated by the financial
adviser for carrying out introducing activities; and
(iii) where the introducer is or will be remunerated by the financial adviser, the
amount of remuneration, if so requested by the client.
2.11 In addition, the financial adviser shall require the introducer to disclose to all
clients that the introducer is carrying out introducing activities for the financial
adviser.

B3. Provision Of Script For Use By Introducers
2.12 The financial adviser shall provide a script to the introducer to provide guidance
to the introducer in its or his introducing activities. The financial adviser shall
ensure that the script specifies:
(i) The information that the introducer is required to disclose to clients in
accordance with Regulation 31 of the FAR;
(ii) The factual information that the introducer is to provide to clients on the
financial adviser; and
(iii) The factual information on the investment products to which its or his
introducing activities relate.
B4. Prohibition On Handling Of Client’s Money Or Property By Introducers
2.13 The financial adviser shall ensure that the introducer does not receive or deal with
client’s money or property in relation to its or his carrying out of introducing
activities.
B5. Maintenance Of Register Of Introducers
2.14 The financial adviser is required to maintain a register containing the following
particulars of the introducers appointed by the financial adviser, their:
(i) names;
(ii)places of business;
(iii)
contact numbers;
(iv)business registration numbers or, in the case of individuals, identity card
numbers; and
(v) dates of appointment and, where applicable, their dates of termination.
2.15 In addition, the financial adviser shall ensure that each of these introducers
comply with the conditions specified in Regulation 31(1)(d), 31(4)(b) and
31(7)(b).
2.16 Paragraphs 2.6 and 2.7, Sub-sections B1. and B5. of this chapter will not apply
to a financial adviser where the introducing activities are carried out by its
employees or representatives on its own behalf.
2.17 A financial adviser shall ensure that the following requirements are complied with
where introducing activities are carried out by its employees or representatives
on its own behalf:
B6. Disclosure
2.18 The financial adviser shall require the employee or representative to disclose to
all clients the following information that he is required to disclose under
Regulation 31 of the FAR:
(i) that the representative or employee, when carrying out introducing activities,
is not permitted to give advice or provide recommendations on any

FAA-N20]
investment product to the client, market any collective investment scheme,

or arrange any contract of insurance in respect of life policies, other than to
the extent of carrying out introducing activities;
(ii) whether or not the representative or employee is or will be remunerated by

the financial adviser for carrying out introducing activities; and
(iii) where the representative or employee is or will be remunerated by the

financial adviser, the amount of remuneration if so requested by the client.
2.19 In addition, the financial adviser shall require the representative or employee to
disclose to all clients that the representative or employee is carrying out
introducing activities for the financial adviser.
B7. Provision Of Script
2.20 The financial adviser shall provide a script to the representative or employee to
provide guidance to him in his introducing activities. The financial adviser shall
ensure that the script specifies:
(i) the information that the representative or employee is required to disclose to
clients in accordance with Regulation 31 of the FAR;
(ii) the factual information that the representative or employee is to provide to
clients on the financial adviser; and
(iii) the factual information on the investment products to which his introducing
activities relate.
B8. Prohibition On Handling Of Client’s Money Or Property
2.21 The financial adviser shall ensure that the representative or employee does not
receive or deal with client’s money or property in relation to his carrying out of
introducing activities.
3. NOTICE ON PROHIBITED REPRESENTATIONS MADE BY PERSONS EXEMPTED

UNDER REGULATION 27(1)(d) OF THE FINANCIAL ADVISERS REGULATIONS
(RG 2) [NOTICE NO: FAA-N10]
Act (Cap. 110) [the “Act”].
3.2 Notice No: FAA-N10 sets out certain prohibitions in respect of representations
made by exempt persons and representatives of exempt persons regarding their
exempt status.

A. Definitions
3.3 For the purposes of this Notice:

(a) “exempt person” means a person exempted from holding a financial
adviser’s [“FA”] licence under section 23(1)(f) of the Act read with
regulation 27(1)(d) of the Financial Advisers Regulations (Rg 2) [the “FAR”];
and
(b) “accredited investors” has the same meaning as in regulation 2(1) of the
FAR
B. Prohibited Representations
3.4 Exempt persons are exempted from the requirement to hold a FA licence in acting,
whether directly or indirectly, as a financial adviser in giving advice in Singapore,
either directly or through publications or writings, or by issuing or promulgating
research analyses or research reports, concerning any investment product (other
than life policies), to not more than 30 accredited investors on any occasion.
3.5 By virtue of Section 23B(1)(b) of the FAA, individuals providing financial advisory
services as a representative of exempt persons are exempted from the
requirement to act as appointed or provisional representatives under Section 23C
or 23D of the FAA, respectively, in acting, whether directly or indirectly, as a
representative of a financial adviser in giving advice in Singapore, either directly
or through publications or writings, or by issuing or promulgating research
analyses or research reports, concerning any investment product (other than life
policies), to not more than 30 accredited investors on any occasion.
3.6 An exempt person and its representatives shall not represent itself, nor cause to
be represented, as being licensed, regulated, supervised or registered by the
MAS, whether verbally or in writing.
4. NOTICE ON ENTRY REQUIREMENTS OF A PROVISIONAL REPRESENTATIVE

[NOTICE NO: FAA-N12]
4.1 Notice No: FAA-N12 is issued pursuant to Sections 23D and 58 of the Financial
Advisers Act (Cap. 110) [“the Act”].
4.2 Notice No: FAA-N12 sets out the entry requirements in respect of the
appointment of provisional representatives, as well as the validity period of such
appointments.
4.3 With the implementation of the amendments to the FAA on 26 November 2010,
the licensing regime for representatives under the FAA was replaced by a
representative notification framework. Under this framework, a principal who
appoints a representative to provide financial advisory services will have to notify
the MAS of the appointment and certify the representative’s fitness and propriety
to be such a representative. The notification requirement is applicable to the
appointment of an appointed or a provisional representative under the FAA.

FAA-N20]
A. Definitions

(a) “appointed representative” has the same meaning as in Section 2(1) of the
FAA;
(b) “exempt financial institution” means a financial institution exempt from the
requirement to hold a financial adviser’s licence under Section 23(1)(a), (b),
(c), (d), or (e) of the FAA;
(c) “principal” has the same meaning as in Section 2(1) of the FAA;
(d) “provisional representative” has the same meaning as in Section 2(1) of the
FAA;
(e) “public register of representatives” has the same meaning as in Section 2(1)
of the FAA.
B. Entry Requirements
4.5 The provisional representative scheme is meant to facilitate the relocation of

experienced individuals who wish to provide financial advisory service under the
FAA on behalf of a licensed financial adviser or an exempt financial institution.
Such an individual may provide financial advisory service as a provisional
representative, while he is given a grace period of three months to pass the
relevant examination(s) to satisfy the examination requirements as stipulated in
the Notice on Minimum Entry And Examination Requirements For Representatives
Of Licensed Financial Advisers And Exempt Financial Advisers [Notice No: FAA-
N13]1.
4.6 The principal shall ensure that any individual proposed to be a provisional
representative is able to satisfy the following minimum entry requirements:
(a) he is at least 21 years old;
(b) he is in the process of relocating or has already relocated to Singapore;
(c) he possesses at least three years of working experience relevant to the type
of financial advisory service that he will provide as a provisional
representative; and
1
Principals should also ensure that the individual proposed to be appointed as a representative satisfy the
requirements set out in Section 23J(1)(s) of the FAA and 4B(3) of the FAR, where the individual:
(a) should be currently or previously licensed, authorised or otherwise regulated as a representative in
relation to a comparable type of financial advisory service in a foreign jurisdiction for a continuous
period of at least 12 months;
(b) if he was previously licensed, authorised or regulated in a foreign jurisdiction, the period between the
date of his ceasing to be so licensed, authorised or regulated in a foreign jurisdiction and the date of
his proposed appointment as a provisional representative does not exceed 12 months; and
(c) the laws and practices of the jurisdiction under which the individual is or was so licensed, authorised
or regulated provide protection to investors comparable to that applicable to an appointed
representative under the FAA.

(d) he possesses at least a Bachelor’s degree or equivalent, or a professional

qualification2.
4.7 The MAS may refuse entry of a provisional representative who fails to satisfy the
entry requirements as set out in the paragraph above.
C. Validity Period
4.8 The appointment of a provisional representative shall be valid for a period of up

to three months from the date when the name of the representative is entered
into the public register of representatives as a provisional representative.
4.9 In relation to the requirement for the principal to submit a notification of

satisfaction of examination requirements under Section 23D of the FAA, where
a provisional representative intends to become an appointed representative for
more than one type of financial advisory service, the provisional representative
shall ensure that he has passed all the relevant examinations before his principal
submits to the MAS, the one-time notification in respect of those financial
advisory services to be provided as an appointed representative.
5. NOTICE ON MINIMUM ENTRY AND EXAMINATION REQUIREMENTS FOR

REPRESENTATIVES OF LICENSED FINANCIAL ADVISERS AND EXEMPT
FINANCIAL ADVISERS [NOTICE NO: FAA-N13]
5.1 The following contents in regard to “Notice On Minimum Entry And Examination
Requirements For Representatives Of Licensed Financial Advisers And Exempt
Financial Advisers” has been entirely extracted from the Notice No: FAA-N13
110) [“the Act”]. The earlier notice (FAA-N07) issued on 16 January 2004 and
last amended on 31 December 2007) on the same subject is cancelled.
2 This Notice shall apply to all licensed financial advisers, persons who are exempt
from holding a financial adviser’s licence under section 23(1)(a), (b), (c), (d), or
(e) of the Act, and their appointed representatives.
3 This Notice shall not apply to –
(a) persons specified in regulation 4 of the Financial Advisers (Structured

Deposits – Prescribed Investment Products and Exemption) Regulations in
relation to the provision of any financial advisory service relating to any
structured deposit as defined in those Regulations; and
2
Acceptable professional qualifications include those listed in the exemptions for Capital Markets and
Financial Advisory Services Examination’s Modules on Product Knowledge and Analysis, as specified in
MAS Notice No: FAA-N13.

FAA-N20]
(b) persons specified in regulation 3 of the Financial Advisers (Exemption from

Section 25 to 29 and 36) Regulations in respect of the provision of any
financial advisory service relating to the investment products referred to in
regulation 3 of those Regulations.
4 This Notice sets out the following:
(a) minimum entry requirements for appointed representatives;
(b) application of the Capital Markets and Financial Advisory Services

Examination (“CMFAS Exam”) requirements to persons intending to
provide financial advisory services as appointed representatives under the
Act;
(c) circumstances under which the CMFAS Exam requirements do not apply;
(d) obligations of licensed financial advisers and exempt financial advisers; and
(e) continuing professional development requirements for appointed

representatives.
DEFINITIONS
5 For the purposes of this Notice:
“accident and health benefits” has the same meaning as in First Schedule to the
Insurance Act (Cap. 142);
Deleted
[FAA-N13 (Amendment No.2) 2018]
“CMFAS Exam requirements” means the requirement to pass the relevant

modules of the CMFAS Exam;
“CTA” means the Commodity Trading Act (Cap. 48A) in force immediately
before 27 February 2008;
“derivatives contracts” has the same meaning as in section 2(1) of the SFA;
“exchange-traded derivatives contracts” has the same meaning as in section
2(1) of the SFA;
“Excluded Investment Product” has the same meaning as in paragraph 6 of the

FAA Notice on Recommendations on Investment Products (FAAN16);

“execution-related advice” has the same meaning as in regulation 34A (2) of the
Financial Advisers Regulations (Reg 2);
“exempt financial adviser” means a person exempt from holding a financial

adviser’s licence under section 23(1)(a), (b), (c), (d) or (e) of the Act;
“financial adviser” means a licensed financial adviser or an exempt financial

adviser;
“Government securities” has the same meaning as in regulation 2 of the

Securities and Futures (Licensing and Conduct of Business) Regulations
“over-the-counter derivatives contract” means a derivatives contract which is

not an exchange-traded derivatives contract;
“qualifying corporation” has the same meaning as in regulation 2 of the

Securities and Futures (Provision for Persons and Matters Previously Regulated
under Commodity Trading Act) Regulations 2007 in force immediately before 8
October 2018
“SFA” means the Securities and Futures Act (Cap. 289);

“Specified Investment Products” has the same meaning as in paragraph 6 of the

FAA Notice on Recommendations on Investment Products (FAAN16);
5A The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same respective meanings as
in the Act and the Financial Advisers Regulations (Reg 2) [“FAR”].

FAA-N20]
APPLICATION OF CMFAS EXAM REQUIREMENTS
6 The CMFAS Exam, which commenced on 1 December 2002, comprises 14

modules, of which Modules 5 to 9A are applicable under the Act.
Module Examination
Rules & Regulations
1A Rules and Regulations for Dealing in Securities (for members of the
Singapore Exchange Securities Trading Limited (“SGX-ST”))
1B Rules and Regulations for Dealing in Securities (Non SGX-ST
members)
2A Rules and Regulations for Trading in Futures Contracts (for
members of the Singapore Exchange Derivatives Trading Limited
(“SGX- DT”)
3 Rules and Regulations for Fund Management
4A Rules and Regulations for Advising on Corporate Finance
4B Rules and Regulations for Advising on Corporate Finance (Solely
Debt Securities)
5 Rules and Regulations for Financial Advisory Services
10 Rules and Regulations for REIT Management, with Product
Knowledge and Analysis
Product Knowledge & Analysis
6 Securities Products and Analysis
6A Securities and Futures Product Knowledge
8 Collective Investment Schemes
8A Collective Investment Schemes II
9 Life Insurance and Investment-Linked Policies
9A Life Insurance and Investment-Linked Policies II
7 The CMFAS Exam requirements apply to individuals who wish to provide any of
the following types of financial advisory service:
(a) advising others, either directly or through publications or writings, and
whether in electronic, print or other form, concerning the following
investment products:
(i) securities;
(ii) units in collective investment schemes;
(iii) exchange-traded derivatives contracts;
(iv) spot foreign exchange contracts for the purposes of leveraged foreign
exchange trading;
(iva) over-the-counter derivatives contracts;
(v) life policies, other than—

(A) in the manner specified in paragraph 8(b) of this Notice; or

(B) advising on corporate finance within the meaning of the SFA;
(b) Deleted ;
(c) arranging of any contract of insurance in respect of life policies, other than
a contract of reinsurance.
8 The CMFAS Exam requirements do not apply to individuals who intend to

provide any of the following types of financial advisory service:
(a) advising others, either directly or through publications or writings, and
whether in electronic, print or other form, concerning the following
(i) spot foreign exchange contracts other than for the purposes of
leveraged foreign exchange trading;
(ii) structured deposits as defined in the Financial Advisers (Structured
Deposits – Prescribed Investment Products and Exemption) Regulations;
(iii) investment products referred to in the Financial Advisers (Exemption
from Section 25 to 29 and 36) Regulations,
other than –
(A) in the manner specified in paragraph 8(b) of this Notice; or
(B) advising on corporate finance within the meaning of the SFA;
(b) advising others by issuing or promulgating research analyses or research
reports, whether in electronic, print or other form, concerning the following
(i) securities;
(ii) units in collective investment schemes;
(iii) exchange-traded derivatives contracts ;
(iv) spot foreign exchange contracts other than for the purposes of
leveraged foreign exchange trading
(va) spot foreign exchange contracts for the purposes of leveraged foreign
exchange trading;
(vb) over-the-counter derivatives contracts;
(vi) life policies;
(vii) structured deposits as defined in the Financial Advisers (Structured
Deposits – Prescribed Investment Product and Exemption) Regulations;
(viii) investment products referred to in the Financial Advisers (Exemption
from Section 25 to 29 and 36) Regulations.

FAA-N20]
9 The following table sets out the applicable modules under the CMFAS Exam for
each of the financial advisory services.
TYPES OF FINANCIAL MODULE

ADVISORY SERVICE Rules & Product Knowledge and
Regulations Analysis
Excluded Specified
Investment Investment
Products Products
5 6 8 9 6A 8A 9A
(a) Advising others concerning:
(i) securities ✓ ✓ ✓
(ii) units in a collective
investment scheme that
are:
(A) not listed on an ✓ ✓ ✓
exchange
(B) listed on an ✓ ✓ ✓
exchange
(iii) exchange-traded
derivatives contracts that
are:
(A) futures contracts ✓ ✓
(B) not futures contracts ✓ ✓ ✓
(iv) spot foreign exchange ✓ ✓
contracts for the
purposes of leveraged
foreign exchange trading
(v) over-the-counter ✓ ✓
derivatives contracts
(b) Advising on and/or arranging ✓ ✓ ✓
life policies
9A Deleted.
9B Deleted
10 Deleted.
11 Deleted.
12 MAS Notice 117 (Training and Competency Requirement: Health Insurance

Module) issued under the Insurance Act (Cap. 142) shall apply to appointed
representatives of financial advisers who provide the financial advisory services
specified in paragraph 7(a)(v) and (c) of this Notice concerning any life policy

with accident and health benefits but excluding such policy where accident and
health benefits are paid out only –
(a) in the event of an injury to, or disability of, the insured as a result of an
accident;
(b) in the event that the insured becomes total and permanently disabled;
(c) on the death of the insured by accidental cause; or
(d) on the occurrence of a combination of the events set out in (a) to (c).
MAS Notice 117 requires such appointed representatives to obtain the requisite
qualification in health insurance before they can provide any advice on or arrange such
policies or both, unless the appointed representatives fall within paragraph 6 or 7 of MAS
Notice 117.
MINIMUM ENTRY REQUIREMENTS
13 Any person who acts as or holds himself out to be an appointed representative

of a financial adviser must:
(b) subject to paragraphs 16 and 16A, satisfy the minimum academic
qualification requirements set out under paragraph 15 of this Notice; and
(c) subject to paragraph 22, comply with the examination requirements of this
Notice.
14 In addition, a financial adviser shall certify that every of its appointed

representatives meets the minimum entry requirements stipulated in paragraph 13 of this
Notice.
15 For the purpose of paragraph 13(b) of this Notice, the minimum academic
qualification requirements are as follows:
(a) a GCE ‘A’ Level certificate with passes in at least three subjects at “Higher
2” level and two subjects at “Higher 1” level;
(b) an International Baccalaureate Diploma qualification;
(c) a diploma awarded by a polytechnic in Singapore; or
(d) any other academic qualification which is equivalent to the qualifications set
out in sub-paragraph (a), (b) or (c) above.
For the purposes of paragraph 15(d), a financial adviser shall determine if such other
academic qualification is the equivalent to the qualifications set out in paragraph 15(a),
15(b) or 15(c). The Authority will provide guidance on the determination of such other
academic qualification.

FAA-N20]
16 Subject to paragraph 16A, an individual who acts as or holds himself out to be

an appointed representative of a financial adviser, but does not have the academic
qualifications set out in paragraph 15(a), (b), (c) or (d), need not comply with paragraph
13(b) if he satisfies any of the following conditions:
(a) he had been providing financial advisory services immediately before 1
February 2014, and continued to do so –
(i) from 1 February 2014, as a representative of a financial adviser; or
(ii) on 1 February 2014, as a representative of a financial adviser, but
ceased to carry out such activity on a date after 1 February 2014, prior
to his re-commencement of carrying out such activity as a
representative of a financial adviser;
(b) he had been providing financial advisory services before 1 February 2014,
and had ceased to provide such services on a date before or on 1 February
2014, prior to his re-commencement of carrying out such activity as a
representative of a financial adviser on or after 1 February 2014 (as the
case may be); or
(c) his principal had, before 1 February 2014, submitted a notice of intent under
section 23F(1)(a) of the Act to appoint the individual as its appointed
representative, and the individual’s appointment is subsequently entered in
the public register of representatives on or after 1 February 2014.
16A The following categories of individuals, who satisfy the conditions in paragraph
16, shall re-take and pass the applicable modules under the CMFAS Exams as set out in
paragraph 9 before providing any financial advisory services referred to in paragraph 7
as an appointed representative:
(a) any individual referred to in paragraph 16(b) who does not re- commence
providing any financial advisory service as a representative of a financial
adviser for a continuous period of 1 year from the date of cessation; or
(b) any individual who ceases to provide any financial advisory service as a
representative after 1 February 2014, but does not re- commence the
provision of any financial advisory service with a financial adviser for a
continuous period of 1 year from the date of cessation.
Any individual who falls under paragraph 16A shall not be entitled to rely on the
exemptions set out in Annexes 3, 3A, 4 and 4A.
CIRCUMSTANCES UNDER WHICH THE CMFAS EXAM REQUIREMENTS DO NOT APPLY
17 A representative who possesses specified qualifications and work experience or

who confines the performance of financial advisory services to a limited segment of the
market is not required to pass certain modules of the CMFAS Exam. Details of the

circumstances under which the CMFAS Exam requirements do not apply are set out in
paragraphs 18 to 24 of this Notice.
Specified Qualifications or Work Experience
18 With effect from 19 October 2011, a representative who possesses any of the
qualifications, where such qualification was obtained by way of passing the required
examination(s)3, or work experience listed in Annexes 1A, 3A or 4A will not be required
to pass Modules 6, 8 or 9 respectively.
18A With effect from 19 October 2011, a representative who possesses any of the
qualifications or work experience listed in Annexes 1, 3 or 4 is not required to pass
Modules 6, 8 or 9 respectively, if:
(a) he has been conducting relevant regulated activities as a representative
immediately before 19 October 2011 and continues to conduct such
regulated activities on and after 19 October 2011;
(b) his principal has lodged with the Authority documents under section 23F of
the Act, in relation to his appointment as an appointed representative before
1 January 2012; or
(c) there is no break in service of more than 6 months between his last working
experience as a representative conducting relevant regulated activities and
the date of his principal’s lodgement with the Authority of documents under
section 23F of the Act, in relation to his appointment as an appointed
representative.
18B A representative who possesses any of the following qualifications is not

required to pass Module 6A, 8A or 9A (as may be applicable).
(a) a degree or higher qualification in finance, financial engineering or
computational finance; or
(b) Chartered Financial Analyst (CFA) by the CFA Institute, USA
19 With effect from 1 July 2005, the Authority will only recognise the qualifications
listed in Annexes 1, 1A, 3, 3A, 4 and 4A where the individual has attained such
qualifications through passing the specific respective examination(s)4.
3
Except for item 8 of Annex 1A, item 10 of Annex 3A, and item 8 of Annex 4A.
4
Except for item 34 of Annex 1, item 8 of Annex 1A, item 40 of Annex 3, and item 10 of Annex
3A, item 8 of Annex 4, and item 8 of Annex 4A.

FAA-N20]
20 Subject to paragraph 21, paragraph 19 shall not apply to an individual who –

(a) has attained the qualification listed in Annex 1, 3 or 4 before 1 July 2005
–
(i) by passing examination(s) which is(are) recognised by the tertiary
institutions, institutes, boards, associations or other bodies listed in
Annex 1, 3 or 4, to be equivalent to passing the specific examination(s)
for attainment of the respective qualifications listed in Annexes 1, 3 and
4; or
(ii) by fulfilling such other criteria specified by the tertiary institutions,
institutes, boards, associations or other bodies listed in Annex 1, 3 or
4, as prerequisites for the attainment of the respective qualifications
listed in Annexes 1, 3 or 4; and
(b) has been providing financial advisory services as a representative of a
financial adviser immediately before 1 July 2005 and continues to provide
such financial advisory services after 1 July 2005, whether on behalf of
the same financial adviser or any other financial adviser.
21 Paragraph 19 shall apply to an individual who would otherwise satisfy paragraph

20 if he ceases to act as a representative of any financial adviser at any time after 1
July 2005.
22 The Authority shall not require an individual who meets the following criteria in
respect of the provision of financial advisory service as specified in paragraph 7(a)
concerning exchange-traded derivatives that are futures contracts to pass Module 5:
(a) the individual has at least 3 years of relevant and continuous working
experience in Singapore in the provision of financial advisory services in
respect of futures contracts as defined in the Act in force immediately
before 8 October 2018 at the same time that he is a licensed commodity
futures broker’s representative under section 13 of the CTA in relation to a
qualifying corporation prior to 27 February 2008, without any break-in-
service of more than 6 months between the person’s last working
experience in the provision of financial advisory services in respect of
futures contracts as defined in the Act in force immediately before 8 October
2018 and the date of his licence application prior to 26 November 2010;
entry into the industry prior to 26 November 2010; or principal’s lodgment
with the Authority of documents under section 23F of the Act, in relation
to his appointment as an appointed representative, as the case may be.
(b) the individual is a person who, prior to 27 February 2008 -
(i) has at least 3 years of relevant and continuous working experience in

Singapore in the provision of financial advisory services in respect of
futures contracts as defined in the Act in force immediately before 8
October 2018 at the same time that he is an associated person in

relation to a qualifying corporation and registered with the Singapore

Commodity Exchange Ltd; and
(ii) does not hold a commodity futures broker’s representative’s licence

under section 13 of the CTA in relation to that corporation,
and there is no break-in-service of more than 6 months between the

person’s last working experience in the provision of financial advisory
services in respect of futures contracts as defined in the Act in force
immediately before 8 October 2018 and the date of his licence application
prior to 26 November 2010; entry into the industry prior to 26 November
2010; or principal’s lodgment with the Authority of documents under
representative, as the case may be. An “associated person”, for the
purposes of this sub-paragraph, has the same meaning as in the Rules and
Regulations of the Singapore Commodity Exchange Ltd;
(c) before 8 October 2018 at the same time that he is a licensed commodity
futures broker’s representative under section 13 of the CTA in relation to a
corporation which prior to 27 February 2008, is the holder of a commodity
futures broker’s licence under the CTA and a capital markets services
licence under the SFA, and there is no break-in-service of more than 6
months between the person’s last working experience in the provision of
financial advisory services in respect of futures contracts as defined in the
Act in force immediately before 8 October 2018 and the date of his licence
application prior to 26 November 2010; entry into the industry prior to 26
November 2010; or principal’s lodgment with the Authority of documents
under section 23F of the Act, in relation to his appointment as an appointed
representative, as the case may be; or
(d) the individual, prior to 27 February 2008 -
(i) is exempted from holding a commodity futures broker’s representative

licence under the CTA;
(ii) is employed by or acting for a bank licensed under the Banking Act (Cap.
19) or a merchant bank approved under the Monetary Authority of
Singapore Act (Cap. 186), and
(iii) has at least 3 years of relevant and continuous working experience in

October 2018,

FAA-N20]

immediately before 8 October 2018 and the date of his licence application
prior to 26 November 2010; entry into the industry prior to 26 November
2010; or principal’s lodgment with the Authority of documents under
representative, as the case may be.
23 Any representative of a financial adviser who, immediately before 1 July 2005,

was providing the financial advisory service specified in paragraph 7(a) concerning
contracts or arrangements for the purposes of leveraged foreign exchange trading under
the Act in force immediately before 8 October 2018, shall not be required to pass any
of the modules of the CMFAS Exam if he continues to act in the same manner on or
after 1 July 2005. With effect from 1 January 2012, such a representative is required
to pass Module 6A.
23A Deleted
Specified Types of Financial Advisory Services
24 For the purposes of paragraph 17 of this Notice, the CMFAS Exam requirements
shall not apply to any representative who confines the performance of financial advisory
services in respect of:
(a) any capital markets product to an expert investor as defined in regulation
2(1) of the FAR;
(b) any investment product to:
(i) an accredited investor as defined in regulation 2(1) of the FAR;
(ii) an institutional investor as defined in regulation 2(1) of the FAR;
(iii) a related corporation of the licensed financial adviser for whom the
representative acts;
(iv) a person that is connected to the licensed financial adviser for whom
the representative acts; or
(v) any person outside Singapore who is an individual and –
(AA) not a citizen of Singapore;
(AB) not a permanent resident of Singapore; and
(AC) not a person who is wholly or partly dependent on the person
referred to in sub-paragraph (AA) or (AB); or

(vi) any person outside Singapore, other than a person referred to in sub-
paragraph (b)(v), with no commercial or physical presence in Singapore.
(c) any Singapore Government Securities.
20 Subject to paragraph 4.2.721, paragraph 4.2.519 shall not apply to an individual

who –
(a) has attained the qualification listed in Annex 1, 2, 3 or 4 before 1 July 2005
–
(i) by passing examination(s) which is(are) recognised by the tertiary
institutions, institutes, boards, associations or other bodies listed in
Annex 1, 2, 3 or 4, to be equivalent to passing the specific
examination(s) for attainment of the respective qualifications listed in
Annexes 1, 2, 3 and 4; or
(ii) by fulfilling such other criteria specified by the tertiary institutions,

institutes, boards, associations or other bodies listed in Annex 1, 2, 3
or 4, as prerequisites for the attainment of the respective qualifications
listed in Annexes 1, 2, and 3 or 4; and
(b) has been providing financial advisory services as a representative of a

financial adviser immediately before 1 July 2005 and continues to provide
such financial advisory services after 1 July 2005, whether on behalf of
the same financial adviser or any other financial adviser.
21 Paragraph 19 shall apply to an individual who would otherwise satisfy paragraph

20 if he ceases to act as a representative of any financial adviser at any time after 1
July 2005.
22 The Authority shall not require an individual who meets the following criteria in
respect of the provision of financial advisory service as specified in paragraph 7(a)
concerning futures contracts to pass Module 5:
(a) the individual has at least 3 years of relevant and continuous working
experience in Singapore in the provision of financial advisory services in
before 2018 at the same time that he is a licensed commodity futures
broker’s representative under section 13 of the CTA in relation to a
qualifying corporation prior to 27 February 2008, without any break-in-
service of more than 6 months between the person’s last working
experience in the provision of financial advisory services in respect of
and the date of his licence application prior to 26 November 2010; entry
into the industry prior to 26 November 2010; or principal’s lodgment with
the Authority of documents under section 23F of the Act, in relation to his
appointment as an appointed representative, as the case may be.
(b) the individual is a person who, prior to 27 February 2008 -
(i) has at least 3 years of relevant and continuous working experience in


FAA-N20]
futures contracts as defined in the Act in force immediately before at

the same time that he is an associated person in relation to a qualifying
corporation and registered with the Singapore Commodity Exchange
Ltd; and
(ii) does not hold a commodity futures broker’s representative’s licence

under section 13 of the CTA in relation to that corporation, and there is
no break-in-service of more than 6 months between the person’s last
working experience in the provision of financial advisory services in
before
and the date of his licence application prior to 26 November 2010; entry
into the industry prior to 26 November 2010; or principal’s lodgment with
the Authority of documents under section 23F of the Act, in relation to his
appointment as an appointed representative, as the case may be. An
“associated person”, for the purposes of this sub-paragraph, has the same
meaning as in the Rules and Regulations of the Singapore Commodity
Exchange Ltd;
(c) the individual is a person who, prior to 27 February 2008, has at least 3
years of relevant and continuous working experience in Singapore in the
provision of financial advisory services in respect of futures contracts as
defined in the Act in force immediately before at the same time that he is a
licensed commodity futures broker’s representative under section 13 of the
CTA in relation to a corporation which prior to 27 February 2008, is the
holder of a commodity futures broker’s licence under the CTA and a capital
markets services licence under the SFA, and there is no break-in- service of
more than 6 months between the person’s last working experience in the
provision of financial advisory services in respect of futures contracts as
defined in the Act in force immediately before and the date of his licence
application prior to 26 November 2010; entry into the industry prior to 26
November 2010; or principal’s lodgment with the Authority of documents
under section 23F of the Act, in relation to his appointment as an appointed
representative, as the case may be; or
(d) the individual, prior to 27 February 2008 -
(i) is exempted from holding a commodity futures broker’s representative

licence under the CTA;
(ii) is employed by or acting for a bank licensed under the Banking Act (Cap.
19) or a merchant bank approved under the Monetary Authority of
Singapore Act (Cap. 186), and
(iii) has at least 3 years of relevant and continuous working experience in

Singapore in the provision of financial advisory services in respect
of futures contracts as defined in the Act in force immediately before,

immediately before and the date of his licence application prior to 26

November 2010; entry into the industry prior to 26 November 2010; or

principal’s lodgment with the Authority of documents under section 23F of
the Act, in relation to his appointment as an appointed representative, as
the case may be.
23 Any representative of a financial adviser who, immediately before 1 July 2005,

was providing the financial advisory service specified in paragraph 7(a) concerning
contracts or arrangements for the purposes of leveraged foreign exchange trading under
the Act in force immediately before, shall not be required to pass any of the modules of
the CMFAS Exam if he continues to act in the same manner on or after 1 July 2005.
With effect from 1 January 2012, such a representative is required to pass Module 6A
in accordance to paragraph 34 of this Notice.
23A A representative who provides financial advisory services concerning futures

contracts and securities (excluding collective investment schemes) is not required to
pass Module 6 if his provision of financial advisory services in securities is confined to
the securities prescribed in regulation 3(1)(iv) of the Securities and Futures (Prescribed
Securities) Regulations 2012
Specified Types of Financial Advisory Services
24 For the purposes of paragraph 17 of this Notice, the CMFAS Exam requirements
shall not apply to any representative who confines the performance of financial advisory
services in respect of:
(a) any capital markets product to an expert investor as defined in regulation
2(1) of the FAR;
(b) any investment product to:
(i) an accredited investor as defined in regulation 2(1) of the FAR;
(ii) an institutional investor as defined in regulation 2(1) of the FAR;
(iii) a related corporation of the licensed financial adviser for whom the
representative acts;
(iv) a person that is connected to the licensed financial adviser for whom
the representative acts; or
(v) any person outside Singapore who is an individual and –
(AA) not a citizen of Singapore;
(AB) not a permanent resident of Singapore; and
(AC) not a person who is wholly or partly dependent on the person
referred to in sub-paragraph (AA) or (AB); or
(vi) any person outside Singapore, other than a person referred to in sub-
paragraph (b)(v), with no commercial or physical presence in Singapore.
(c) any Singapore Government Securities.

FAA-N20]
RE-TAKING OF MODULE 5
25 Subject to paragraph 16A and 26, the following categories of individuals shall
re-take and pass Module 5 of the CMFAS Exam before providing any financial advisory
service referred to in paragraph 7 of this Notice as an appointed representative:
(a) any individual who -

(i) passed Module 5 of the CMFAS Exam; or
(ii) was subject to the requirement of completing the non- examinable

course on Module 5 by the stipulated deadline in cancelled Notice No.
FAA-N04 (Notice on Minimum Entry and Examination Requirements for
Representatives of Licensed Financial Advisers and Exempt Financial
Advisers) issued on 1 October 2002 and cancelled on 16 January 2004,
and had completed the non-examinable course on Module 5 by 30
November 2003,
as the case may be, but subsequently—
(i) ceased providing any financial advisory service for a financial adviser
before 8 October 2018, without re-commencing the provision of any
financial advisory service set out at paragraph 7 of the Notice on
Minimum Entry and Examination Requirements for Representatives of
Licensed Financial Advisers and Exempt Financial Advisers [Notice No.
FAA- N13] dated 26 November 2010 and last revised on 11 April 2018,
in force immediately before 8 October 2018, for a financial adviser
within 3 years from the date of cessation;
(ii) ceased providing any financial advisory service for a financial adviser
before 8 October 2018, without re-commencing the provision of any
financial advisory service set out at paragraph 7 of this Notice, for a
financial adviser within 3 years from the date of cessation; or
(iii) ceased providing any financial advisory service for a financial advisory
on or after 8 October 2018, without re-commencing the provision of
any financial advisory services set out at paragraph 7 of this Notice, for
a financial adviser within 3 years from the date of cessation.
(c) any individual who -
(i) was subject to the requirement of completing the non- examinable

course on Module 5 by the stipulated deadline in cancelled Notice No.
FAA-N04 (Notice on Minimum Entry and Examination Requirements for
Advisers) issued on 1 October 2002 and cancelled on 16 January 2004
and completed the non-examinable course on Module 5 by 30 November
2003 but only after he ceased to provide financial advisory services;
and

(ii) did not re-commence the provision of financial advisory services for a
financial adviser within 3 years from the date of completing the non-
examinable course.
26 Paragraph 25 of this Notice shall not apply to an individual who -
(a) as of 18 February 2004, was a representative of an exempt financial adviser

providing execution-related advice, and has completed a non- examinable
course on Module 5 by 17 August 2004; or
(b) is or was a representative of an exempt financial adviser who had

commenced the provision of execution-related advice within 12 months
from 18 February 2004, and has completed a non-examinable course on
Module 5 within 6 months from the date of commencement of the activity,
unless such individual has ceased the provision of execution-related advice for
an exempt financial adviser for a period exceeding 3 years.
OBLIGATIONS OF A FINANCIAL ADVISER
27 A financial adviser shall maintain a register stating whether its representative is

subject to the CMFAS Exam requirements or the non- examinable course(s), where
applicable, relevant to the type of financial advisory services provided by the
representative. A financial adviser shall enter in the register the type of financial advisory
services conducted by its representative, the date on which its representative completed
the CMFAS Exam or non-examinable course(s), where applicable, and in respect of such
representative who is not required to pass certain modules of the CMFAS Exam under
this Notice, to state the details thereof, if any.
28 In addition, a financial adviser shall ensure that its representative comply with
the examination requirements of this Notice. A financial adviser shall not allow its
representative who is subject to the CMFAS Exam requirements to commence any type
of financial advisory service unless he has passed the applicable modules of the CMFAS
Exam or completed the relevant non- examinable course, where applicable.
ADMINISTRATION OF CMFAS EXAM
29 The Institute of Banking and Finance (“IBF”) administers Modules 1A, 1B, 2A, 3,
4A, 4B, 6, 6A and 10 while the Singapore College of Insurance (“SCI”) administers
Modules 5, 8, 8A, 9 and 9A. Details of the syllabus and examination format of these
modules may be obtained from IBF and SCI.
CONTINUING PROFESSIONAL DEVELOPMENT

REQUIREMENTS FOR APPOINTED REPRESENTATIVES
30 As set out in the Guidelines on Fit and Proper Criteria (Guideline No. FSG- G01),

FAA-N20]
competence and capability are criteria which the Authority will take into account in
considering whether a person is fit and proper. The Authority expects appointed
representatives of financial advisers to undergo continuing professional development so
as to keep abreast of developments in the financial advisory industry and update their
skills and knowledge in relation to the type of financial advisory services which they
provide. In this regard, a principal must include the structured continuing professional
development (“CPD”) training undertaken by its appointed representatives under
paragraph 30A of this Notice in its assessment on whether its appointed representatives
remain fit and proper in respect of their provision of financial advisory services5.
30A Every appointed representative of a financial adviser must –
(a) undergo structured CPD training which is relevant to the type of financial
advisory services that he provides; and
(b) obtain and retain relevant supporting evidence that he has completed the
minimum hours of structured CPD training under paragraph 31 or 31B of
this Notice, as applicable, within the stipulated period.
30B Every principal must –
(a) review and follow up on each of its appointed representatives' structured

CPD training needs on an annual basis; and
(b) obtain and retain the relevant supporting evidence that each of its appointed
representatives has completed the minimum hours of structured CPD
training under paragraph 31 or 31B of this Notice, as applicable, within the
stipulated period.
30C In this section, “structured CPD training” includes –
(a) lectures;
(b) conferences;
(c) workshops;
(d) courses;
(e) product seminars prior to the launch of new products; and
(f) e-learning courses
5
Under regulations 14A(1)(a)(ii) and 14A(2)(b) of the FAR, exempt financial advisers and licensed
financial advisers are respectively required to ensure that their representatives are fit and proper
persons in relation to the carrying out of financial advisory services as representatives. Pursuant
to section 23J of the Act, the Authority may revoke or suspend the status of an individual as
an appointed representative if he or his principal fails to satisfy the Authority that he remains a
fit and proper person to be an appointed representative.

which have clear learning objectives and outcomes that are clearly documented
and independently verified but excludes activities that are part of the job scope
of an appointed representative, such as carrying out research on products and
services for clients.
Minimum hours of structured CPD training required and calculation of structured CPD
training hours
31 Subject to paragraph 31D(b), an individual who acts or holds himself out to be

an appointed representative and provides –
(a) only one type of financial advisory service, must complete by the end of
every calendar year –
(i) the minimum number of training hours in Ethics or Rules and
Regulations, or both, as the case may be, set out in the second column
of Table A for that type of financial advisory service; and
(ii) the minimum number of training hours set out in the third column of
Table A for that type of financial advisory service; and
(b) two or more types of financial advisory services, must complete by the end
of every calendar year –
(i) the minimum number of training hours in Ethics or Rules and
Regulations, or both, as the case may be, set out in the second column
of Table A for those types of financial advisory service; and
(ii) the higher of the minimum number of training hours set out in the third
column of Table A for those types of financial advisory services.
The minimum number of training hours under paragraph 31(a)(i) or 31(b)(i), as the case
may be, applicable to an appointed representative is referred to in this Notice as the Core
CPD hours, and the minimum number of training hours under paragraph 31(a)(ii) or
31(b)(ii), as the case may be, applicable to an appointed representative is referred to in
this Notice as Supplementary CPD hours. The total of the Core CPD hours and
Supplementary CPD hours is referred to as the Total Annual CPD hours.
Table A
First Column Second Column Third Column

Types of financial advisory Core CPD hours Supplementary CPD hours
service
1. Advising others, either 6 training hours in respect of 10 hours
directly or through Ethics or Rules and
publications or writings, Regulations, or both, as the
and whether in case may be
electronic, print or other
form, concerning any * Only training hours of
contract of insurance in courses in Ethics or Rules
respect of mortgage and Regulations, or both, as
reducing term assurance

FAA-N20]
policies or group term the case may be, which are

life insurance policies or accredited by IBF or SCI will
both (as the case may be counted towards the
be), other than – Core CPD hours.
(a) in the manner set
out in item 2; or
(b) advising on
corporate finance
within the meaning
of the SFA.
2. Advising others by
issuing or promulgating
research analyses or
research reports,
whether in electronic,
print or other form,
concerning any contract
of insurance in respect
of mortgage reducing
term assurance policies
or group term life
insurance policies or
both (as the case may
be).
3. Arranging of any
contract of insurance in
respect of mortgage
policies or group term
life insurance policies or
both (as the case may
be), other than a
contract of reinsurance.
4. Advising others, either 24 hours
directly or through
publications or writings, and
whether in electronic, print or
other form, concerning any
investment product (other
than mortgage reducing term
assurance policies or group
term life insurance policies),
other than –
(a) in the manner set out in
item 5; or
(b) advising on corporate
finance within the
meaning of the SFA.
5. Advising others by issuing
or promulgating research
analyses or research reports,
whether in electronic, print or
other form, concerning any

investment product (other

than mortgage reducing term
assurance policies or group
term life insurance policies).
6. Deleted.
7. Arranging of any contract
of insurance in respect of life
policies (other than a contract
of reinsurance, mortgage
policy or group term life
insurance policy).
31A Any appointed representative who, within the period of 1 January 2018 to 10
April 2018 (both dates inclusive), completed courses under his structured CPD training
(including courses in Ethics or Rules and Regulations, or both, as the case may be) in
compliance with the Notice on Minimum Entry and Examination Requirements for
Representatives of Licensed Financial Advisers and Exempt Financial Advisers [Notice
No. FAA-N13] dated 26 November 2010 and last revised on 30 June 2017, in force
immediately before 11 April 2018 may count the training hours in such completed
courses towards his Core CPD hours or Supplementary CPD hours, for the calendar year
of 2018 only.
31B Subject to paragraphs 31C and 31D(b), where an individual is an appointed

representative of a particular principal for an aggregate period of less than a year in a
calendar year, the appointed representative must complete by the end of that calendar
year –
(a) a pro-rated minimum number of training hours in Ethics or Rules and

Regulations, or both as the case may be, calculated in accordance with the
formula in sub-paragraph (i) below (“Pro-rated Core CPD hours”); and
(b) a pro-rated minimum number of Supplementary CPD training hours calculated

in accordance with the formula in sub-paragraph (ii) (“Pro- rated
Supplementary CPD hours”).
The total of the Pro-rated Core CPD hours and Pro-rated Supplementary CPD hours is
referred to in this Notice as the Total Pro-rated CPD hours.
Formulas:
(i) Pro-rated minimum number of training hours in Ethics or Rules and Regulations, or
both (as the case may be)
═ (Total number of days appointed as an appointed representative of the particular
principal in the calendar year ∕ 365) × Core CPD hours
(ii) Pro-rated minimum number of Supplementary CPD hours

FAA-N20]
═ (Total number of days appointed as an appointed representative of the particular

principal in the calendar year ∕ 365) × Supplementary CPD hours
For avoidance of doubt, where an appointed representative has more than one principal
in a calendar year, paragraph 31B shall apply only in respect of the particular principal
for whom the appointed representative still provides financial advisory services.
31C Subject to paragraph 31D(a), an individual who is an appointed representative

of a particular principal for an aggregate period of less than 183 days in a calendar year
and is unable to complete his Total Pro-rated CPD hours by the end of that calendar year,
may carry over his unfulfilled Total Pro-rated CPD hours to the next calendar year (“New
Calendar Year”) on the condition that he completes his unfulfilled Total Pro-rated CPD
hours by the end of the New Calendar Year.
31D In respect of an appointed representative who –
(a) carries over his unfulfilled Total Pro-rated CPD hours to the New Calendar
Year and changes his principal in the New Calendar Year (the “new
principal”), the appointed representative is not required to comply with the
condition under paragraph 31C as an appointed representative of the new
principal6; or
(b) ceases to be an appointed representative in any calendar year, the appointed

representative is not required to complete his Total Annual CPD hours or
Total Pro-rated CPD hours, as the case may be, for that calendar year.
31E For purposes of calculating Supplementary CPD hours or Pro-rated

Supplementary CPD hours, as applicable, an appointed representative who completes at
least 2 hours of structured CPD training7 on –
(a) Medishield Life Scheme content;
(b) shield plan content; or
(c) a combination of MediShield Life Scheme content and shield plan content,
as required under MAS Notice 117 (Training and Competency Requirement:
Health Insurance) (“MAS Notice 117”) before the end of any calendar year
may –
(i) treat up to 2 hours of that structured CPD training, as equivalent to the

same in structured CPD training hours under this Notice for the same
calendar year (“Equivalent CPD hours”); and
6
For avoidance of doubt, the appointed representative must comply with paragraph 31 or 31B,
as the case may be.
7
Please see paragraph 9A of MAS Notice 117.

(ii) count the Equivalent CPD hours towards his Supplementary CPD hours
or Pro-rated Supplementary CPD training hours, as applicable.
For avoidance of doubt, the Equivalent CPD hours do not count towards Core CPD hours
or Pro-rated Core CPD hours, as applicable. For purposes of this paragraph, “MediShield
Life Scheme” and “shield plan” have the same respective meanings as in paragraph 2 of
MAS Notice 117.
31F Where an appointed representative (other than an appointed representative

referred to in paragraph 31D) is or will be unable to fulfil any of the requirements under
paragraph 30A, 31 or 31B of this Notice, as the case may be, within the stipulated
period due to circumstances beyond the control of the appointed representative that
could not reasonably have been foreseen by the appointed representative, the appointed
representative will not be treated as having breached the requirements under paragraph
30A, 31 or 31B of this Notice, if the appointed representative –
(a) immediately informs his principal upon being aware of his inability to fulfil
the requirements; and
(b) completes the unfulfilled number of Total Annual CPD hours or Total Pro-
rated CPD hours (as the case may be) within 12 months of being aware of
his inability to fulfil the requirements.
The principal of the appointed representative, who has been informed of the fact referred
to in sub-paragraph (a), must take reasonable steps to ensure that the appointed
representative completes the unfulfilled number of Total Annual CPD hours or Total Pro-
rated CPD hours (as the case may be) within 12 months of the appointed representative
being aware of his inability to fulfil the requirements.
32 A principal must –
(a) calculate the total number of completed structured CPD training hours of
each of its appointed representatives as at the end of each calendar year;
and
(b) maintain a register containing records of each of its appointed

representatives’ total number of completed structured CPD training hours
for each calendar year, and the principal must retain the register for a period
of not less than 5 years from the end of the calendar year in which the
appointed representative is appointed by the principal.
32A A financial adviser should ensure that its representatives have undergone
adequate relevant training in any new Specified Investment Products, prior to their
providing financial advisory services concerning such products.

FAA-N20]
32B For the purposes of calculating Core CPD hours, or Pro-rated Core CPD hours,
as applicable, or Supplementary CPD hours or Pro-rated Supplementary CPD hours, as
applicable, a person who—
(a) is an appointed representative under the SFA and the Act for the same
principal; and
(b) completes courses during the period he is an appointed representative under

both the SFA and the Act for the same principal, under his structured CPD
training in compliance with the Notice on Minimum Entry and Examination
Requirements for Representatives of Holders of Capital Markets Services
Licence and Exempt Financial Institutions [Notice No. SFA 04-N09] dated
11 August 2010 and last revised on 8 October 2018 (“SFA Exam Notice”)
before the end of any calendar year,
may count his training hours in such completed courses –
(c) for Core CPD hours or Pro-rated Core CPD hours under the SFA Exam
Notice, towards his Core CPD hours or Pro-rated Core CPD hours, as
applicable, under this Notice, if IBF or SCI, as the case may be, has
accredited that such training hours may be counted towards Core CPD hours
under both the SFA Exam Notice and this Notice; and
(d) for Supplementary CPD hours or Pro-rated Supplementary CPD hours under
the SFA Exam Notice, towards his Supplementary CPD hours or Pro-rated
Supplementary CPD hours, as applicable, under this Notice, subject to the
condition in paragraph 32C being satisfied.
for the same calendar year.

32C The condition mentioned in paragraph 32B(d) is that the appointed

representative’s principal must determine that the Supplementary CPD hours completed
by the appointed representative under the SFA Exam Notice are
relevant to one or more types of financial advisory services being provided by the
appointed representative under this Notice.
CIRCUMSTANCES UNDER WHICH THE CPD REQUIREMENTS DO NOT APPLY
33 Paragraphs 30A, 31 and 31B do not apply to an individual who has been
appointed as an appointed representative of any financial adviser for the first time, for
the period starting on the date of his first appointment as an appointed representative
and ending on the last day of the same calendar year.

33A Where an appointed representative –

(a) is required to take or re-take 1 or more applicable modules under the CMFAS
Exams in any calendar year so as to –
(i) be able to continue providing the types of financial advisory service for
which he is appointed;
(ii) provide a type of financial advisory service other than that in sub-
paragraph (i); or
(iii) satisfy sub-paragraphs (i) and (ii); and
(b) passes the applicable module or applicable modules under the CMFAS
Exams (as the case may be),
paragraphs 30A, 31 and 31B of this Notice do not apply to the appointed representative
for the period of the entire calendar year in which he passes the applicable module or
applicable modules (as the case may be).
33B Paragraphs 30A, 31 and 31B do not apply to –
(a) an appointed representative who is an individual referred to in paragraph 8

of this Notice;
(b) an appointed representative who is a representative referred to in paragraph

24 of this Notice;
(c) an appointed representative whose principal is a financial adviser referred to

in paragraph 13 of FAA-N16, and who provides execution-related advice
only; or
(d) Deleted
(e) an appointed representative who satisfies any combination of sub-

paragraphs (a), (b) or (c).
TRANSITIONAL ARRANGEMENTS FOR IMPLEMENTATION OF MODULES 6A, 8A AND

9A OF THE CMFAS EXAMINATION REQUIREMENTS
Existing Representatives
34 Deleted.
Outstanding Notifications with the Authority on 1 January 2012

35 Deleted

FAA-N20]
Notifications Submitted after 1 January 2012

36 Deleted.
Representatives referred to in Securities and Futures (Prescribed Securities) (Exemption)

Regulations 2012
37 Deleted.
TRANSITIONAL ARRANGEMENTS FOR IMPLEMENTATION OF THE SECURITIES AND

FUTURES (AMENDMENT) ACT 2017
Representatives conducting the regulated activity of advising others concerning

over the counter derivatives contracts
38 A person is treated as having satisfied paragraph 9 in respect of the regulated

activity of advising others concerning over-the-counter derivatives contracts if all of the
following conditions are satisfied –
(a) at any time during the period of up to 1 year immediately prior to 8 October
2018, he carried out any activity which would have amounted to acting as
a representative in respect of advising others concerning over-the-counter
derivatives contracts;
(b) he carries out the regulated activity of advising others concerning over-the-
counter derivatives contracts on or after 8 October 2018;
(c) if he ceased to carry out the activity mentioned in sub-paragraph (a)

sometime (“date of cessation”) during the period stipulated in sub-
paragraph (a), and thereafter commenced carrying out of the activity
mentioned in paragraph (b) (“date of re-commencement”), the time that
elapsed between the latest date of cessation and the date of re-
commencement does not exceed a continuous period of 1 year.
Representatives conducting the regulated activity of advising others concerning spot

foreign exchange contracts for the purposes of leveraged foreign exchange trading
39 A person is treated as having satisfied paragraph 9 in respect of the regulated

activity of advising others concerning spot foreign exchange contracts for the purposes
of leveraged foreign exchange trading if all of the following conditions are satisfied –
(a) at any time during the period of up to 1 year immediately prior to 8 October
2018, he carried out any activity which would have amounted to acting as
a representative in respect of advising others concerning any spot foreign
exchange contract for the purposes of leveraged foreign exchange trading
arranged by any bank that is licensed under the Banking Act (Cap. 19) or
any merchant bank that is approved as a financial institution under the
Monetary Authority of Singapore Act (Cap. 186);

(b) he carries out the regulated activity of advising others concerning spot
foreign exchange contracts for the purposes of leveraged foreign exchange
trading on or after 8 October 2018;
(c) if he ceased to carry out the activity mentioned in sub-paragraph (a)

sometime (“date of cessation”) during the period stipulated in sub-
paragraph (a), and thereafter commenced carrying out of the activity
mentioned in paragraph (b) (“date of re-commencement”), the time that
elapsed between the latest date of cessation and the date of re-
commencement does not exceed a continuous period of 1 year.
40 A person that satisfies paragraphs 38(a) to 38(c) or 39(a) to 39(c) is not required
to satisfy the minimum academic qualification requirements set out in paragraph 15 of
this Notice.
Retaking of Rules and Regulations Module
41 An individual relying on paragraphs 38 is required to pass, or re-take and pass,

as the case may be, the relevant CMFAS rules and regulations modules set out in
paragraph 9, if the individual ceases carrying out the regulated activity of advising others
concerning over-the-counter derivatives contracts for a continuous period of more than
1 year on or after 8 October 2018
42 An individual relying on paragraph 39 is required to pass, or re-take and pass,

as the case may be, the relevant CMFAS rules and regulations modules set out in
paragraph 9, if the individual ceases carrying out the regulated activity of advising others
concerning spot foreign exchange contracts for the purposes of leveraged foreign
exchange trading for a continuous period of more than 1 year on or after 8 October 2018
Retaking of Product Knowledge Modules
43 An individual relying on paragraph 38 is required to pass the relevant CMFAS

product knowledge modules set out in paragraph 9 if –
(a) the individual ceases to carry out the regulated activity of advising others
on over-the-counter derivatives contracts for a continuous period of more
than 1 year on or after 8 October 2018; and
(b) he does not have at least 3 years of continuous working experience in the
relevant regulated activity prior to the break-in-service referred to in
paragraph (a).
44 An individual relying on paragraph 39 is required to pass the relevant CMFAS

product knowledge modules set out in paragraph 9 if –

FAA-N20]
(a) the individual ceases to carry out the regulated activity of advising others
concerning spot foreign exchange contracts for the purposes of leveraged
foreign exchange trading for a continuous period of more than 1 year on or
after 8 October 2018; and
(b) he does not have at least 3 years of continuous working experience in the
relevant regulated activity prior to the break-in-service referred to in
paragraph (a).
Note:
in a written direction issued by the Authority (which would include this Notice), shall be
guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000
and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every
day or part thereof during which the offence continues after conviction.
*Note on History of Amendment
1. FAA-N13 (Amendment) 2011 with effect from 19 October 2011.

2. FAA-N13 (Amendment) 2012 with effect from 2 May 2012.
3. FAA-N13 (Amendment) 2013 with effect from 20 February 2013.
4. FAA-N13 (Amendment No. 2) 2013 with effect from 1 February 2014.
5. FAA-N13 (Amendment) 2014 with effect from 10 June 2014.
6. FAA-N13 (Amendment) 2015 with effect from 7 October 2015.
7. FAA-N13 (Amendment No. 2) 2015 with effect from 1 January 2016.
8. FAA-N13 (Amendment) 2016 with effect from 9 September 2016
9. FAA-N13 (Amendment No. 2) 2016 with effect from 30 December 2016.
10. FAA-N13 (Amendment) 2017 with effect from 30 June 2017
11. FAA-N13 (Amendment) 2018 with effect from 11 April 2018
12. FAA-N13 (Amendment No.2) 2018 with effect from 8 October 2018
6. NOTICE ON REPORTING OF MISCONDUCT OF REPRESENTATIVES BY

FINANCIAL ADVISERS [NOTICE NO: FAA-N14]
Act (Cap. 110) ["the Act"].
6.2 Notice No: FAA-N14 shall apply to all licensed financial advisers and persons who
are exempt from holding a financial adviser’s licence under Section 23(1)(a) to
(e) of the FAA. It sets out the responsibilities and reporting requirements of
financial advisers for the misconduct of their representatives. This notice takes
effect from 1 January 2011.

A. Definitions
6.3 For the purposes of this Notice —

(a) “designated investment product” has the same meaning as in Section 25(6)
of the FAA;
(b) “financial adviser” means a licensed financial adviser or a person exempt
from holding a financial adviser’s licence under Section 23(1)(a) to (e) of
the FAA;
(c) “financial advisory service” has the same meaning as in Section 2(1) of the
FAA;
(d) “principal” has the same meaning as in Section 2(1) of the FAA;
(e) “representative” has the same meaning as in Section 2(1) of the FAA.
B. Report Of Misconduct Of Representative
6.4 A financial adviser shall report to the MAS, in the manner as specified in
Paragraph 6.6 below, upon discovery of any of the following types of misconduct
committed by its representatives:
(a) Acts Involving Fraud, Dishonesty or Other Offences of a Similar Nature: cases
where the financial adviser has reason to suspect that its representative has
committed any offence involving cheating, dishonesty, fraud, forgery,
misappropriation of moneys, or criminal breach of trust. For such cases, the
financial adviser is expected to lodge a police report and submit to the MAS
a copy of the police report, together with information (where available)
relating to:
(i) the name of the police officer investigating the case; and
(ii) an update on the progress of the police investigation and result of the
criminal proceeding (if any).
Where a financial adviser has not lodged a police report, it should notify the
MAS of the reasons for its decision;
(b) Acts Involving Inappropriate Advice, Misrepresentation or Inadequate
Disclosure of Information: cases where its representative:
(i) made a recommendation to a client without due consideration to his
investment objectives, financial situation or particular needs;
(i) made a deceptive, false or misleading statement to a client; or
(ii) failed to disclose to a client all material information relating to any
designated investment product recommended by him, as specified in
Notice No: FAA-N03, Notice On Information To Clients And Product
Information Disclosure;
(c) Failure to satisfy the Guidelines On Fit And Proper Criteria (Guideline No: FSG-
G01): cases where its representative failed to satisfy the fit and proper
criteria as set out in Guideline No: FSG-G01; and
(d) Other Misconduct: any type of misconduct other than those as set out in
subparagraphs (a) to (c), resulting in:

FAA-N20]
(i) a non-compliance with any regulatory requirement relating to the

provision of any financial advisory service under the FAA; or
(ii) a serious breach of the financial adviser’s internal policy or code of
conduct which would render the representative liable to demotion,
suspension, or termination of the representative’s employment or
arrangement with the financial adviser
6.5 A financial adviser shall also report to the MAS, in the manner as specified in
Paragraph 6.6 below, any type of misconduct as set out in Paragraph 6.4 above,
that is committed by any of its representatives who has ceased to be a
representative of the financial adviser before the misconduct was discovered, or
before disciplinary action has been decided upon or taken.
6.6 Where a misconduct has been committed for which the financial adviser required
to report to the MAS in accordance with Paragraphs 6.4 or 6.5 above, the
financial adviser shall submit to the MAS the relevant information in the form as
set out at Appendix 5A [“Misconduct Report”] not later than 14 days after the
discovery of the misconduct by the financial adviser. The Misconduct Report shall
be lodged by the financial adviser through MASNET.
6.7 A financial adviser shall ensure that its appointed representatives meet continuing
education requirements as part of the fit and proper requirements. However, the
financial adviser is not required to lodge a Misconduct Report against its
representatives for failing to meet the continuing education requirements.
C. Update On Report Of Misconduct Of Representative
6.8 In addition to the Misconduct Report to be submitted in accordance with

Paragraph 6.5 above, where a financial adviser has not concluded its investigation
or has not taken any disciplinary action against the representative concerned, the
financial adviser shall submit to the MAS, a report in the form as set out at
Appendix 5B [“Update Report”], to provide an update of the case as and when
there is any significant development. The Update Report shall be lodged by the
financial adviser through MASNET.
D. Annual Declaration
6.9 If there is no Misconduct Report for which a financial adviser is required to report
under Paragraph 6.6 above for any calendar year, the financial adviser shall
submit to the MAS a declaration in the form as set out at Appendix 5C not later
than 14 days after 31 December of that calendar year. Appendix 5C shall be
lodged by the financial adviser through MASNET.
E. Investigations
6.10 For the purpose of complying with the requirements as set out in Paragraphs 6.4
to 6.6 and Paragraph 6.8 above, a financial adviser is expected to conduct
internal investigations and keep proper records of the following:

(a) a summary of the facts of the case;

(b) interviews with relevant parties, such as the representative, his supervisor
and the client;
(c) documentary evidence of the alleged misconduct;
(d) the investigator’s assessment and recommendation; and
(e) disciplinary action taken against the representative, if any.
6.11 Where an investigation has been carried out by a financial adviser in respect of
any misconduct committed by any of its representatives, the financial adviser
shall, at the request of the MAS, furnish the records as set out above to the MAS.
F. Disciplinary Action
6.12 A financial adviser is responsible for the conduct of its representatives. It should
take appropriate disciplinary action against its representatives for any misconduct
committed by them in relation to the provision of any financial advisory service
and ensure consistency in its application of disciplinary action.
6.13 The type of disciplinary action that a financial adviser may take against its
representatives in respect of any misconduct committed depends on the severity
of the case and includes, but is not limited to, any one or more of the following:
(a) suspension from providing any financial advisory service;
(b) restitution of misappropriated moneys;
(c) fine;
(d) formal warning;
(e) demotion; and
(f) termination of the representative’s employment or arrangement (agreement)
with the financial adviser.
6.14 A financial adviser should have an internal process for addressing the appeals
made by its representatives for any disciplinary action taken against them.
G. Use Of Information In Report
6.15 The MAS may take into account any information contained in any report that is
submitted by a financial adviser under Notice No: FAA-N14 in exercising its
powers or performing its functions under the FAA.
7. NOTICE ON CANCELLATION PERIOD FOR UNLISTED DEBENTURES [NOTICE NO:

FAA-N15]
Act (Cap. 110) (the “Act”). It sets out the obligations of the persons specified
below in relation to the cancellation period of an unlisted debenture when they

FAA-N20]
sell (whether direct or indirect) an unlisted debenture to a client. This Notice shall
come into effect on 1 May 2011.
A. Definitions

(a) “debenture” has the same meaning as in Section 2(1) of the Securities and
Futures Act (Cap. 289);
(b) “exempt financial adviser” has the same meaning as in Section 2(1) of the
FAA;
(c) “financial adviser” has the same meaning as in Section 2(1) of the FAA;
(d) “relevant person” means any person specified in paragraph 4 of this Notice.
B. Applications
7.3 This notice shall apply to:

(a) holders of a financial adviser’s licence;
(d) persons who are exempted under Regulation 29 of the FAR; and
(e) representatives of persons who are exempted under Regulation 29 of the
FAR.
7.4 This Notice does not apply to the following:

(a) unlisted debentures with tenures of three months or shorter;
(b) unlisted debentures which are exempt from prospectus requirements under
the SFA; and
(c) purchases of unlisted debentures where the client is not an individual.
C. Sale Of Unlisted Debenture
7.5 A relevant person shall not sell (whether directly or indirectly) to a client any
unlisted debenture which does not contain a right, given by the issuer, to cancel
the agreement to purchase such debenture.
7.6 In the sale (whether direct or indirect) of any unlisted debenture to a client, a
relevant person shall conduct due diligence on issuers of such unlisted debenture
to ensure that the issuers have put in place steps and processes that would
satisfy the Guidelines on Cancellation Period for Unlisted Debentures [SFA13-
G12] issued by the MAS.
D. Disclosure Of Cancellation Period
7.7 When selling an unlisted debenture, the relevant person shall disclose and explain
to the client:
(a) the time frame for the client to reconsider his purchase of an unlisted
debenture;

(b) the terms and procedures for exercising his right to cancel his purchase of
the unlisted debenture;
(c) that the risk of any fall in value of the unlisted debenture during the
cancellation period would have to be borne by the client.
8. NOTICE ON REQUIREMENTS FOR THE REMUNERATION FRAMEWORK FOR

REPRESENTATIVES AND SUPERVISORS (“BALANCED SCORECARD
FRAMEWORK”) AND INDEPENDENT SALES AUDIT UNIT [NOTICE NO: FAA-N20]
8.1 The following contents in regard to “Requirements For The Remuneration

Framework For Representatives And Supervisors (“Balanced Scorecard
Framework”) And Independent Sales Audit Unit” has been entirely extracted from
Notice No: FAA-N20

Issue Date: 31 December 2015
NOTICE ON REQUIREMENTS FOR THE REMUNERATION FRAMEWORK FOR

REPRESENTATIVES AND SUPERVISORS (“BALANCED SCORECARD
FRAMEWORK”) AND INDEPENDENT SALES AUDIT UNIT
_____________________________________________________________________________
CONTENTS
1 Introduction 1
2 Definitions 1
3 The independent sales audit unit (“ISA Unit”) 4

3.1 Persons comprising the ISA Unit 4
3.2 Requirements of ISA Unit in relation to the balanced scorecard 5
Framework
4 Requirements of the balanced scorecard framework for representatives 5

of a financial adviser
4.1 Introduction 6
4.2 Non-sales key performance indicators (“non-sales KPIs”) 7
4.3 Specified variable income 7
4.4 Processes and methods for reviewing and assessing 7
representative’s performance in his provision of financial
advisory services against non-sales KPIs
4.5 Classification of infractions: Category 1 infraction or Category 2 12
4.6 Grading table for representatives 14
4.7 Recovery of specified variable income which representative is 18
not entitled to in the calendar quarter
5 Requirements of the balanced scorecard framework for supervisors of 20

FAA-N20]
a financial adviser
5.1 Introduction 20
5.2 Specified variable income 20
5.3 Percentage of specified variable income which supervisor is 22
entitled to in a calendar quarter
5.4 Recovery of specified variable income which supervisor is not 22
entitled to in the calendar quarter
5.5 Grading table for supervisors 23
6 Avenue for appeal by representatives and supervisors 24
7 Record keeping 25
8 Maintenance of register 25
9 Provision of balanced scorecard performance record to 25
representatives and supervisors
10 Responsibilities of board and senior management 26
11 Submission of reports to the Monetary Authority of Singapore 26
12 Annex 1 28
13 Annex 2 30
14 Annex 3 53

Notice No: FAA-N20

Issue Date: 1 January 2016
NOTICE ON REQUIREMENTS FOR THE REMUNERATION FRAMEWORK FOR

REPRESENTATIVES AND SUPERVISORS (“BALANCED SCORECARD FRAMEWORK”)
AND INDEPENDENT SALES AUDIT UNIT
________________________________________________________________________________
1 Introduction
1.1 This Notice is issued pursuant to sections 38 and 39 of the Financial Advisers
Act (Cap. 110) ("the Act").
1.2 This Notice shall apply to all licensed financial advisers and exempt financial
advisers, other than a financial adviser in respect of the activities,
recommendations or transactions set out under regulation 34A of the Financial
Advisers Regulations (“FAR”).
1.3 This Notice sets out the requirements in relation to the design and operation of
the balanced scorecard framework, and the independent sales audit unit (“ISA
Unit”), which licensed financial advisers and exempt financial advisers shall put
in place in their remuneration structures for their representatives and
supervisors.
2 Definitions
2.1 For the purposes of this Notice, unless the context otherwise requires –
“balanced scorecard grade” means the grade assigned to a representative or

supervisor under the Representatives’ Grading Table or the Supervisors’ Grading
Table;
“board” means the board of directors of a financial adviser;
“dual currency investment” has the same meaning as in the Financial Advisers
(Prescribed Investment Products and Exemption) Regulations 2005;
“exempt financial adviser” means a person exempt from holding a financial

adviser’s licence under section 23(1)(a), (b), (c), (d) or (e) of the Act; Notice on
Requirements for the Remuneration Framework for Representatives and

FAA-N20]
Notice on Requirements for the Remuneration Framework for Representatives and

Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit 2
_______________________________________________________________________________

adviser;
“infraction” in relation to a representative, means a failure by the representative

to meet any of the non-sales key performance indicators;
“measurement quarter” means any calendar quarter where a representative’s

performance is measured against the non-sales key performance indicators;
“non-sales key performance indicators” or “non-sales KPIs”, in relation to a

representative, means the principles set out in Annex 1 to this Notice that the
representative has to meet;
“percentage of total specified variable income” means the percentage of specified

variable income determined based on the formula set out in footnote 1 of the
Supervisors’ Grading Table;
“post-transaction” refers to the period of time after –

(a) in the case of a life policy –
(i) the policy is issued;
(ii) the policy takes effect; or
(iii) the cover has commenced,
whichever is the latest; and
(b) in the case of an investment product other than a life policy, a client’s
application for a transaction has been accepted by a product manufacturer;
“Representatives’ Grading Table” refers to the table set out in paragraph 4.6.1
for grading a representative under the balanced scorecard framework;
“sampled transaction” means a transaction which has been sampled by the ISA
Unit to fulfil the requirements of the minimum sampling size set out in paragraph
4.4.2.5;
“selected representative” means a representative who has been assigned a

balanced scorecard grade B or worse under the balanced scorecard framework
consecutively for two calendar quarters immediately preceding the measurement
quarter;


________________________________________________________________________________
“specified variable income” –
(a) in relation to a representative, means the proportion of variable income of the
representative referred to in paragraph 4.3.1 which is measured against the non-
sales key performance indicators; and
(b) in relation to a supervisor, means the proportion of variable income of the
supervisor referred to in paragraph 5.2.1 which is measured against the
performance of the representatives of the supervisor under the balanced
scorecard framework;
“structured notes” has the same meaning as in regulation 2(1) of the Securities and
Futures (Offers of Investments) (Shares and Debentures) Regulations 2005;
“Supervisors’ Grading Table” refers to the table set out in paragraph 5.5.1 for
grading a supervisor under the balanced scorecard framework;
“transaction” means any purchase of an investment product by a client, and

includes, in the case of any life policy, any increases in the sum assured involving
the injection of new funds or any addition of riders to the life policy, but does not
include the purchase leg of any switch of funds for an investment-linked policy or a
collective investment scheme, which is free of charge or where no additional charge
for the switch is borne by the client;
“variable income” in relation to –

(a) a representative, means the amount of remuneration paid or payable to the
representative, whether on a periodic basis or otherwise, which varies and is
directly dependent, wholly or partly, on any or all of the following –
(i) the number or value of investment products in relation to which financial
advisory services are provided by the representative to clients;
(ii) the number or value of agreements, transactions or arrangements relating to
any investment product, entered into by clients to whom the representative
provided any financial advisory service;
(iii) the total amount of consideration, paid by clients to whom the representative
provided any financial advisory service for investment products; or
(iv) the total amount of premiums paid or payable under life policies, paid by
clients to whom the representative provided any financial advisory service;
and
(b) a supervisor, means the amount of remuneration paid or payable to the
supervisor, whether on a periodic basis or otherwise, which varies

FAA-N20]

______________________________________________________________________________________
and is directly dependent, wholly or partly, on any or all of the following –

(i) the number or value of investment products, in relation to which financial
advisory services are provided by a representative, who is under the
supervision or management of the supervisor or any other person whom
the supervisor manages or supervises, to clients;
(ii) the number or value of agreements, transactions or arrangements relating
to any investment product, entered into by clients to whom a
representative, who is under the supervision or management of the
supervisor or any other person whom the supervisor manages or
supervises, provided financial advisory services;
(iii) the total amount of consideration, paid by clients to whom a
representative, who is under the supervision or management of the
supervisor or any other person whom the supervisor manages or
supervises, provided financial advisory services for investment products;
or
(iv) the total amount of premiums paid or payable under life policies, paid by
clients to whom a representative, who is under the supervision or
management of the supervisor or any other person whom the supervisor
manages or supervises, provided financial advisory services.
2.2 The expressions used in this Notice shall, except where expressly defined in
this Notice or where the context otherwise requires, have the same respective
meanings as in the Act, the FAR, the Notice on Recommendations on
Investment Products (FAA-N16), the Notice on Information to Clients and
Product Information Disclosure (FAA-N03), and the Guidelines on Switching of
Designated Investment Products (FAA-G10).
3 The ISA Unit
3.1 Persons comprising the ISA Unit
3.1.1 A financial adviser shall have an ISA Unit comprising persons who –
(a) are independent of the financial advisory services unit of the financial
adviser;
(b) do not directly or indirectly supervise or manage the conduct and
performance of any representative or class of representatives of the


_______________________________________________________________________________
(c) are competent in reviewing and assessing the quality of the financial
advisory services provided by the representatives of the financial adviser,
against the non-sales KPIs, and determining if infractions have been
committed by the representatives.
3.1.2 A financial adviser may –

(a) utilise its compliance or risk management function to carry out the
responsibilities of the ISA Unit; or
(b) outsource the responsibilities of the ISA Unit to a third party provider,
if and only if –
(i) its compliance or risk management function or the third party provider,
as the case may be, satisfies paragraph 3.1.1; and
(ii) the financial adviser ensures that its compliance or risk management
function, or the third party provider, as the case may be, complies with
the requirements of this Notice which applies to the ISA Unit.
3.2 Requirements of ISA Unit in relation to the balanced scorecard framework
3.2.1 A financial adviser shall ensure that the ISA Unit carries out the post transaction
checks set out in paragraph 4.4.1, and samples transactions in accordance with the
sampling methodology in paragraph 4.4.2.
3.2.2 A financial adviser shall require the ISA Unit to submit reports on its audit
of the quality of financial advisory services provided in every calendar quarter by the
representatives of the financial adviser, to either –
(a) the board and chief executive officer of the financial adviser; or
(b) a business function or unit of the financial adviser, which is independent
from the financial advisory services unit of the financial adviser, by the
end of two calendar quarters immediately subsequent to the measurement
quarter.
4 Requirements of the balanced scorecard framework for representatives

of a financial adviser
4.1 Introduction
4.1.1 Subject to paragraph 4.3.2, a financial adviser shall for each of its
representatives, other than –

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(a) a representative who is exempt from the application of the balanced
scorecard framework under regulation 34A of the FAR; or
(b) a representative who ceases to provide financial advisory services during
the relevant calendar quarter and where the financial adviser has assessed
and documented its assessment in writing that it is not possible for the
financial adviser to comply with sub-paragraphs (i) to (vii) in respect of
that representative,
satisfy all of the following requirements by the end of every calendar quarter
immediately subsequent to a measurement quarter:
(i) require the ISA Unit to review and assess the quality of financial advisory
services provided by the representative in respect of his sampled
transactions, in accordance with paragraphs 4.4.1 and 4.4.2;
(ii) review and assess findings of mystery shopping exercises, if any, and
substantiated complaints, if any, in relation to the performance of
representatives, against the non-sales KPIs in accordance with paragraphs
4.4.3 and 4.4.4 respectively;
(iii) ensure that the ISA Unit classifies any infraction committed by the
representative, in accordance with paragraph 4.5;
(iv) determine the percentage or number of cases with one or more infractions,
set out in the Representatives’ Grading Table;
(v) assign the balanced scorecard grade to the representative under the
Representatives’ Grading Table, which corresponds with the percentage
or number of cases with one or more infractions referred to in sub-
paragraph (iv);
(vi) if applicable, determine the percentage of specified variable income which
the representative is entitled to under the Representatives’ Grading Table,
which corresponds with the percentage or number of cases with one or
more infractions referred to in sub-paragraph (iv); and
(vii) if applicable, determine the effective percentage of specified variable
income which the representative is entitled to in accordance with
paragraph 4.6.3.
4.2 Non-sales key performance indicators
4.2.1 Every financial adviser shall incorporate the non-sales KPIs into its balanced
scorecard framework.
4.2.2 In addition to the non-sales KPIs, a financial adviser may incorporate other key
performance indicators in its balanced scorecard framework to meet its specific
business objectives. However, the financial adviser shall not measure the specified
variable income of a representative against such other key performance indicators.


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4.3 Specified variable income
4.3.1 Subject to paragraph 4.3.3, in a calendar quarter, where a financial adviser

remunerates a representative for his provision of financial advisory services by way
of –
(a) variable income only, the financial adviser shall measure only 60% of the
variable income provided or to be provided to the representative in the
calendar quarter against the non-sales KPIs; or
(b) a fixed salary and a variable income component, the financial adviser shall
shall measure all of the variable income provided or to be provided to the
representative in the calendar quarter against the non-sales KPIs.
4.3.2 Where a financial adviser does not remunerate a representative for his provision
of financial advisory services by way of any variable income in a calendar quarter, the
financial adviser shall comply with paragraph 4.1.1(i) to (v), and factor the balanced
scorecard grade assigned to the representative in the representative’s appraisal,
including the representative’s remuneration and promotion reviews (if any).
4.3.3 Where any specified variable income of a representative has been measured
against the non-sales KPIs for any calendar quarter, the financial adviser shall not
measure the specified variable income against the non-sales KPIs in any other calendar
quarter. For example, in relation to the calendar quarter of April to June 2016, if a
representative has arranged a life policy on behalf of a client in June 2016 and in respect
of this transaction, he is entitled to receive S$1,500 of the specified variable income
under the balanced scorecard framework but he will only be paid S$1,000 in June 2016
and S$500 in June 2017; the financial adviser must not measure the deferred payment
of S$500 in June 2017 against the non-sales KPIs in the calendar quarter of April to
June 2017.
4.4 Processes and methods for reviewing and assessing representative’s

performance in his provision of financial advisory services against non-sales
KPIs
4.4.1 Post-transaction checks by the ISA Unit
4.4.1.1 The ISA Unit has to carry out and complete the following checks (“post-
transaction checks”) on the sampled transactions in order to review and assess the

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quality of financial advisory services provided by a representative, by the end of the

calendar quarter immediately subsequent to the measurement quarter1–
(a) in respect of sampled transactions which are rollovers of any dual currency
investment or structured note relating to equities or commodities, or such other
product as the Authority may approve on an exceptional basis, the ISA Unit is
to review all call-logs of conversations held with clients of every sampled
transaction;
(b) in respect of other sampled transactions –
(i) Documentation review: The ISA Unit must review all documentation,
including fact-find, needs analysis and basis of recommendation, of every
sampled transaction; and
(ii) Client survey: The ISA Unit must conduct client surveys on every sampled
transaction.
4.4.1.2 The ISA Unit should also refer to the Guidelines on the Remuneration
Framework for Representatives and Supervisors (“Balanced Scorecard Framework”),
Reference Checks and Pre-Transaction Checks (FAA-G14) on the expectations of the
Authority on post-transaction checks. In addition, the ISA Unit must take into
consideration all relevant facts and circumstances in relation to the sampled
transactions in assessing the quality of the financial advisory services provided by the
representative, and determining if the non-sales KPIs are met by the representative, in
each calendar quarter.
4.4.2 Sampling methodology of the ISA Unit and sampled transactions
4.4.2.1 The ISA Unit is to carry out up to three rounds of post-transaction checks
for each representative for every calendar quarter.
4.4.2.2 Subject to paragraphs 4.4.2.3 and 4.4.2.4, the ISA Unit has to determine
the population for sampling using either of the following methods –
(a) Historical average transaction count method: based on the quarterly
average transaction count of each representative –
(i) over the past 12 months immediately preceding the measurement
quarter; or
(ii) where a representative has provided financial advisory services for
less than 12 months, over the past number of months immediately
preceding the measurement quarter which the representative
provided financial advisory services,
______________________________
1
For example, in relation to the transactions effected in the calendar quarter of 1 January to 31 March 2016, the ISA
Unit must carry out and complete the post-transaction checks on every sampled transaction by no later than the end of
June 2016.


_______________________________________________________________________________
(b) Actual transaction count method: based on the actual number of

transactions effected in a measurement quarter.
4.4.2.3 A financial adviser shall apply the actual transaction count method in
determining the population for sampling for any –
(a) new representative who has provided financial advisory service for
less than 3 months; or
(b) existing representative who has not effected any transactions in the
past 12 months or less, immediately preceding the measurement
quarter.
4.4.2.4 A financial adviser shall ensure that the ISA Unit applies the same method
in determining the population for sampling across all representatives and from quarter
to quarter. If the financial adviser intends to vary the method used in determining the
population for sampling, it shall notify the Authority, in writing, of the reason for the
change, at least seven days prior to effecting the change.
4.4.2.5 In respect of each round of post-transaction checks referred to in paragraph

4.4.2.1, the ISA Unit has to sample –
(a) the respective minimum sample sizes of all transactions which have been
effected in the measurement quarter, set out in paragraph 4.4.2.6; or
(b) a minimum of one transaction which has been effected in the
measurement quarter, whichever is the higher, unless there are no
transactions effected in the measurement quarter.
4.4.2.6 In any measurement quarter –

(a) First round of post-transaction checks -
(i) in relation to a selected representative, the ISA Unit has to sample a
minimum of 10% of the population for sampling;
(ii) in relation to a representative who only provides financial advisory
services in relation to the rollovers of any dual currency investment
or structured note relating to equities or commodities, or such other
product as the Authority may approve on an exceptional basis, the
ISA Unit has to sample a minimum of 2% of the population for
sampling; and
(iii) in relation to any other representative, the ISA Unit has to sample a
minimum of 5% of the population for sampling;

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(b) Second round of post-transaction checks - Where the ISA Unit has discovered
that any representative (including a selected representative) has committed one
or more cases2 with infractions (regardless of the categorisation of the infraction
set out in paragraphs 4.5.1 to 4.5.4) in the first round of post-transaction
checks, the ISA Unit has to –
(i) in relation to a representative who only provides financial advisory services

in relation to the rollovers of any dual currency investment or structured
note relating to equities or commodities, or such other product as the
Authority may approve on an exceptional basis –
(A) conduct a second round of post-transaction checks by sampling a

minimum of an additional 5% of the population for sampling; and
(B) sample transactions which are distinct from all sampled transactions in
paragraph (a)(ii);
(ii) in relation to any other representative including a selected representative –
(A) conduct a second round of post-transaction checks by sampling a

(B) sample transactions which are distinct from all sampled transactions in
paragraph (a)(i) or (iii) (as the case may be); and
(c) Third round of post-transaction checks - Where the ISA Unit has discovered that
any representative (including a selected representative) has committed one or
more cases with infractions (regardless of the categorisation of the infraction
set out in paragraphs 4.5.1 to 4.5.4) in the second round of post-transaction
checks, the ISA Unit has to –
(i) in relation to a representative who only provides financial advisory

services in relation to the rollovers of any dual currency investment or
structured note relating to equities or commodities, or such other
product as the Authority may approve on an exceptional basis –
(A) conduct a third round of post-transaction checks by sampling a

minimum of an additional 10% of the population for sampling;
and
______________________
2
Please refer to footnote 2 of the Representatives’ Grading Table set out in paragraph 4.6.1.


________________________________________________________________________________
(B) sample transactions which are distinct from all sampled
transactions in paragraphs (a)(ii) and (b)(i)(A);
(ii) in relation to any other representative including a selected

representative –
(A) conduct a third round of post-transaction checks by sampling a

(B) sample transactions which are distinct from all the sampled
transactions in paragraphs (a)(i) or (iii) (as the case may be) and
paragraph (b)(ii)(A).
4.4.2.7 A financial adviser shall not count any rider that is purchased together with
any life policy as a separate transaction from the life policy for purposes of
the post-transaction checks.
4.4.3 Findings from mystery shopping exercises
4.4.3.1 Where a financial adviser conducts any mystery shopping exercise on or

after 1 January 2016, or receives any information in relation to the findings of any
mystery shopping exercise conducted by the Authority or any industry association on
or after 1 January 2016, the financial adviser shall review and assess the findings of
its mystery shopping exercise or the information received from the Authority or industry
association, in relation to the quality of financial advisory services provided by its
representatives, against the non-sales KPIs, so as to determine –
(a) whether the findings of the mystery shopping exercise are

substantiated; and
(b) based on such findings, whether its representatives have committed
any infraction in the calendar quarter.
4.4.3.2 A financial adviser shall factor any infraction committed by a representative

and discovered in the circumstances set out in paragraph 4.4.3.1, into his performance
under the balanced scorecard framework in the calendar quarter in which the review
and assessment of the findings was completed3.
___________________
3 For example, if the financial adviser conducts a mystery shopping exercise in February 2016 and completes the
review and assessment of the mystery shopping findings in July 2016, any infraction committed by the representative
will have to be factored into his performance under the balanced scorecard framework in the calendar quarter of 1 July
2016 to 30 September 2016.

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4.4.4 Substantiated complaints
4.4.4.1 A financial adviser shall investigate every complaint lodged against a

representative arising from any incident that occurs on or after 1 January 2016. Where
a financial adviser is satisfied that a complaint against a representative is substantiated,
the financial adviser shall review and assess the substantiated complaint in relation to
the quality of financial advisory services provided by the representative, against the
non-sales KPIs, so as to determine whether the representative has committed any
infraction in the calendar quarter.
4.4.4.2 A financial adviser shall factor any infraction committed by a representative

arising from any complaint into his performance under the balanced scorecard
framework in the calendar quarter which the complaint was substantiated. For the
avoidance of doubt, the financial adviser shall assess whether paragraph 4.6.3 applies
when determining the amount of variable income which the representative is entitled to
in the calendar quarter.
4.5 Classification of infractions: Category 1 infraction or Category 2 infraction
4.5.1 A financial adviser shall ensure that the ISA Unit classifies every infraction
committed by a representative as a Category 1 infraction or Category 2 infraction, by
assessing the facts and circumstances (including any aggravating or mitigating factors)
of the infraction.
4.5.2 A financial adviser should have regard to the examples of Category 1

infractions set out in the Guidelines on the Remuneration Framework for
Representatives and Supervisors (“Balanced Scorecard Framework”), Reference Checks
and Pre-Transaction Checks (FAA-G14).
4.5.3 Category 1 infraction
4.5.3.1 In relation to an infraction arising from a sampled transaction of a client, a

finding from a mystery shopping exercise, or a substantiated complaint, a financial
adviser shall ensure that the ISA Unit classifies an infraction as a Category 1 infraction
if the ISA Unit determines that in relation to the quality of the financial advisory services
provided by a representative to the client, the infraction –
(a) has a material impact on the interests of the client; or
(b) impinges on the fitness and propriety of the representative.
4.5.3.2 The Authority considers the following circumstances as having a material

impact on the interests of a client or impinging on the fitness and propriety of the


________________________________________________________________________________
representative in relation to the quality of the financial advisory services provided (as
the case may be) –
(a) where the representative recommends an investment product or class
of investment products that is clearly unsuitable for a client, based on
the information provided by the client to the representative during the
fact-find process;
(b) where the representative recommends that a client switches from one
designated investment product to another designated investment
product and the switch to the other designated investment product is
unnecessary and wholly or partly for the representative’s benefit;
(c) where the representative fails to provide or explain information, or both,
as the case may be, on an investment product to a client which, if it
had been disclosed to the client, would have resulted in the client not
purchasing the investment product;
(d) in relation to the quality of the financial advisory services provided,
where the representative fails to execute the client’s instructions
without valid cause and the representative’s failure to do so results in
the client incurring material losses; or
(e) in relation to the quality of the financial advisory services provided,
where the representative has carried out any act of misrepresentation,
gross negligence, or serious misconduct.
4.5.4 Category 2 infraction
4.5.4.1 A financial adviser shall ensure that the ISA Unit classifies any infraction
which is not a Category 1 infraction, as a Category 2 infraction.
4.5.5 Disregarded as infraction
4.5.5.1 Where the ISA Unit uncovers minor lapses or administrative oversights in
relation to —
(a) a sampled transaction;
(b) a finding from a mystery shopping exercise; or
(c) a substantiated complaint,
which does not affect client’s interest or impinge on the fitness and propriety of the
representative, the financial adviser may allow the ISA Unit to not consider such minor
lapses, or administrative oversights, as infractions. For example, if the representative
did not fill in the name of the dependants during a fact-find exercise conducted on a
client and his failure to provide such information did not affect the results of the client’s
financial needs analysis, the ISA Unit will not need to regard such an administrative
oversight as an infraction under the balanced scorecard framework. However, where
such minor lapses or administrative oversights are prevalent, the financial adviser should
ensure that the ISA Unit assesses whether such lapses or oversights would impinge on
the fitness and propriety of the representative.

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4.5.6 Rectification of infractions
4.5.6.1 A financial adviser shall take all reasonable steps to rectify all infractions
uncovered by the ISA Unit.
4.6 Grading Table for Representatives (“Representatives’ Grading Table”)
4.6.1 A financial adviser shall incorporate the following Representatives’ Grading

Table in its balanced scorecard framework:
Representatives’ Grading Table

Balanced scorecard Percentage1 (“X”) or number Percentage of specified
grade for a of cases2 with infractions in a variable income that a
representative for a calendar quarter3 representative is entitled to
calendar quarter for a calendar quarter
A X < 5% or one case with 100%

Category 2 infractions
B 5% _ X < 10% or two cases with 75% to less than 100%

C 10% _ X < 20% or three cases 50% to less than 75%

with Category 2 infractions
D 20% _ X < 30% or four cases 25% to less than 50%

with Category 2 infractions
E (a) X _ 30% or five or more 0% to less than 25%

cases with Category 2
infractions; or
(b) One or more cases with
1
The denominator to be used in the computation of the percentage of cases2 with
Category 2 infraction is calculated based on the sum of –
(a) the total number of cases that would have been sampled in all three rounds of
sampling under paragraph 4.4.2.6, notwithstanding that the ISA Unit may not
have progressed to the second or third round of sampling of transactions in
respect of a representative; and


(b) the number of cases referred to under paragraphs (b) and (c) of footnote 2
of the Representatives’ Grading Table.
The financial adviser may refer to the worked examples set out in Annex 3 for
guidance.
2
A “case” means –
(a) a sampled transaction;
(b) a finding arising from any mystery shopping exercise, if any, referred to in
paragraph 4.4.3; or
(c) a substantiated complaint, if any, referred to in paragraph 4.4.4.
The calculation is based on the number of cases with infractions, and not the number
of infractions uncovered by the ISA Unit in relation to a representative. For example,
a case with multiple Category 2 infractions will be considered as one case with
Category 2 infractions, whilst a case with one Category 1 infraction and multiple
Category 2 infractions will be considered as one case with a Category 1 infraction.
3
Where a representative has committed only Category 2 infractions, the financial
adviser shall calculate the percentage and the number of cases with infractions in a
calendar quarter. Where the percentage of cases with Category 2 infractions and the
number of cases with Category 2 infractions determined in a calendar quarter
correspond to two different balanced scorecard grades under the Representatives’
Grading Table respectively, the financial adviser shall assign the better of the two
balanced scorecard grades to the representative. For example, in relation to a
representative, where two out of ten cases were found to have Category 2
infractions, and the financial adviser determines that a balanced scorecard grade D
would be assigned in respect of the percentage of cases and a balanced scorecard
grade B would be assigned in respect of the number of cases with infractions, the
financial adviser shall assign the better of the two balanced scorecard grades i.e.
grade B, to the representative for that calendar quarter.
4.6.2 A financial adviser shall, for each of its representatives other than –
(a) a representative who is exempt from the application of the balanced
scorecard framework under regulation 34A of the FAR;
(b) a representative who ceases to provide financial advisory services
during the relevant calendar quarter and where the financial adviser
has assessed and documented its assessment in writing that it is not
possible for the financial adviser to comply with paragraphs 4.1.1(i)
to (vii), in respect of that representative; or

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(c)
a representative who has not effected any transaction and does not
have any case with infractions referred to in footnote 2 of the
Representatives’ Grading Table arising from findings from mystery
shopping exercises or substantiated complaints, during the relevant
calendar quarter4 –
satisfy all of the following requirements by the end of every calendar quarter
immediately subsequent to a measurement quarter:
(i) determine the percentage of cases with Category 2 infractions or the
number of cases with Category 1 infractions or Category 2 infractions,
based on footnotes 1 and 2 of the Representatives’ Grading Table;
(ii) subject to footnote 3 of the Representatives’ Grading Table, assign
the balanced scorecard grade to the representative set out in the first
column of the Representatives’ Grading Table, which corresponds with
the determined percentage of cases with Category 2 infractions or
number of cases with Category 1 infraction or Category 2 infractions
referred to in sub-paragraph (i);
(iii) determine the percentage of specified variable income that the
representative is entitled to, based on the balanced scorecard grade
assigned to the representative under sub-paragraph (ii);
(iv) apply the percentage of specified variable income that the
representative is entitled to under sub-paragraph (iii) on the specified
variable income in the measurement quarter to determine the amount
of specified variable income which the representative is entitled to;
and
(v) compute the amount of specified variable income which the
representative is not entitled to by taking the difference between the
specified variable income that the representative is entitled to under
sub-paragraph (iv) and specified variable income.
4.6.3 If –
(a) any of the cases with Category 1 or Category 2 infraction arose from
a substantiated complaint in relation to an incident which occurred in
a calendar quarter which is prior to the measurement quarter; and
(b) the financial adviser has ascertained that the representative’s variable
income in that calendar quarter where the incident arose is lower than
his variable income in the measurement quarter, the financial adviser
shall perform steps (a) to (e) to determine the final amount of
specified variable income and the effective percentage of specified
____________________________
4
For the avoidance of doubt, a financial adviser shall not assign a balanced scorecard grade to a representative referred
to in paragraph 4.6.2(c) for the calendar quarter in which the representative has not effected any transaction and does
not have any case with infractions referred to in footnote 2 of the Representatives’ Grading Table arising from findings
from mystery shopping exercises or substantiated complaints.


_______________________________________________________________________________
variable income which the representative is not entitled to:
Step (a): Apportion the amount of specified variable income under paragraph 4.6.2(v)
between –
(i) case(s) with infractions arising from substantiated complaints (“Income
X”); and
(ii) case(s) with infractions arising from post-transaction checks and
findings of mystery shopping exercises (“Income Y”),
based on the number of cases with infractions arising from the post-
transaction checks, mystery shopping exercises and substantiated
complaints. For example, the representative is found to have one case with
Category 1 infraction arising from a substantiated complaint and two cases
with Category 2 infraction arising from post-transaction checks. Based on
the Representatives’ Grading Table, he is assigned a balanced scorecard
grade E and determined not to be entitled to S$18,000 (i.e. 75% of
specified variable income of S$24,000) of his specified variable income in
the measurement quarter. Income X will be S$6,000 (i.e. 1/3 of
S$18,000), whilst Income Y will be S$12,000 (i.e. 2/3 of S$18,000).
Step (b): Compute the proportion of past variable income in the calendar quarter
where the incident resulting in the substantiated complaint arose (“past
variable income”) to current variable income in the measurement quarter
(“current variable income”) by taking the past variable income as a
percentage of the current variable income. For the avoidance of doubt, the
financial adviser shall apply the gross variable income5 in the computation
of the proportion of past to current income. For example, if the incident
resulting in the substantiated complaint took place in the calendar quarter
January to March 2016 where the representative’s variable income was
S$12,000 and his variable income in the measurement quarter is
S$24,000, the percentage of past to current income will be 50% (i.e.
S$12,000/S$24,000 x 100%).
Step (c): Apply the proportion of past to current income determined in step (b) on
Income X to determine the amount of specified variable income that the
representative is not entitled to after factoring cases with infractions
arising from substantiated complaints (“Income
_____________________
5
Gross variable income refers to variable income before factoring in the following –
(i) any amount which the representative is not entitled to under the balanced scorecard framework; and
(ii) (ii) any subsequent changes to the transactions, such as termination of a life policy after inception.

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Z”). For example, if the proportion of past to current variable income

determined in step (b) is 50% and Income X is S$6,000, the amount
of specified variable income that the representative is not entitled to
after factoring cases with infractions arising from substantiated
complaints is S$3,000 (i.e. 50% of S$6,000).
Step (d): Compute the final amount of specified variable income which the
representative is not entitled to by totalling Income Y and Income Z.
For example, if Income Y is S$12,000 and Income Z is S$3,000, the
final amount of specified variable income which the representative is
not entitled to is S$15,000.
Step (e): Compute the effective percentage of specified variable income that the
representative is not entitled to by taking the final amount of specified
variable income under step (d) as a percentage of specified variable
income. In addition, compute the corresponding effective percentage
of specified variable income that the representative is entitled to in the
measurement quarter. For example, the final amount of specified
variable income which the representative is not entitled to is S$15,000
and the specified variable income is S$24,000, the effective
percentage of specified variable income that the representative is not
entitled to will be 62.5% (i.e. S$15,000/S$24,000 x 100%). The
corresponding effective percentage of specified variable income that
the representative is entitled to will be 37.5% (i.e. 100% - 62.5%).
4.6.4 For the purpose of performing step (b) under paragraph 4.6.3, a financial
adviser shall ensure that it keeps and maintains sufficient records of each
representative’s past variable income. Where the financial adviser does not have record
of a representative’s past variable income, it may place reliance on the balanced
scorecard performance record which had been provided to the representative in the
past to determine the representative’s past variable income. Where both the financial
adviser and the representative do not have record of the representative’s past variable
income, the financial adviser shall not apply steps (a) to (e) under paragraph4.6.3.
Instead, it shall use the variable income in the current calendar quarter to calculate how
much the representative is entitled to, set out in paragraph 4.6.2.
4.7 Recovery of specified variable income which representative is not entitled

to in the calendar quarter
4.7.1 Where a financial adviser has paid any variable income in relation to a portfolio
of transactions to a representative for any calendar quarter before determining the
percentage of specified variable income or effective percentage of


_______________________________________________________________________________
specified variable income (as the case may be) in relation to that portfolio of
transactions which the representative is entitled to for that calendar quarter under
the balanced scorecard framework, the financial adviser shall only recover the
percentage of specified variable income or effective percentage of specified variable
income (as the case may be) which the representative is not entitled to for that
calendar quarter from the amount of variable income in relation to the portfolio of
transactions which has been paid to the representative, by no later than the end of
two calendar quarters subsequent to the measurement quarter, unless there are
exceptional circumstances6 where the financial adviser has made an assessment that
it is reasonable to recover the income over a longer period of time. For example,
where a representative is remunerated by way of variable income only and his
variable income from the arrangement of four life policies in the calendar quarter of
January to March 2016 is S$10,000 (i.e. the specified variable income measured
against the non-sales KPIs is S$6,000 for the calendar quarter of January to March
2016). The financial adviser pays the representative S$2,000 (i.e. specified variable
income paid out is S$1,200) in relation to the portfolio of transactions in March
2016 before determining in June 2016 that the representative is actually entitled to
only 50% of his specified variable income (i.e. S$3,000) in relation to the portfolio
of transactions for the calendar quarter of January to March 2016. The financial
adviser shall recover 50% of S$1,200 (i.e. S$600), which has been paid to the
representative, by the end of September 2016.
4.7.2 Where the payment of any amount of specified variable income is made
in relation to financial advisory services provided by a representative over more than
one calendar quarter (such as bonuses which are paid annually), a financial adviser
shall apportion such specified variable income using any reasonable method over
the calendar quarters. The financial adviser shall then determine the percentage of
the apportioned specified variable income which the representative is entitled to in
each calendar quarter based on the performance of the representative against the
non-sales KPIs in the same calendar quarter. Please refer to worked examples 1 and
4 in Annex 3 for guidance.
4.7.3 For the avoidance of doubt, where a financial adviser has determined the
percentage of specified variable income or effective percentage of specified variable
income (as the case may be) which a representative is entitled to for a calendar
quarter but the payment of any amount of specified variable income is deferred by
a financial adviser (including where bonuses are paid on an annual basis or
commissions earned are spread and paid out over a number of years), the financial
adviser shall only pay out the amount of specified variable income that the
representative is entitled to.
___________________________________________
6
Exceptional circumstances may include situations where a representative is experiencing financial difficulty and is
unable to make payments.

FAA-N20]

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5 Requirements of the balanced scorecard framework for supervisors of a

financial adviser
5.1 Introduction
5.1.1 A financial adviser shall, for each of its supervisors, other than a supervisor
who ceases to supervise or manage the conduct and performance of any representative
during the relevant calendar quarter and in respect of whom, the financial adviser has
assessed and documented its assessment in writing that it is not possible for the
financial adviser to comply with sub-paragraphs (a) and (b) –
(a) determine the percentage of specified variable income which the
supervisor is entitled to based on the percentage of specified variable
income or effective percentage of specified variable income (as the case
may be) which a representative under his supervision or management is
entitled to in the calendar quarter; and
(b) assign the balanced scorecard grade to the supervisor set out in the
second column of the Supervisors’ Grading Table, based on the
percentage of total specified variable income which is calculated based
on the formula in footnote 1 of the Supervisors’ Grading Table,
by the end of every calendar quarter immediately subsequent to a measurement quarter.
For the avoidance of doubt, where a financial adviser operates a tier structure for its
representatives and supervisors, any supervisor who belongs to a second or higher tier
and receives any variable income in relation to financial advisory services provided by
a representative, shall be deemed to be a supervisor who is responsible for the
supervision or management of the conduct and performance of that representative for
the purpose of paragraphs (a) and (b).
5.2 Specified variable income
5.2.1 Subject to paragraph 5.2.3, where a financial adviser remunerates a supervisor

by way of –
(a) variable income only in any calendar quarter and the representatives under
the supervision or management of the supervisor are –
(i) remunerated by way of variable income, whether wholly or partly, the
financial adviser shall measure only 60% of the variable income
provided or to be provided to the supervisor in the calendar quarter
against his representatives’ performance under the balanced scorecard
framework in the same calendar quarter; or
(ii) not remunerated by way of any variable income, the financial adviser
shall assess the supervisor’s performance in a calendar quarter against
the performance of his representatives under the


______________________________________________________________________________
balanced scorecard framework in the same calendar quarter and factor the
assessment into any appraisal of the supervisor, including remuneration and
promotion reviews; or
(b) a fixed salary and variable income component in any calendar quarter,and the
representatives under the supervision or management of the supervisor are –
(i) remunerated by way of variable income, whether wholly or partly, the
financial adviser shall measure all variable income provided or to be
provided to the supervisor in the calendar quarter against the
representatives’ performance under the balanced scorecard framework in
the same calendar quarter; or
(ii) not remunerated by way of any variable income, the financial adviser
shall assess the supervisor’s performance in a calendar quarter against
the performance of the representatives under the balanced scorecard
framework in the same calendar quarter and factor the assessment into
any appraisal of the supervisor, including remuneration and promotion
reviews.
5.2.2 Where a financial adviser does not remunerate a supervisor by way of any
variable income and regardless of how the representatives under his supervision or
management are remunerated, the financial adviser shall assess the supervisor’s
performance in a calendar quarter against the performance of his representatives under
the balanced scorecard framework in the same calendar quarter and factor the
assessment into any appraisal of the supervisor, including remuneration and promotion
reviews.
5.2.3 Where any specified variable income of a supervisor has been measured
against the performance of any of his representatives under the balanced scorecard
framework in any calendar quarter, the financial adviser shall not measure the specified
variable income of the supervisor against the performance of any of his representatives
under the balanced scorecard framework in any other calendar quarter. For example,
based on the percentage of specified variable income which a representative is entitled
to in the calendar quarter of April to June 2016, a supervisor is entitled to receive an
amount of specified variable income of S$1,500, but he will only be paid S$1,000 in
June 2016 and S$500 in June 2017; the financial adviser must not measure the
deferred payment of S$500 to be paid to the supervisor in June 2017 against the
performance of his representative under the balanced scorecard framework
in the calendar quarter of April to June 2017.

FAA-N20]

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5.3 Percentage of specified variable income which supervisor is entitled to in a

calendar quarter
5.3.1 A financial adviser shall, for every calendar quarter and in respect of any
variable income payable to a supervisor in relation to a portfolio of transactions effected
by a representative, whose supervision or management the supervisor is responsible
for, pay the supervisor the percentage of specified variable income which is the same
as the percentage of specified variable income or effective percentage of specified
variable income (as the case may be) which the representative is entitled to in relation
to that portfolio of transactions in the calendar quarter under the balanced scorecard
framework. For example, if a representative is entitled to 75% of the specified variable
income in relation to his portfolio of transactions effected in the calendar quarter of
April to June 2016 under the balanced scorecard framework, the supervisor is entitled
to 75% of the specified variable income in relation to the same portfolio of transactions
in the same calendar quarter; or if a representative is entitled to the full amount of the
specified variable income in relation to his portfolio of transactions effected in the
calendar quarter of April to June 2016, the supervisor is entitled to the full amount of
specified variable income in relation to the same portfolio of transactions in the same
calendar quarter.
5.4 Recovery of specified variable income which supervisor is not entitled to in

the calendar quarter
5.4.1 Where a financial adviser has paid any variable income to a supervisor in relation
to a portfolio of transactions effected by a representative under his supervision for any
calendar quarter before determining the percentage of specified variable income which
the supervisor is entitled to in relation to that portfolio of transactions effected by that
representative for that calendar quarter under the balanced scorecard framework, the
financial adviser shall only recover the percentage of specified variable income which
the supervisor is not entitled to for that calendar quarter from the amount of variable
income which has been paid to the supervisor in relation to that portfolio of transactions
effected by that representative, by no later than the end of two calendar quarters
subsequent to the measurement quarter unless there are exceptional circumstances7
where the financial adviser has made an assessment that it is reasonable to recover the
income over a longer period of time. For example, where a supervisor is remunerated
by way of variable income only and his variable income in relation to the arrangement
of four life policies by a representative under his supervision or management for the
calendar quarter January to March 2016 is S$5,000 (i.e. the amount of specified
variable income of the supervisor in relation to the portfolio of transactions which is
measured against the performance of his
________________
7
Exceptional circumstances may include situations where a supervisor is experiencing financial difficulty and is unable
to make repayments.


_______________________________________________________________________________
representative under the balanced scorecard framework is S$3,000 for the
calendar quarter of January to March 2016). The financial adviser pays the
supervisor S$1,000 (i.e. specified variable income paid out is S$600) in relation to
the portfolio of transactions in February 2016 before determining in June 2016
that the representative under the supervisor’s supervision is actually entitled to
only 50% of his specified variable income in relation to the portfolio of transactions
for the calendar quarter of January to March 2016, and correspondingly, the
supervisor is entitled to only 50% of his specified variable income in relation to
that portfolio of transactions (i.e. S$1,500). The financial adviser shall recover
50% of S$600 (i.e. S$300), which has been paid to the supervisor, by the end of
September 2016.
5.4.2 Where the payment of any amount of specified variable income is made
to a supervisor in relation to financial advisory services provided by representatives
under the supervision or management of the supervisor over more than one
calendar quarter (such as bonuses which are paid annually), the financial adviser
shall apportion such specified variable income using any reasonable method over
the calendar quarters. The financial adviser shall then determine the percentage of
the apportioned specified variable income which the supervisor is entitled to in
each calendar quarter based on his representatives’ performance under the
balanced scorecard framework in the same calendar quarter. Please refer to worked
examples 2, 3 and 5 in Annex 3 for guidance.
5.4.3 For the avoidance of doubt, where a financial adviser has determined the
percentage of specified variable income which the supervisor is entitled to for a
calendar quarter but the payment of any amount of specified variable income is
deferred by the financial adviser (including where bonuses are paid on an annual
basis or commissions earned are spread and paid out over a number of years), the
financial adviser shall only pay out the amount of specified variable income that
the supervisor is entitled to.
5.5 Grading table for supervisors (“Supervisors’ Grading Table”)
5.5.1 A financial adviser shall incorporate the following Supervisors’ Grading

Table in the balanced scorecard framework:
Supervisors’ Grading Table
Percentage of total specified variable Balanced scorecard grade for a

income1 from all representatives supervisor for a calendar quarter
under his supervision that a
supervisor is entitled to in a calendar
quarter
75% to 100% Good

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________________________________________________________________________________
50% to less than 75% Satisfactory

25% to less than 50% Fair
0% to less than 25% Unsatisfactory
1
A financial adviser shall compute the percentage of total specified variable income
that the supervisor is entitled to in a calendar quarter as follows:
Percentage of total specified variable income

= (Sum of specified variable income which a supervisor is entitled to
in a calendar quarter under the balanced scorecard framework, in
respect of every representative under his supervision or
management)
x 100%
(Sum of specified variable income of the supervisor in the same
calendar quarter which is subject to the balanced scorecard
framework, in respect of every representative under his
supervision or management)
For example, where the specified variable income of a supervisor is S$5,000 and
S$10,000 from Representatives A and B respectively in the calendar quarter of April
to June 2016; if Representative A is entitled to 75% of his specified variable income
while Representative B is entitled to 100% of his specified variable income in the
calendar quarter of April to June 2016, then the supervisor is entitled to S$13,750
(i.e. 75% of S$5,000 from Representative A and 100% of S$10,000 from
Representative B) in the same calendar quarter; the percentage of total specified
variable income that the supervisor is entitled to in that calendar quarter will be
91.7% (rounded up to 1 decimal place) (i.e. S$13,750/S$15,000 x 100%).
5.5.2 A financial adviser shall, for every calendar quarter, assign to a supervisor
the balanced scorecard grade set out in the second column of the Supervisors’ Grading
Table which corresponds with the percentage of total specified variable income set out
in the first column of the Supervisors’ Grading Table.
6 Avenue for appeal by representatives and supervisors
6.1 A financial adviser shall put in place a process for addressing any appeal
made by any representative or supervisor in relation to the balanced scorecard
framework, including any appeal in relation to –
(a) the review and assessment of the performance of the representative in
relation to his provision of financial advisory services, against the
non-sales KPIs and the determination of any infraction;
(b) the classification of any infraction committed by the representative;


________________________________________________________________________________
(c) the percentage or number of cases of Category 1 or Category 2

infractions committed by the representative;
(d) the percentage or amount of specified variable income that the
representative or supervisor is entitled to under the balanced scorecard
framework;
(e) the percentage of the total specified variable income of the supervisor;
or
(f) the balanced scorecard grade assigned to the representative or
supervisor.
7 Record keeping
7.1 A financial adviser shall keep records of its processes and methods undertaken,
and every assessment and determination made under or in relation to the balanced
scorecard framework for a period of not less than five years.
8 Maintenance of register
8.1 A financial adviser shall maintain a register of all representatives who only provide
financial advisory services in relation to the rollovers of any dual currency investment
or structured note relating to equities or commodities, or such other product as the
Authority may approve on an exceptional basis, for a period of not less than five years.
9 Provision of balanced scorecard performance record to representatives and

supervisors
9.1 A financial adviser shall ensure that it provides a balanced scorecard performance
record for each representative and supervisor (other than a representative referred to
in paragraph 4.1.1(a) or (b) and a supervisor who ceases to supervise or manage the
conduct and performance of any representative during the relevant calendar quarter) in
respect of the representative’s and supervisor’s performance under the balanced
scorecard framework in every calendar quarter by the end of two calendar quarters
immediately subsequent to the measurement quarter. The balanced scorecard
performance record shall minimally include details such as gross variable income, gross
specified variable income, balanced scorecard grade, percentage entitlement to
specified variable income, and amount of specified variable income that the
representative or supervisor is entitled to.

FAA-N20]

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10 Responsibilities of board and senior management
10.1 According to the Guidelines on Fair Dealing – Board and Senior Management
Responsibilities for Delivering Fair Dealing Outcomes to Customers (FAA-G11), the
board is responsible for charting the corporate policy and strategy to deliver the fair
dealing outcomes and promote a culture of fair dealing with clients. The board oversees
the senior management of a financial adviser in implementing corporate policies and
strategies approved by the board. The board and senior management are accountable
for the implementation of the balanced scorecard framework which incentivises fair
dealing conduct.
10.2 A financial adviser shall establish a management information framework for

the purpose of allowing the board and senior management to monitor the operations of
the balanced scorecard framework and measure the achievement of the fair dealing
outcomes.
10.3 A financial adviser shall put in place measures, such as training or coaching
to ensure that –
(a) its representatives meet the non-sales KPIs; and

(b) its supervisors carry out their duties or functions in their supervision or
management of the conduct and performance of their representatives in a
proper manner.
11 Submission of reports to the Authority
11.1 A financial adviser shall submit the following reports to the Authority in
accordance with the respective formats set out in Annex 2 to this Notice, by the end
of two calendar quarters subsequent to the measurement quarter or such longer period
as the Authority may approve –
(a) a report on the number of representatives who have been assigned
balanced scorecard grades;
(b) a report on the number of selected representatives and number of
representatives who have been placed under close supervision;
(c) a report on the details of representatives who have been recruited by the
financial adviser with balanced scorecard grades of B or worse in any of
the last four balanced scorecard grades within the past 10 years (including
balanced scorecard grades assigned by previous principals of the
representatives and the names of the previous principals);
(d) a report on the balanced scorecard grades assigned to representatives of
the financial adviser for any measurement quarter;
(e) a report on the amount of specified variable income that representatives
are not entitled to;


_______________________________________________________________________________
(f) a report on the number of appeals made by representatives to the financial

adviser in relation to the balanced scorecard framework, including the
number of rejected, outstanding and successful appeals, and the outcomes
of successful appeals;
(g) a report on the number of successful appeals by representatives which
involve a reassignment of balanced scorecard grades;
(h) a report on the details of successful appeals involving a reassignment from
a balanced scorecard grade E to a better grade;
(i) a report on the details of the infractions committed by representatives who
have been assigned a balanced scorecard grade E (including the
classification of the infractions and names of the representatives who
committed the infractions) and the percentages or amounts of specified
variable income which the representatives are not entitled to for any
measurement quarter;
(j) a report on the number of supervisors who have been assigned balanced
scorecard grades;
(k) a report on the details of supervisors who have been recruited by the
financial adviser with balanced scorecard grades of “Satisfactory” or
worse in any of the last four balanced scorecard grades within the past 10
years (including balanced scorecard grades assigned by previous principals
of the supervisors and the names of the previous principals);
(l) a report on the balanced scorecard grades assigned to supervisors of the
financial adviser for any measurement quarter;
(m) a report on the amounts of specified variable income which the supervisors
are not entitled to for any measurement quarter;
(n) a report on the number of appeals made by supervisors to the financial
adviser in relation to the balanced scorecard framework, including the
number of rejected, outstanding and successful appeals, and the outcomes
of successful appeals;
(o) a report on the number of successful appeals by supervisors which involve
a reassignment of balanced scorecard grades;
(p) a report on the statistics for client surveys conducted by the ISA Unit on
sampled transactions for any measurement quarter;
(q) a report on the method used to determine the population for sampling
during the measurement quarter;
(r) a report on the number of transactions effected by representatives in the
measurement quarter; and
a report on the number of cases with infractions uncovered through
various processes and methods.
12 This Notice shall take effect on 1 January 2016.

FAA-N20]

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ANNEX 1
Non-sales Key Performance Indicators
Non-sales KPI 1: Understanding a client’s needs

• A representative must take reasonable steps8 to conduct sufficient fact-find
to understand the circumstances and needs of his clients.
• In determining if a representative has taken reasonable steps to conduct
sufficient fact-find to understand the circumstances and needs of a client, a
financial adviser shall take into account the following list of factors (which are
non-exhaustive) –
(a) whether the representative has taken reasonable steps to collect all
pertinent information from the client and correctly documented all the
information collected from the fact-find process;
(b) whether the representative conducted the fact-find with the client
before or after giving advice or making a recommendation, or both (as
the case may be);
(c) whether the representative influenced the client’s inputs or responses
during the fact-find stage.
Non-sales KPI 2: Suitability of product recommendations

• A representative must have a reasonable basis for any recommendation made
to a client and take into account the client’s financial objectives, investment
horizon, risk profile, financial situation and particular circumstances and needs.
Non-sales KPI 3: Adequacy of information disclosure

• A representative must have highlighted, explained and provided all material
information in relation to the investment product or class of investment
products to the client.
• A representative must ensure that any statement or representation to the
client is not false or misleading.
• Material information to be highlighted, explained and provided to clients shall
include, but is not limited to, the terms and conditions of the investment
product, the benefits to be or likely to be derived from or the risks that may
arise from purchasing the investment product, the premium, costs, expenses,
investment horizon, fees and other charges that may be imposed in relation to
the investment
________________________________
8
A representative should collect as much relevant information as possible so as to understand the circumstances and
needs of a client. Where a client does not wish to provide the information required during the fact-find process, the
representative should clearly document the client’s decision.


_______________________________________________________________________________
product, and the identity of the product manufacturer of the investment

product.
• Financial advisers and their representatives should make reference to the
Notice on Information to Clients and Product Information Disclosure (FAA-
N03), the Notice on Dual Currency Investments (FAA-N11) and the Guidelines
on Structured Deposits (FAA-G09) on the type of information that must be
disclosed to clients.
Non-sales KPI 4: Standards of professionalism and ethical conduct in relation to

the provision of financial advisory services
• A representative must provide financial advisory services in a professional and

ethical manner, and must not engage in any unprofessional or unethical acts.
• Unprofessional or unethical acts, other than those under non-sales KPIs 1 to
3, refer to –
(a) acts involving fraud, dishonesty, or other offences of a similar nature,
misrepresentation, or acts involving non-compliance with regulatory
requirements or serious breach of the financial adviser’s internal policy
or code of conduct which would render the representative liable to
demotion, suspension or termination of the representative’s
employment or arrangement with the financial adviser; and
(b) acts that impinge on the fitness and propriety of representatives set
out in the Guidelines on Fit and Proper Criteria (FSG-G01).

FAA-N20]

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ANNEX 2
NAME OF FINANCIAL ADVISER:
REPORT FOR MEASUREMENT QUARTER FROM: _____ to _____
SECTION A: FOR REPRESENTATIVES

Table 1 – Number of representatives
Total number of appointed representatives and provisional
representatives (collectively referred to as “representatives”)
Breakdown:
1) Number of representatives who have been assigned
balanced scorecard grades and
are:
(i) remunerated by way of variable income only
(ii) remunerated by way of a fixed salary and variable income
component
(iii) not remunerated by way of variable income
2) Number of representatives who have not been assigned
balanced scorecard grades due to the following reasons:
(i) representative is exempt from the application of the

balanced scorecard framework under regulation 34A of
the FAR
(ii) representative ceases to provide financial advisory

services during the measurement quarter and where the
financial adviser has assessed and documented its
assessment in writing that it is not possible for the
financial adviser to comply with paragraphs 4.1.1(i) to
(vii) of the Notice, in respect of that


_______________________________________________________________________________
representative
(iii) representative did not effect any transaction and did not
have any case with infractions referred to under footnote
2 of the Representatives’ Grading Table arising from
findings from mystery shopping exercises, if any, or
substantiated complaints, if any, during the
measurement quarter
(iv) other reasons, please state:
Comments for Table 1 (if any)
Table 2(a) –
(I) Number of selected representatives
Total number of selected representatives in the calendar

quarter
(II) Number of representatives placed under close supervision

Number of representatives placed under close supervision9
by the financial adviser based on their performance under
the balanced scorecard framework in the measurement
quarter
_________________
9
The financial adviser should refer to the Guidelines on the Remuneration Framework for Representatives and Supervisors
(“Balanced Scorecard Framework”), Reference Checks and Pre-Transaction Checks (FAA-G14) on the Authority’s
expectations in relation to close supervision of representatives.

FAA-N20]

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Comments for Table 2(a) (if any)
Table 2(b) – Recruitment of representatives who obtained balanced scorecard grades of

B or worse in any of the last four balanced scorecard grades within the past 10 years
Number of representatives who obtained a balanced

scorecard grade of B or worse in any of the last four
balanced scorecard grades within the past 10 years
Name10 of representative Name of former Last four balanced

principal(s) scorecard grades within the
past 10 years
Comments for Table 2(b) (if any)
____________________
10
Name as reflected in the Register of Representatives.


_______________________________________________________________________________
Tables 3(a), (b), (c), (d), and (e) are only applicable to representatives who are
remunerated by way of variable income, whether wholly or partly
Table 3(a) – Number of representatives based on each balanced scorecard grade and
range of percentage of specified variable income or effective percentage specified
variable income (as the case may be) that the representatives are entitled to under each
grade (e.g. If there are 10 representatives who obtained a balanced scorecard grade of
B, and they are entitled to 80 – 90% of the specified variable income, please indicate
under number of representatives as "10" and range of percentage of specified variable
income or effective percentage specified variable income as "80-90%”).
Balanced Categories Does not perform any Performs supervisory role as a Performs supervisory role as a
Scorecard supervisory role (i.e. Tier 1) Tier 2 supervisor Tier 3 supervisor
Grade Number of Range of Number of Range of Number of Range of
representatives percentage representatives percentage representatives percentage
of specified of specified of specified
variable variable variable
income or income or income or
effective effective effective
percentage percentage percentage
specified specified specified
variable variable variable
income income income
A (i) No infraction
(ii) X <5% of
cases with
Category 2
infractions
(iii) One case
with Category
2

FAA-N20]

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infractions
(iv) Satisfies
both categories
(ii) and (iii)
B (i) 5%≤X 10%
of cases with
Category 2
infractions
(ii) Two cases
with Category 2
infractions
(iii) Satisfies
both categories
(i) and (ii)
C (i) 10% ≤ X <
20% of cases
with Category 2
infractions
(ii) Three cases
with Category 2
infractions
(iii) Satisfies
both categories
(i) and (ii)
D (i) 20% ≤ X <


_______________________________________________________________________________
30% of cases with

Category 2
infractions
(ii) Four cases with
Category 2
infractions
(iii) Satisfies both
categories (i) and (ii)
E (i) X ≥ 30% cases

with Category 2
infractions
(ii) Five or more
cases with Category
2 infractions

(iv) One or more

cases with Category
1 infractions
(v) One or more

cases with Category
1

FAA-N20]

________________________________________________________________________________
infractions
and
Category 2
infractions
Sub-total Sub-total Sub-total
Total number of
representatives11
Table 3(b) – Amount of specified variable income that the representatives are not entitled to
Amount (S$)
Total amount of specified variable income that representatives are not
entitled to
Table 3(c)(i) – Number of appeals handled by the financial adviser in the measurement quarter
Total number of outstanding appeals by representatives at the
beginning of the measurement quarter
____________________
11
The total number of representatives should be the same as the number of representatives who have been assigned balanced scorecard grades under Part 1(i) and (ii) of Table 1.


________________________________________________________________________________
Breakdown:
1) Number of successful appeals which involve:
(i) a reassignment to a better balanced scorecard grade (please provide a
breakdown of the reassignment of grades under table 3(c)(ii))
(ii) no reassignment of balanced scorecard grades but an increase in percentage
entitlement to specified variable income
(iii) others, please describe:
_________________________________
2) Number of rejected appeals
3) Number of outstanding appeals pending final outcome
Total number of appeals submitted by representatives against the financial

adviser’s assignment of balanced scorecard grades during the measurement
quarter
Breakdown:
(i) a reassignment to a better balanced scorecard grade (please provide a
(ii) no reassignment of balanced scorecard grade but an increase in percentage
entitlement to specified variable income
(iii) others, please describe:
_________________________________

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Total amount of specified variable income returned to representatives in successful

appeal cases (S$)
Table 3(c)(ii) – Number of successful appeals which involve a reassignment of balanced

scorecard grades
Revised balanced scorecard grades
A B C D
Original B
balanced
C
scorecard
grades D
E
Comments for Table 3(c)(i) and 3(c)(ii) (if any)
Table 3(d) – Details of successful appeals involving a reassignment from a balanced scorecard
grade E to a better grade
S/N Name12 of representative Final balanced scorecard grade
__________________
12


_______________________________________________________________________________
Comments for Table 3(d) (if any)
Table 3(e) – Details of infractions committed by representatives who have been assigned a
balanced scorecard grade E
Name13 of Category of Misconduct Percentage of Amount of

representative infraction / report number specified specified
brief (if applicable) variable income variable income
description that the that the
of infraction representative representative
is not entitled is not entitled
to to (S$)
Comments for Table 3(e) (if any)
____________________
13

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Tables 4(a), (b), (c) and (d) are only applicable to representatives who are not remunerated by
way of any variable income
Table 4(a) – Number of representatives by balanced scorecard grade
Balanced Categories Number of representatives

scorecard
grade Does not perform Performs supervisory Performs supervisory
any supervisory role role as a Tier 2 role as a Tier 3
(i.e. Tier 1) supervisor supervisor
A (i) No infraction
(ii) X <5% of cases with
(iii) One case with
(iv) Satisfies both
categories (ii) and (iii)
B (i) 5% _ X < 10% of
cases With Category 2
infractions
(ii) Two cases with
C (i) 10% _ X < 20% of
infractions
(ii) Three cases with
Category


________________________________________________________________________________
2 infractions
D (i) 20% _ X < 30% of
infractions
(ii) Four cases with
E (i) X _ 30% cases with
(ii) Five or more cases
with Category 2
infractions
(iv) One or more cases
with Category 1
infractions
(v) One or more cases
with Category 1
infractions and Category
2 infractions
Sub-total

FAA-N20]

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Total number of representatives14
Total number of outstanding appeals by representatives at the beginning of

the measurement quarter
Breakdown:
i) a reassignment to a better balanced scorecard grade (please provide a

breakdown of the reassignment of grades under table 4(b)(ii))
ii) others, please describe:
_________________________________
Total number of appeals submitted by representatives against the financial

adviser’s assignment of balanced scorecard grades during the measurement
quarter
___________________
14
The total number of representatives should be the same as the number of representatives who have been assigned
balanced scorecard grades under Part 1(iii) of Table 1.


________________________________________________________________________________
Breakdown:
i) a reassignment to a better balanced scorecard grade (please provide
a breakdown of the reassignment of grades under table 4(b)(ii))
ii) others, please describe:
_________________________________

Table 4(b)(ii) – Number of successful appeals which involve a reassignment of balanced

scorecard grades
Revised balanced scorecard grades

A B C D
Original balanced B
scorecard grades
C
D
E
Comments for Table 4(b)(i) and 4(b)(ii) (if any)
Table 4(c) – Details of successful appeals involving a reassignment from a balanced scorecard
grade E to a better grade

FAA-N20]

________________________________________________________________________________
S/N Name15 of representative Final balanced scorecard grade
Comments for Table 4(c) (if any)
Table 4(d) – Details of infractions committed by representatives who have been assigned a
balanced scorecard grade E
Name16 of Category of infraction / brief description Misconduct report number (if applicable)
representative of infraction
Comments for Table 4(d) (if any)
SECTION B: FOR SUPERVISORS
____________________
15
16


________________________________________________________________________________
Total number of supervisors
Breakdown:
1) Number of supervisors who have been assigned balanced scorecard
grades and
are:
i) remunerated by way of variable income only, and have representatives
under their supervision who are remunerated by way of variable income,
whether wholly or partly.
ii) remunerated by way of a fixed salary and variable income component,
and have representatives under their supervision who are remunerated
by way of variable income, whether wholly or partly.
2) Number of supervisors who have not been assigned balanced scorecard
grades due to the following reasons:
i) representatives under their supervision are exempt from the application
of the balanced scorecard framework under regulation 34A of the FAR
ii) supervisors are not remunerated by way of variable income
iii) supervisors are remunerated by way of variable income, whether wholly
or partly, but the representatives under their supervision are not
iv) supervisors who cease to supervise or manage the conduct and
performance of any representative during the measurement quarter and
where the financial adviser has assessed and documented its
assessment in writing that it is not

FAA-N20]

_______________________________________________________________________________
possible for the financial adviser to comply with

paragraphs 5.1.1 (a) and (b) of the Notice, in respect
of those supervisors
v) other reasons, please state
_________________________________
Table 2 – Recruitment of supervisors who obtained balanced scorecard grades “Satisfactory” or

worse in any of the last four balanced scorecard grades within the past 10 years
Number of supervisors recruited who had obtained balanced scorecard

grades of Satisfactory" or worse in any of the last four balanced scorecard
grades within the past 10 years
Name of supervisor Name of former employer(s) Last four balanced scorecard grades
within the past 10 years


________________________________________________________________________________
Table 3(a) – Number of supervisors, range of percentage of total specified variable income that
the supervisors are entitled to and balanced scorecard grade assigned (e.g. If there are 10
supervisors who received 80 – 90% of the total variable income that they were entitled to,
please indicate under number of supervisors as "10" and range of percentage of total specified
variable income which the supervisors are entitled to as "80-90%”)
Balanced scorecard Number of supervisors Range of percentage of total

grade assigned specified variable income which the
supervisors are entitled to under
each grade
Good
Satisfactory
Fair
Unsatisfactory
Table 3(b) – Amount of specified variable income that the supervisors are not entitled to
Amount (S$)
Total amount of specified variable income that supervisors are not
entitled to

FAA-N20]

________________________________________________________________________________
Table 3(c)(i) – Number of appeals handled by the financial adviser in the measurement quarter
Total number of outstanding appeals by supervisors at the beginning of the
measurement quarte
Breakdown:
ii) no reassignment of balanced scorecard grades but an increase in percentage

entitlement to variable income
iii) others, please describe:
_________________________________

Total number of appeals submitted by supervisors against the financial adviser’s

assignment of balanced scorecard grades during the measurement quarter
Breakdown:
breakdown

________________________________________________________________________________
of the reassignment of grades under table 3(c)(ii))

ii) no reassignment of balanced scorecard grades but an increase
in percentage entitlement to variable income
iii) others, please describe:
_________________________________

Total amount of specified variable income returned to supervisors

in successful appeal cases (S$)
Table 3(c)(ii) – Number of successful appeals which involve a reassignment of balanced

scorecard grades
Revised balanced scorecard grade
Good Satisfactory Fair
Original Satisfactory
balanced
scorecard Fair
grade
Unsatisfactory
Comments for Table 3(c)(i) and 3(c)(ii) (if any)


________________________________________________________________________________
Table 1 – Statistics for client surveys conducted by the ISA Unit on sampled transactions in the
measurement quarter
Number of client surveys conducted using the following methods:

i) Phone surveys
ii) Face-to-face interactions
iii) Written surveys
iv) Electronic surveys
v) others, please describe:
_________________________________
Number of responses from clients for client surveys conducted using the
following methods
i) Phone surveys
ii) Face-to-face interactions
iii) Written surveys
iv) Electronic surveys
v) others, please describe:
_________________________________

FAA-N20]

________________________________________________________________________________
Table 2 – Method used to determine the population for sampling during the measurement quarter
Method used to determine the population for sampling17
Table 3 – Number of transactions effected by representatives in the measurement quarter

(a) Number of transactions which are rollovers of any dual currency
investment or structured note relating to equities or commodities, or
such other product as the Authority may approve on an exceptional
basis
(b) Number of transactions other than transactions which are rollovers of any
dual currency investment or structured note relating to equities or
commodities, or such other product as the Authority may approve on an
exceptional basis
Table 4 – Number of cases with infractions uncovered through various processes and methods
Number of cases with infractions uncovered through:
(a) Post-transaction documentation reviews
___________________
17
The sampling method indicated should not include such method used for new representatives who have provided
financial advisory services for less than 3 months or existing representatives who have not effected any transactions
in the past 12 months or less, immediately preceding the measurement quarter.


________________________________________________________________________________
(b) Post-transaction client surveys
(c) Findings from mystery shopping exercises (if any)
(d) Substantiated complaints (if any)

________________________________________________________________________________
ANNEX 3
Worked Example 1
Applicable to a representative who is remunerated for his provision of financial advisory
services by way of variable income only
A representative would receive variable income of S$15,000 from 10 transactions

effected in the calendar quarter January to March 2020 (i.e. the measurement
quarter). The variable income is paid to the representative over the income payment
period which is spread over 6 years. For the remaining 3 calendar quarters of 2020,
the representative earns variable income of S$10,000 (April to June 2020),
S$10,000 (July to September 2020) and S$15,000 (October to December 2020)
from transactions effected in those calendar quarters respectively. The representative
earns an annual bonus tied to sales volume in 2020 of S$10,000.
During the post-transaction checks conducted by the ISA Unit on sampled

transactions effected during the calendar quarter January to March 2020, 2 cases
with Category 2 infractions were uncovered. The financial adviser also investigated
and substantiated a complaint against the representative in March 2020 in relation
to a transaction which was effected in February 2016. The case of the substantiated
complaint was determined by the financial adviser to be 1 case with Category 2
infractions. There were no cases with infractions uncovered in the remaining 3
quarters of 2020.
The variable income which the representative earned from 5 transactions effected in
the calendar quarter January to March 2016 was S$5,000.

FAA-N20]

________________________________________________________________________________
Part (I): Assignment of balanced scorecard grade to the representative for his performance in
the measurement quarter of January to March 2020
Number of cases in Number of cases with Balanced Scorecard Grade

measurement quarter of infractions
January to March 2020
(a) Post-transaction checks by First round of check: 1 case Percentage of cases with Category 2 infractions
ISA Unit with Category 2 infractions = (3/5) x 100% = 60% (Grade: E)
(Note: Sample size for 3 Second round of check: 1 case (Note: Denominator of 5 is derived from the total
rounds with Category 2 infractions number of cases that would have been sampled
of sampling in all three rounds of sampling, plus one
First round: 1 case Third round of check: No case substantiated complaint case.)
Second round: 1 case with infractions
Third round: 2 cases Number of cases with Category 2 infractions =
Total sample size for 3 rounds 3 cases (Grade: C)
of
sampling = 4 cases) Final Balanced Scorecard Grade: C
[Note: Where the percentage of cases with

Category 2 infractions and the number of cases
with Category 2 infractions determined in a
measurement quarter, corresponds to two
different balanced scorecard grades under the
Representatives’ Grading Table respectively, the
financial adviser shall assign the better of the
two balanced scorecard grades to the
representative.]


________________________________________________________________________________
Part (II): Computation of representative’s entitlement to variable income from transactions
effected in the measurement quarter
of January to March 2020
Given that the representative has been assigned a balanced scorecard grade C, he will be entitled
to 50% to less than 75% of his specified variable income. Assuming that the financial adviser
determined that the representative is entitled to 50% of his specified variable income, the
representative’s entitlement to variable income will be computed as follows:
Specified variable income = 60%18 x S$15,000 = S$9,000
Amount of specified variable income affected by the balanced scorecard grade

= (100%-50%) x S$9,000 = S$4,500
Given that one of the cases with Category 2 infractions arose from a substantiated
complaint in relation to a transaction effected in February 2016, which is prior to the
measurement quarter January to March 2020, and as the variable income in the calendar
quarter January to March 2016 was lower than that in the measurement quarter, steps
(a) to (e) have to be performed:
Step (a): To apportion the amount of specified variable income affected by the balanced
scorecard grade between –
(i) case(s) with infraction arising from substantiated complaints
= 1/3 x S$4,500 = S$1,500 (i.e. Income X)
(ii) case(s) with infraction arising from post-transaction checks and findings from
mystery shopping exercises
= 2/3 x S$4,500 = S$3,000 (i.e. Income Y)
Step (b): Given that the variable income for the calendar quarter January to March 2016
(i.e. S$5,000) was lower than the variable income in the measurement quarter
(i.e. S$15,000), to compute the proportion of past to current income as
follows:
Proportion of past to current income
= S$5,000/S$15,000 x 100% = 33.3%
__________________________________
18
60% of a representative’s variable income, based on the portfolio of transactions effected in the measurement
quarter of January to March 2020, is measured against the non-sales KPIs.

FAA-N20]

________________________________________________________________________________
Step (c): To apply the proportion of past to current income on Income X as follows: Amount
of specified variable income representative is not entitled to after factoring cases
with infractions arising from substantiated complaints
= 33.3% x S$1,500 = S$500 (rounded to the nearest dollar) (i.e. Income Z)
Step (d): To compute the final amount of specified variable income affected under the
balanced scorecard framework by totalling Income Y and Income Z as follows:
Final amount of specified variable income which representative is not entitled to
=S$3,000 + S$500 = S$3,500
Step (e): To compute the effective percentage of specified variable income the
representative is entitled to as follows:
Effective percentage of specified variable income representative is entitled to
= (S$9,000-S$3,500)/S$9,000 x 100% = 61.1%
Note: Effective percentage of specified variable income representative is not

entitled to
= 100% - 61.1% = 38.9%
Amount of variable income that representative is entitled to for transactions effected in the
measurement quarter January to March 2020
= S$15,000 - S$3,500 = S$11,500

________________________________________________________________________________
Assuming that specified variable income in the calendar quarter January to March
2016 was S$20,000, i.e. higher than specified variable income in the measurement
quarter January to March 2020
Part (II): Computation of representative’s entitlement to variable income from

transactions effected in the measurement quarter of January to March 2020
Given that the representative has been assigned a balanced scorecard grade C, he
will be entitled to 50% to less than 75% of his specified variable income. Assuming
that the FA firm determined that the representative is entitled to 50% of his specified
variable income, the representative’s entitlement to variable income will be computed
as follows:
Specified variable income = 60% x S$15,000 = S$9,000

= (100%-50%) x S$9,000 = S$4,500
Amount of variable income that representative is entitled to for transactions

effected in the measurement quarter January to March 2020
= S$15,000 - S$4,500 = S$10,500
Note: Steps (a) to (e) will not need to be performed.


________________________________________________________________________________
Part (III): Recovery or payment of specified variable income over the income payment
period
Scenario A
Assume that the variable income earned by the representative for the measurement
quarter of January to March 2020 is paid out annually and spread over an income
payment period of 6 years as follows:
Period January January January January January January Total

to to to to to to
March March March March March March
2020 2021 2022 2023 2024 2025
Percentage of 55% 20% 10% 5% 5% 5% 100%
variable income
for the
measurement
quarter of
January to
March 2020,
spread over 6
years
Amount of 8,250 3,000 1,500 750 750 750 15,000
variable income
which the
representative
would receive
(S$)
Amount of 60% x 60% x 60% x 60% x 60% x 60% x 9,000

specified 8,250 3,000 1,500 750 750 750
variable income = = = 900 = 450 = 450 = 450
the 4,950 1,800
representative
would receive
(S$)
The amount of variable income to be recovered or paid out in each period after factoring
the representative’s performance against the non-sales KPIs under the balanced
scorecard framework will be as follows:
Period January to January January January January January Total

March 2020 to to to to to (S$)
March March March March March
2021 2022 2023 2024 2025

FAA-N20]

__________________________________________________________________________________
Period January to March January January to January January January Total

2020 to March to to to (S$)
March 2022 March March March
2021 2023 2024 2025
Amount of 4,950 x 38.9% 1,800 x 900 x 450 x 450 x 450 x 3,500
specified variable = 1,925 38.9% = 38.9% 38.9% 38.9% 38.9%
income affected by 700 = 350 = 175 = 175 = 175
the balanced
scorecard grade
(S$) (rounded
to the nearest
dollar)
Amount of variable 8,250 – 1,925 = 3,000 – 1,500 - 750 – 750 – 750 – 11,500
income that 6,325 700 350 = 175= 175 = 175 =
representative is = 2,300 1,150 575 575 575
entitled to (S$)
Recovery of If the financial Amount Amount Amount Amount Amount 11,500
variable income adviser had of of variable of of of
affected by the paid S$8,250 to variable income to variable variable variable
balanced scorecard the representative income to be paid income to income to income to
grade/ deferred before be paid out in be paid be paid be paid
payment of determining the out in January to out in out in out in
variable income percentage of January March January January January
which specified variable to March 2022 to March to March to March
representative is income which the 2021 = 2023 2024 2025
entitled to representative is = S$1,150 = S$575 = S$575 = S$575
entitled to in the S$2,300
measurement
quarter of
January to March
2020 i.e.
S$6,325, the
financial adviser
shall recover the
percentage of
specified variable
income which the
representative is
not entitled to i.e.
S$1,925, by no
later than end of
September 2020.


Scenario B
Assume that the variable income is spread over the same income payment period as Scenario
A. However, the variable income is paid out in equal monthly payments as follows:
Monthly payment over the 6 years from January 2020 to December 2025
= S$15,000 / 6 years / 12 months = $209 (rounded up to the nearest dollar)
The amount of variable income to be recovered or paid out in each period after factoring the
representative’s performance against the non-sales KPIs under the balanced scorecard
framework will be as follows:
Extract of variable income which would be received, for example, over the 10 month period from
January to October 2020
Period January February March April May June July August September October
2020 2020 2020 2020 2020 2020 2020 2020 2020 2020
Amount of 209 209 209 209 209 209 209 209 209 209
variable income
received or to
be received
(S$) (rounded
up to the
nearest dollar)
Amount of 209x 209 x 209 x 209 x 209 x 209 x 209 x 209 x 209 x 209x
specified 60% 60% 60% 60% 60% 60% 60% 60% 60% 60%
variable income = 126 = 126 =126 =126 =126 =126 =126 = 126 =126 = 126
received or to
be received
(S$) (rounded
up to the
nearest dollar)
Amount of 126 x 126 x 126 x 126 x 126 x 126 x 126 x 126 x 126 x 126 x
specified 38.9% 38.9% 38.9% 38.9% 38.9% 38.9% 38.9% 38.9% 38.9% 38.9%
variable income =49 =49 =49 =49 =49 =49 =49 =49 =49 =49
affected by the
balanced
scorecard grade
(S$) (rounded
to the nearest
dollar)
Amount of 209 –49 209 – 49 209 – 209 – 209 – 209 – 209 – 209 – 209 –49 209 –49
variable income =160 =160 49 49 49 49 49 49 =160 =160
that =160 =160 =160 =160 =160 =160
representative
is entitled to
(S$)

FAA-N20]

_______________________________________________________________________________________
Extract of variable income which would be received, for example, over the 10 month period from
January to October 2020
Period January February March April May June July August September October
2020 2020 2020 2020 2020 2020 2020 2020 2020 2020
Recovery of variable income affected If the financial adviser pays S$1,881 (S$209 x 9), from Amount
by the balanced scorecard grade/ January to September 2020, to the representative and Of
deferred payment of variable income determines the percentage of specified variable income which variable
which representative is entitled to the representative is entitled to for the calendar quarter of income
January to March 2020, by end September 2020, the financial to be
adviser shall recover the percentage of specified variable paid out
income which the representative is not entitled to i.e. S$441 in
(S$49 x 9), by no later than end of September 2020. October
2020 =
S$160
Part (IV): Computation of the amount of annual bonus tied to sales volume in 2020
which the representative is entitled to
Given that the annual bonus is tied to the representative’s sales performance over the
4 calendar quarters in 2020, the representative’s entitlement to his annual bonus is to
be computed by assigning weights to each calendar quarter based on the amount of
variable income he earns in each calendar quarter. The amount of bonus which the
representative is entitled to will be computed as follows:
January to April to June July to October to Total

March 2020 2020 September December
2020 2020
Variable income 15,000 10,000 10,000 15,000 50,000
from transactions
effected (S$)
Weightage of 15,000/50,000 10,000/50,000 10,000/50,000 15,000/50,000 100%

variable income x 100% x 100% x 100% x 100%
from transactions = 30% = 20% = 20% = 30%
effected for each
calendar quarter
Amount of bonus 30% x 10,000 20% x 10,000 20% x 10,000 30% x 10,000 10,000
tied to = 3,000 =2,000 = 2,000 = 3,000
transactions
effected in each
calendar quarter
(S$)


________________________________________________________________________________________
January to April to July to October to Total

March 2020 June 2020 September December
2020 2020
Amount of bonus classified 60%19 x 60% x 60% x 2,000 60% x 3,000 6,000
as specified variable income 3,000 2,000 = 1,200 = 1,800
for each calendar quarter = 1,800 = 1,200
(S$)
Balanced scorecard grade for Grade C Grade A Grade A Grade A
the calendar quarter and 61.1% 100% 100% 100%
effective percentage
entitlement to specified
variable income
Amount of bonus affected by (100%- 0% x 1,200 0 0% x 1,200 0% x 1,800 700
the balanced scorecard grade 61.1%) x =0 =0 =0
(S$) (rounded to the nearest 1,800
dollar) = 700
Bonus that representative is 3,000 - 700 2,000 - 0 2,000 - 0 3,000 - 0 9,300
entitled to for each calendar = 2,300 = 2,000 = 2,000 = 3,000
quarter (S$)
If the financial adviser had paid S$10,000 to the representative before determining the amount
of bonus that representative is entitled to for the calendar year, the financial adviser shall recover
the amount of bonus that the representative is not entitled to i.e. S$700, by no later than end
of June 2021.
If bonuses are paid out every calendar quarter rather than annually, the amount of bonus that
the representative is entitled to each calendar quarter will be computed in a similar manner as
his entitlement to variable income under Part (II). The bonus to be recovered in each calendar
quarter will be as follows:
Period January to March April to June July to September October to December
2020 2020 2020 2020
Recovery The recovery of the The recovery of The recovery of the The recovery of the
of bonus bonus affected by the bonus affected bonus affected by the bonus affected by the
affected the balanced by the balanced balanced scorecard balanced scorecard
by the scorecard grade is scorecard grade is grade is to be carried grade is to be carried
balanced to be carried out or to be carried out out or settled by no out or settled by no
settled by no or settled by
___________________
19
The representative’s performance on non-sales KPIs will be factored into 60% of bonuses being the specified variable
income earned from the portfolio of transactions effected each calendar quarter.
________________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
Period January to March April to June 2020 July to September October to December
2020 2020 2020
scorecard later than end of no later than end later than end of later than end of June
grade September 2020. of December March 2021. 2021.
2020.

FAA-N20]

________________________________________________________________________________________
Worked Example 2
Applicable to a supervisor who is remunerated by way of variable income only and the
representatives who are under his supervision or management, are remunerated by way
of variable income, whether wholly or partly
A supervisor would receive a variable income of S$30,000 for the calendar quarter
of January to March 2020 (i.e. measurement quarter). The variable income is paid to
the supervisor over the income payment period spread over 6 years. For the remaining
3 calendar quarters of 2020, the supervisor earns variable income of S$20,000 (April
to June 2020), S$20,000 (July to September 2020) and S$30,000 (October to
December 2020) respectively. The supervisor earns an annual bonus tied to the sales
volume of the representatives under his supervision or management in 2020 of
S$50,000.
The supervisor has 4 representatives directly under his supervision and management.
The amount of variable income earned by the supervisor for the calendar quarter of
January to March 2020 which is dependent on the financial advisory services
provided by each of the representative under his supervision or management is as
follows:
Representative A – S$12,000
Representative B – S$6,000
Representative C – S$6,000
Representative D – S$6,000
Arising from the financial adviser’s assessment of the representatives’ performance

against the non-sales KPIs for the calendar quarter of January to March 2020, it was
determined that the representatives’ percentage entitlements to their specified
variable income are as follows:
Representative A – 61.1%
Representatives B to D – 100%
All representatives were entitled to their full specified variable income for the
remaining 3 quarters of the year.


________________________________________________________________________________
Part (I): Computation of the percentage of total specified variable income that the
supervisor is entitled to in the measurement quarter January to March 2020
Representative Variable income of Representatives’ Supervisor’s Supervisor’s

the supervisor entitled specified entitlement
which is dependent percentage variable to specified
on the financial of specified income (S$) variable income
advisory services variable income (S$) (rounded
provided by each of to the nearest
the representative dollar)
(S$)
A 12,000 61.1% 60%x 12,000 61.1% x 7,200
= 7,200 = 4,399
B 6,000 100% 60% x6,000 100% x 3,600
= 3,600 = 3,600
C 6,000 100% 60% x6,000 100% x 3,600
= 3,600 = 3,600
D 6,000 100% 60% x6,000 100% x 3,600
= 3,600 = 3,600
Total (S$) 18,000 15,199
Percentage of total specified variable income that supervisor is entitled to in the

measurement quarter
= S$15,199 / S$18,000 = 84.4%
According to the Supervisors’ Grading Table, the supervisor will be assigned a balanced
scorecard grade of “Good”.
Part (II): Recovery or payment of specified variable income over the income payment
period
Amount of specified variable income which supervisor is not entitled to in the

measurement quarter
= S$18,000 - S$15,199 = S$2,801

FAA-N20]

________________________________________________________________________________
Given that the variable income earned by the supervisor is paid to the supervisor over
the income payment period spread over 6 years, the financial adviser shall apply the
same method of recovery or payment as described under Part (III) of Worked Example
1.
Part (III): Computation of the amount of annual bonus tied to sales volume of
representatives under the supervisor and recovery of such annual bonus that supervisor
is not entitled to
Given that the annual bonus is tied to the supervisor’s variable income over the 4
calendar quarters in 2020, the supervisor’s entitlement to his annual bonus is to be
computed by assigning weights to each calendar quarter based on the amount of
supervisor is entitled to will be computed as follows:

March 2020 September December
2020 2020 2020
Variable income 30,000 20,000 20,000 30,000 100,000
dependent on
financial advisory
services provided
by representatives
(S$)
Weightage of 30,000/ 20,000/ 20,000/ 30,000/ 100%
variable income 100,000 x 100,000 x 100,000 x 100,000 x
for each calendar 100% 100% 100% 100%
quarter = 30% = 20% = 20% = 30%
Amount of bonus 30% x 50,000 20% x 50,000 20% x 50,000 30% x 50,000
tied to variable = 15,000 = 10,000 = 10,000 50,000
income in each = 15,000
calendar quarter
(S$)
Amount of bonus 60% x 15,000 60% x 10,000 60% x 10,000 60% x 30,000
classified as = 9,000 = 6,000 = 6,000 15,000
specified variable = 9,000
income for each
calendar quarter
(S$)


________________________________________________________________________________
Percentage of total 84.4% 100% 100% 100%

specified variable (refer to
income that Part (I))
supervisor is
entitled to in each
calendar quarter
Amount of bonus (100% - 0% x 6,000 0% x 6,000 0% x 9,000 1,404
that supervisor is 84.4%) x =0 =0 =0
not entitled to (S$) 9,000
= 1,404
Bonus that 15,000 – 10,000 - 0 10,000 - 0 15,000 - 0 48,596
supervisor is 1,404 = 10,000 = 10,000 = 15,000
entitled to for each = 13,596
calendar quarter
(S$)
If the financial adviser had paid S$50,000 to the supervisor before determining the
amount of bonus that supervisor is entitled to for the calendar year, the financial adviser
shall recover the amount of bonus that the supervisor is not entitled to i.e. S$2,340,
by no later than end of June 2021.
If bonuses are paid out every calendar quarter rather than annually, the amount of bonus
that the supervisor is entitled to each calendar quarter will be computed in a similar
manner as his entitlement to variable income under Part (I). The bonus to be recovered
each calendar quarter will be as follows:
Period January to March April to June July to October to

2020 2020 September 2020 December 2020
Recovery The recovery of The recovery of The recovery of The recovery of
of bonus the bonus that the the bonus that the bonus that the bonus that the
that supervisor is not the supervisor is the supervisor is supervisor is not
supervisor entitled to is not entitled to is not entitled to is entitled to is
is not carried out or carried out or carried out or carried out or
entitled settled by no later settled by no settled by no settled by no later
to than end of later than end of later than end of than end of June
September 2020. December 2020. March 2021. 2021.

FAA-N20]

________________________________________________________________________________
Worked Example 3
Applicable to a supervisor of supervisors, who is remunerated by way of variable income

only and the representatives under his supervision or management are remunerated by
way of variable income, whether wholly or partly
A supervisor would receive variable income of S$50,000 during the calendar quarter
January to March 2020 (i.e. measurement quarter). The variable income is paid to
the supervisor over the income payment period spread over 6 years. For the remaining
3 calendar quarters of the year, the supervisor earns variable income of S$75,000
(April to June 2020), S$75,000 (July to September 2020) and S$50,000 (October
to December 2020) respectively. The supervisor earns an annual bonus tied to sales
volume of the representatives under his supervision or management in 2020 of
S$100,000.
The supervisor has 2 representatives under his supervision or management and 3

supervisors under his supervision or management, who collectively have 9
representatives under their supervision or management. The variable income which
the supervisor would receive for the calendar quarter of January to March 2020 is
relation to the financial advisory services provided by each of 11 representatives, and
the supervisor is deemed to be the supervisor of the 9 representatives.
The respective amounts of variable income which the supervisor would receive in
relation to the financial advisory services provided by the 11 representatives for the
calendar quarter of January to March 2020 are as follows:
Supervisor 1 Supervisor 2 Supervisor 3 Direct

representatives
Representative A Representatives D, E Representatives G, Representatives J
– S$4,000 and F H and I and K
Representatives B – S$5,000 each – S$5,000 each – S$5,000 each
and C
- S$3,000 each
Arising from the financial adviser’s review and assessment of each of the 11
representatives’ performance of the provision of financial advisory services against
non-sales KPIs for the calendar quarter of January to March 2020, it is determined
that the representatives are entitled to the following percentages of their specified
variable income:
Representatives B, C, D, E, F, G, H, I, J and K – 100%
All representatives were entitled to 100% of their specified variable income for the


________________________________________________________________________________
supervisor is entitled to for the measurement quarter of January to March 2020
Supervisor / Variable income Percentage of Supervisor’s Supervisor’s

Representative which the specified variable specified entitlement to
supervisor would income which variable specified
receive in representatives income variable
relation to are entitled to in subject to income in the
the financial the measurement the balanced measurement
advisory services quarter of scorecard quarter of
provided by each January to March framework January to
of the 2020 (S$) March 2020
representative (S$) (rounded
(S$) to the nearest
dollar)
1 A 4,000 61.1% 60% x 4,000 61.1% x
= 2,400 2,400
=1,466
B 3,000 100% 60% x 3,000 100% x 1,800
= 1,800 = 1,800
C 3,000 100% 60% x 3,000 100% x 1,800
= 1,800 = 1,800
2 D 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
E 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
F 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
3 G 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
H 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
I 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
J 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
K 5,000 100% 60% x 5,000 100% x 3,000
= 3,000 = 3,000
Total (S$) 30,000 29,066

FAA-N20]

_______________________________________________________________________________
Percentage of total specified variable income that supervisor is entitled to in the measurement
quarter
= S$29,066 / S$30,000 = 96.9%
scorecard grade of “Good”.
Part (II): Recovery or deferred payment of variable income over the income payment period
Amount of specified variable income which supervisor is not entitled to

= S$30,000 - S$29,066 = S$934
Given that the variable income earned by the supervisor is paid to the supervisor over the income
payment period spread over 6 years, the financial adviser shall apply the same method of
recovery or payment as described under Part (III) of Worked Example 1.
Part (III): Computation of the amount of annual bonus tied to sales volume of representatives
under the supervisor and recovery of such annual bonus that supervisor is not entitled to
The financial adviser should apply the same method of computation as described under Part (III)
of Worked Example 2.

________________________________________________________________________________
Worked Example 4
Applicable to a representative who is remunerated for his provision of financial advisory
services by way of a fixed salary and a variable income component
A representative earns variable income of S$10,000 and fixed salary of S$5,000
from 60 transactions effected in the calendar quarter of January to March 2020 (i.e.
measurement quarter). There is no deferral of income payment. For the remaining 3
calendar quarters of 2020, the representative earns variable income of S$10,000
(April to June 2020), S$15,000 (July to September 2020) and S$15,000 (October
to December 2020) from transactions effected in those calendar quarters
respectively. The representative earns an annual bonus tied to sales volume in 2020
of S$10,000.
During the post-transaction checks conducted by the ISA Unit on sampled

transactions effected in the calendar quarter of January to March 2020, 1 case with
Category 2 infractions was uncovered. The financial adviser also investigated and
substantiated a complaint against the representative in March 2020 in relation to a
transaction which was effected in February 2016. The case of the substantiated
complaint was determined by the financial adviser to be 1 case with Category 2
infractions. The financial advisor also conducted a mystery shopping exercise and it
was found that there was a case with Category 2 infractions in January 2020. There
were no cases with infractions uncovered in relation to the representative in the
remaining 3 quarters of 2020.
The representative earned a variable income of S$5,000 and fixed salary of S$2,000
from 30 transactions effected in the calendar quarter January to March 2016.


________________________________________________________________________________
Part (I): Assignment of balanced scorecard grade to the representative for his
performance in relation to financial advisory services provided in the measurement
quarter of January to March 2020
Number of cases for Number of cases with Balanced Scorecard Grade

measurement quarter infractions
January to March 2020
(a) Post-transaction First round of check: 1 Percentage of cases with Category 2
checks by ISA Unit case with Category 2 infractions
infractions = 3/23 x 100% = 13% (Grade: C)
(Note: Sample size for
3 rounds of sampling Second round of check: (Note: Denominator of 23 is derived
First round: 3 cases No case with infractions from the total number of cases that
Second round: 6 cases would have been sampled in all three
Third round: 12 cases (Note: The ISA Unit is not rounds of sampling, plus one
Total sample size for 3 required to perform the substantiated complaint and one
rounds of sampling = third round of post- mystery shopping finding.)
21 cases) transaction checks.)
Number of cases with Category 2
(b) Mystery shopping 1 case with Category 2 infractions = 3 cases (Grade: C)
exercise was infractions
conducted and the Final Balanced Scorecard Grade: C
rep was visited
once by the
mystery shopper.
(c) Substantiated 1 case with Category 2
complaint infractions

FAA-N20]

________________________________________________________________________________
Part (II): Computation of representative’s entitlement to variable income from transactions

effected in the measurement quarter of January to March 2020
Given that the representative has been assigned a balanced scorecard grade C, he will be
entitled to 50% to less than 75% of his specified variable income. Assuming that the
financial adviser determined that the representative is entitled to 50% of his specified
variable income, the representative’s entitlement to variable income will be computed as
follows:
Specified variable income = S$10,000

= (100%-50%) x S$10,000 = S$5,000
Given that one of the cases with infraction arose from a substantiated complaint in
relation to a transaction which was effected in February 2016 and prior to the
measurement quarter, and as the variable income in the calendar quarter January to
March 2016 was lower than that in the measurement quarter, steps (a) to (e) have to
be performed:
Step (a): To apportion the amount of specified variable income affected by the
balanced scorecard grade between –
(i) case(s) with infraction arising from substantiated complaints
= 1/3 x S$5,000 = S$1,667 (i.e. Income X) (rounded to the nearest
dollar)
(ii) case(s) with infraction arising from post-transaction checks and findings
from mystery shopping exercises
= 2/3 x S$5,000 = S$3,333 (i.e. Income Y) (rounded to the nearest
dollar)
Step (b): Given that the variable income for the calendar quarter January to March
2016 (i.e. S$5,000) was lower than the variable income in the measurement
quarter (i.e. S$10,000), to compute the proportion of past to current income
as follows:
Proportion of past to current income
= S$5,000/S$10,000 x 100% = 50%
Step (c): To apply the proportion of past to current income on Income X as follows:


________________________________________________________________________________
Amount of specified variable income representative is not entitled to after

factoring cases with infractions arising from substantiated complaints
= 50% x S$1,667 = S$834 (rounded to the nearest dollar) (i.e. Income Z)
Step (d): To compute the final amount of specified variable income affected under
the balanced scorecard framework by totalling Income Y and Income Z as
follows:
Final amount of specified variable income which representative is not
entitled to
=S$3,333 + S$834 = S$4,167
Step (e): To compute the effective percentage of specified variable income the
representative is entitled to as follows:
Effective percentage of specified variable income representative is entitled
to
= (S$10,000-S$4,167)/S$10,000 x 100% = 58.3%
Note: Effective percentage of specified variable income representative is

not entitled to
= 100% - 58.3% = 41.7%
Amount of variable income that representative is entitled to for transactions effected

in the measurement quarter of January to March 2020
= S$10,000 - S$4,167 = S$5,833
Part (III): Recovery of variable income affected by the balanced scorecard grade
Given that there is no deferral of income payment, if the financial adviser had paid
S$10,000 of variable income to the representative before determining the percentage of
specified variable income which the representative is entitled to for the measurement
quarter of January to March 2020, the financial adviser shall recover the variable income
which the representative is not entitled to i.e. S$4,167, by no later than end of
September 2020

FAA-N20]

________________________________________________________________________________
Part (IV): Computation of the amount of annual bonus tied to sales volume in 2020 which
the representative is entitled to
Given that the annual bonus is tied to the representative’s sales performance over the 4
calendar quarters in 2020, the representative’s entitlement to his annual bonus is to be
computed by assigning weights to each calendar quarter based on the amount of variable
income he earns in each calendar quarter. The amount of bonus which the representative
is entitled to will be computed as follows:

2020 2020 2020
Variable income 10,000 10,000 15,000 15,000 50,000

from transactions
effected (S$)
Weightage of 10,000/ 10,000/ 15,000/ 15,000/ 100%
variable income 50,000 x 50,000 50,000 x 50,000 x
from transactions 100% x 100% 100% 100%
effected for each = 20% =20% = 30% = 30%
calendar quarter
Amount of bonus 20% x 20% x 30% x 30% x 10,000
tied to transactions 10,000 10,000 10,000 10,000
effected in each = 2,000 = 2,000 = 3,000 = 3,000
calendar quarter
(S$)
Amount of bonus 2,000 2,000 3,000 3,000 10,000
classified as
specified variable
income for each
calendar quarter
(S$)
Balanced scorecard Grade C Grade A Grade A Grade A
grade for the 58.3% 100% 100% 100%
calendar quarter
and percentage
entitlement to
specified variable
income
Amount of bonus (100% - 0% x 2,000 0% x 3,000 0% x 3,000 834
affected by the 58.3%) x =0 =0 =0
balanced scorecard 2,000
grade (S$) = 834


________________________________________________________________________________
March June September December
2020 2020 2020 2020
Bonus that 2,000 – 834 2,000 - 0 3,000 - 0 3,000 - 0 9,166
representative is = 1,166 = 2,000 = 3,000 = 3,000
entitled to for
each calendar
quarter (S$)
If the financial adviser had paid S$10,000 to the representative before determining the
amount of bonus that representative is entitled to for the calendar year, the financial
adviser shall recover the amount of bonus that the representative is not entitled to i.e.
S$834, by no later than end of June 2021.
that the representative is entitled to each calendar quarter will be computed in a similar
manner as his entitlement to variable income under Part (II). The bonus to be recovered
in each calendar quarter will be as follows:
Period January to April to June July to October to

March 2020 2020 September 2020 December
2020
Recovery of The recovery of The recovery of The recovery of The recovery of

Bonus affected the bonus the bonus the bonus the bonus
by the balanced affected by the affected by the affected by the affected by the
scorecard grade balanced balanced balanced balanced
scorecard grade scorecard grade scorecard grade scorecard grade
is to be carried is to be carried is to be carried is to be carried
out or settled by out or settled by out or settled by out or settled by
no later than no later than no later than no later than
end of end of end of March end of June
September December 2021. 2021.
2020. 2020.

FAA-N20]

________________________________________________________________________________
Worked Example 5
Applicable to a supervisor who is remunerated by way of a fixed salary and a variable

income component and the representatives under his supervision or management are
A supervisor earns variable income of S$20,000 and fixed salary of S$10,000 during
the calendar quarter January to March 2020 (i.e. measurement quarter). There is no
deferral of income payment. For the remaining 3 calendar quarters of the year, the
supervisor earns variable income of S$20,000 (April to June 2020), S$30,000 (July
to September 2020) and S$30,000 (October to December 2020) respectively. The
supervisor earns an annual bonus tied to sales volume of representatives under his
supervision and management in 2020 of S$50,000.
The supervisor has 4 representatives under his supervision or management. The

amount of variable income earned by the supervisor during the calendar quarter
January to March 2020 which is in relation to the financial advisory services provided
by each of the representative under his supervision or management is as follows:
Representative A – S$6,000
Representative B – S$5,000
Representative C – S$5,000
Representative D – S$4,000
Arising from the financial adviser’s assessment of the performance of each

representatives’ provision of financial advisory services against the non-sales KPIs for
the calendar quarter of January to March 2020, it was determined that the
representatives’ are entitled to the following percentages of specified variable income
are as follows:
Representatives B to D – 100%
All representatives were entitled to their full specified variable income for the


________________________________________________________________________________
supervisor is entitled to in the measurement quarter of January to March 2020
Representative Variable income of Percentage of Supervisor’s Specified variable

supervisor which is specified specified income (S$)
in relation to the variable income variable which the
financial advisory which each income (S$) supervisor is
services provided representative entitled to for the
by each of the is entitled to for measurement
representatives for the quarter of
the measurement measurement January to March
quarter of January quarter of 2020
to March 2020 (S$) January to
March 2020
A 6,000 58.3% 6,000 58.3% x 6,000
= 3,498
B 5,000 100% 5,000 100% x 5,000
= 5,000
C 5,000 100% 5,000 100% x 5,000
= 5,000
D 4,000 100% 4,000 100% x 4,000
= 4,000
Total (S$) 20,000 17,498
Percentage of total specified variable income that supervisor is entitled to in the

measurement quarter
= S$17,498 / S$20,000 = 87.5%
scorecard grade of “Satisfactory”.
Part (II): Recovery or payment of specified variable income over the income payment
period
Amount of specified variable income which supervisor is not entitled to

= S$20,000 - S$17,498 = S$2,502

FAA-N20]

________________________________________________________________________________
Given that there is no deferral of income payment, if the financial adviser had paid
S$20,000 of variable income to the supervisor before determining the percentage of
specified variable income which the supervisor is entitled to for the measurement
quarter of January to March 2020, the financial adviser shall recover the variable
income which the supervisor is not entitled to i.e. S$2,502, by no later than end of
September 2020.
Part (III): Computation of the amount of annual bonus tied to sales volume of
representatives under the supervisor and recovery of such annual bonus that supervisor
is not entitled to
Given that the annual bonus is tied to the supervisor’s variable income over the 4
calendar quarters in 2020, the supervisor’s entitlement to his annual bonus is to be
computed by assigning weights to each calendar quarter based on the amount of
supervisor is entitled to will be computed as follows:

2020 2020 2020
Variable income 20,000 20,000 30,000 30,000 100,000
dependent on
financial
advisory
services
provided by
representatives
(S$)
Weightage of 20,000/ 20,000/ 30,000/ 30,000/ 100%
variable income 100,000 x 100,000 100,000 x 100,000 x
for each 100% x 100% 100% 100%
calendar quarter = 20% = 20% = 30% = 30%
Amount of 20% x 20% x 30% x 30% x 50,000

bonus tied to 50,000 50,000 50,000 50,000
variable income = 10,000 = 10,000 = 15,000 = 15,000
in each
calendar quarter
(S$)


________________________________________________________________________________

March June September December
2020 2020 2020 2020
Percentage of total 87.5% (refer 100% 100% 100%
specified variable to Part (I))
income that
supervisor is entitled
to in each calendar
quarter
Amount of bonus that (100%- 0% x 0% x 0% x 1,250
supervisor is not 87.5%) x 10,000 15,000 15,000
entitled to (S$) 10,000 =0 =0 =0
= 1,250
Bonus that supervisor 10,000 – 10,000 - 0 15,000 - 0 15,000 - 0 48,750
is entitled to for each 1,250 =10,000 =15,000 =15,000
calendar quarter (S$) =8,750
If the financial adviser had paid S$50,000 to the supervisor before determining the
amount of bonus that supervisor is entitled to for the calendar year, the financial adviser
shall recover the amount of bonus that the supervisor is not entitled to i.e. S$1,250,
by no later than end of June 2021.
that the supervisor is entitled to each calendar quarter will be computed in a similar
manner as his entitlement to variable income under Part (I). The bonus to be recovered
in each calendar quarter will be as follows:
Period January to April to June July to October to

March 2020 2020 September December
2020 2020
Recovery of The recovery of The recovery of The recovery of The recovery of
the bonus the bonus the bonus the bonus

________________________________________________________________________________
bonus that that the that the that the that the
supervisor is supervisor is not supervisor is not supervisor is not supervisor is not
not entitled to entitled to is entitled to is entitled to is entitled to is
carried out or carried out or carried out or carried out or
settled by no settled by no settled by no settled by no
later than end later than end of later than end later than end
of September December of March 2021. of June 2021.
2020. 2020.
Source : MAS website (31 December 2015)

FAA-N20]
Appendix 5A
For information only
REPORT OF MISCONDUCT OF REPRESENTATIVE
This misconduct report is being submitted under:

Notice No: FAA-N14 under the Financial Advisers Act (Cap. 110)
1 Identification Details
1.1 Name as reflected in NRIC or passport
1.2 Representative Number
If the representative does not have a representative number, please complete item 1.3
below.
1.3(a) Date of Birth (DD/MM/YYYY)
1.3(b) Gender Male

Female
1.3(c) Nationality Singapore Citizen
Singapore PR
Please specify country:
Others.
1.3(d) (i) NRIC No:
(For Singapore citizen and Singapore PR)
or
(ii) Foreign Identification Number
(For employment pass or work-permit holders)
or
(iii) Passport Number
(For non-Singapore Citizen and non-Singapore PR)
2 Information on Misconduct
2.1 Please select the type(s) of misconduct that has been committed by the representative
(you may select more than one option):
 Acts involving fraud, dishonesty or other offences of a similar nature

Failure to satisfy the Guidelines On Fit And Proper Criteria [Guideline No: FSG-

G01]
Acts involving inappropriate advice, misrepresentation or inadequate disclosure of

information
 Other misconduct
2.2 Period of Misconduct (Please be as precise as possible.)

2.3 Has the company concluded its investigation?

 Yes [Please attach investigation report(s).]
If the answer is “Yes”, has the company taken disciplinary action against the
individual?
 Yes (Please provide details at 2.4.)
No (Please update the information when the disciplinary action has been

taken.)
Not applicable because the company has decided not to take disciplinary

action against the individual for this case.
No (Please submit the Update Report when there is any significant development,

as well as at conclusion of the investigation.)
2.4 Summary of the Misconduct
Where possible, please include information on:
(a) circumstances under which the misconduct was discovered;
(b) the number of clients affected;
(c) the monetary amounts involved;
(d) whether the individual was cooperative during the investigation
(e) the type of disciplinary action taken against the individual.
Where available, please attach supporting documents like written and signed
statements, investigation reports and police reports.
3 Declaration
This report is submitted on behalf of (name of principal) by
(name of director/principal officer/ chief executive officer) who
certifies that the information contained in the above report is to the best of
(name of principal)’s knowledge and belief true and correct.
4 Confirmation
(name of principal) is aware that, pursuant to:
▪ Section 86(1) of the Financial Advisers Act (Cap. 110) ["the FAA”], “Any person
who furnishes the MAS with any information under the FAA shall use due care to
ensure that the information is not false or misleading in any material particular.”;
▪ Section 86(3) of the FAA, “Any person who (a) signs any document lodged with
the MAS; or (b) lodges with the MAS any document by electronic means using any
identification or identifying code, password or other authentication method or
procedure assigned to him by the MAS, shall use due care to ensure that the
document is not false or misleading in any material particular.”; and
▪ Section 86(4) of the FAA, “Any person who contravenes subsection (1) or (3) shall
be guilty of an offence and shall be liable on conviction to a fine not exceeding
S$25,000 or to imprisonment for a term not exceeding two years or to both.”
Signature:
Date:

FAA-N20]
Appendix 5B
UPDATE ON REPORT OF MISCONDUCT OF REPRESENTATIVE

1 Identification Details
1.1 Name as reflected in NRIC or passport
1.2 Representative Number
If the representative does not have a representative number, please complete item 1.3
below.
1.3(a) Date of Birth (DD/MM/YYYY)
1.3(b) Gender Male

Female
1.3(c) Nationality Singapore Citizen
Singapore PR
Others.
1.3(d) (i) NRIC No:
(For Singapore citizen and Singapore PR)
or
(ii) Foreign Identification Number
(For employment pass or work-permit holders)
or
(iii) Passport Number
(For non-Singapore Citizen and non-Singapore PR)
2 Information on Misconduct
2.1 Please select the type(s) of misconduct that has been committed by the representative
(you may select more than one option):
 Acts involving fraud, dishonesty or other offences of a similar nature

Failure to satisfy the Guidelines On Fit And Proper Criteria [Guideline No: FSG-

G01]
Acts involving inappropriate advice, misrepresentation or inadequate disclosure of

information
 Other misconduct
2.2 Period of Misconduct (Please be as precise as possible.)

2.3 Has the company concluded its investigation?

 Yes [Please attach investigation report(s).]
If the answer is “Yes”, has the company taken disciplinary action against the
individual?
 Yes (Please provide details at 2.4.)
No (Please update the information when the disciplinary action has been

taken.)
Not applicable because the company has decided not to take disciplinary

action against the individual for this case.
No (Please submit the Update Report when there is any significant development,

as well as at conclusion of the investigation.)
2.4 Summary of the Misconduct
Where possible, please include information on:
(a) circumstances under which the misconduct was discovered;
(b) the number of clients affected;
(c) the monetary amounts involved;
(d) whether the individual was cooperative during the investigation
(e) the type of disciplinary action taken against the individual.
Where available, please attach supporting documents like written and signed
3 Declaration
This report is submitted on behalf of (name of principal) by
(name of director/principal officer/ chief executive officer) who
certifies that the information contained in the above report is to the best of
(name of principal)’s knowledge and belief true and correct.
4 Confirmation
▪ Section 86(1) of the Financial Advisers Act (Cap. 110) ["the FAA”], “Any person
who furnishes the MAS with any information under the FAA shall use due care to
ensure that the information is not false or misleading in any material particular.”;
▪ Section 86(3) of the FAA, “Any person who (a) signs any document lodged with
the MAS; or (b) lodges with the MAS any document by electronic means using any
procedure assigned to him by the MAS, shall use due care to ensure that the
document is not false or misleading in any material particular.”; and
▪ Section 86(4) of the FAA, “Any person who contravenes subsection (1) or (3) shall
be guilty of an offence and shall be liable on conviction to a fine not exceeding
S$25,000 or to imprisonment for a term not exceeding two years or to both.”
Signature:
Date:

FAA-N20]
Appendix 5C
DECLARATION OF NIL RETURN OF MISCONDUCT OF REPRESENTATIVES

1 Declaration
I hereby declare that (name of principal) has no misconduct for
which it is required to report under Paragraph 6 of Notice No: FAA-N14 Notice on Reporting
of Misconduct of Representatives by Financial Advisers for the calendar year ended 31
December .
2 Confirmation
▪ Section 86(1) of the Financial Advisers Act (Cap. 110) ["the FAA”], “Any person who
furnishes the MAS with any information under the FAA shall use due care to ensure
that the information is not false or misleading in any material particular.”;
▪ Section 86(3) of the FAA, “Any person who (a) signs any document lodged with the
MAS; or (b) lodges with the MAS any document by electronic means using any
procedure assigned to him by the MAS, shall use due care to ensure that the document
is not false or misleading in any material particular.”; and
▪ Section 86(4) of the FAA, “Any person who contravenes subsection (1) or (3) shall be
guilty of an offence and shall be liable on conviction to a fine not exceeding S$25,000
or to imprisonment for a term not exceeding two years or to both.”
Details of Reporting Officer
Reporting Officer Name:

Designation:
Signature:
Date:


6. MAS Notice No: FAA-N06 – Prevention Of Money Laundering
And Countering The Financing Of Terrorism – Financial Advisers
CHAPTER 6
MAS NOTICE NO: FAA-N06 - PREVENTION OF MONEY LAUNDERING AND COUNTERING
THE FINANCING OF TERRORISM – FINANCIAL ADVISERS
CHAPTER OUTLINE
1. Introduction
2. Definitions
3. Underlying Principles
4. Assessing Risks And Applying A Risk-Based Approach
5. New Products, Practices And Technologies
6. Customer Due Diligence (“CDD”)
7. Simplified Customer Due Diligence
8. Enhanced Customer Due Diligence
9. Reliance On Third Parties
10. Record Keeping
11. Personal Data
12. Suspicious Transactions Reporting
13. Internal Policies, Compliance, Audit And Training
14. Guidelines To MAS Notice No: FAA-N06 On Prevention Of Money Laundering And
Countering The Financing Of Terrorism
Appendix 6A
Appendix 6B
KEY LEARNING POINTS

▪ outline the principles in the Notice to Financial Advisers on Prevention of Money
Laundering and Countering the Financing of Terrorism [Notice No: FAA-N06] and who
it applies to
▪ understand Customer Due Diligence (“CDD”) and when it is needed
▪ explain when Simplified CDD measures and Enhanced CDD measures may be applied
▪ know when CDD measures can be performed by intermediaries
▪ understand the need for record keeping on all business relations and transactions with
customers
▪ understand suspicious transactions reporting
▪ describe the importance of internal policies, compliance procedures, audit and training
▪ explain the Guidelines To MAS Notice No:FAA-N06 On Prevention Of Money
Laundering And Countering The Financing Of Terrorism

1. INTRODUCTION
1.1 In this chapter, we will cover the MAS Notice to Financial Advisers on Prevention
of Money Laundering and Countering the Financing of Terrorism [Notice No: FAA-
N06].
1.2 Notice No: FAA-N06 is issued pursuant to Section 27B of the Monetary Authority
of Singapore Act (Cap. 186) and applies to all of the following, except those
which only provide advice by issuing or promulgating research analyses or
research reports, whether in electronic, print or other form, concerning any
investment product:
(a) licensed financial advisers under the Financial Advisers Act (Cap. 110)
(“FAA”);
(b) registered insurance brokers which are exempt under Section 23(1)(c) of the
FAA, from holding a financial adviser’s licence to act as a financial adviser in
Singapore in respect of any financial advisory service; and
(c) persons exempt, under Section 23(1)(f) of the FAA read with Regulation
27(1)(d) of the Financial Advisers Regulations (Rg. 2) (“FAR”), from holding
a financial adviser’s licence to act as a financial adviser in Singapore in
respect of any financial advisory service.
(d) This Notice shall take effect from 24 May 2015. MAS Notice FAA-N06 dated
2 July 2007 is cancelled with effect from 24 May 2015.
2. DEFINITIONS
2.1 The following contents in regard to “Definitions” has been entirely extracted from
2.1 For the purposes of this Notice -
“AML/CFT” means anti-money laundering and countering the financing of

terrorism;
“Authority” means the Monetary Authority of Singapore;
“beneficial owner”, in relation to a customer of a financial adviser, means the

natural person who ultimately owns or controls the customer or the natural
person on whose behalf a transaction is conducted or business relations are
established and includes any person who exercises ultimate effective control
over a legal person or legal arrangement;
“business relations” means -

(a) the opening or maintenance of an account by the financial adviser in the
name of; or
(b) the provision of financial advice by the financial adviser to,
a person (whether a natural person, legal person or legal arrangement);

“CDD measures” or “customer due diligence measures” means the measures

required by paragraph 6;
“CDSA” means the Corruption, Drug Trafficking and Other Serious Crimes
(Confiscation of Benefits) Act (Cap. 65A);
“connected party” -
(a) in relation to a legal person (other than a partnership), means any director
or any natural person having executive authority in the legal person;
(b) in relation to a legal person that is a partnership, means any partner or
manager1; and
(c) in relation to a legal arrangement, means any natural person having
executive authority in the legal arrangement;
“Core Principles” refers to the Core Principles for Effective Banking Supervision
issued by the Basel Committee on Banking Supervision, the Objectives and
Principles for Securities Regulation issued by the International Organisation of
Securities Commissions, or the Insurance Core Principles issued by the
International Association of Insurance Supervisors;
“customer”, in relation to a financial adviser, means a person (whether a natural

person, legal person or legal arrangement) with whom the financial adviser
establishes or intends to establish business relations and includes in the case
where the financial adviser arranges a group life insurance policy, the owner of
the master policy;
“FATF” means the Financial Action Task Force; “financial adviser” means -
(a) a licensed financial adviser under the FAA;
(b) a registered insurance broker which is exempt, under section 23(1)(c) of
the FAA, from holding a financial adviser’s licence to act as a financial
adviser in Singapore in respect of any financial advisory service; and
(c) a person exempt, under section 23(1)(f) of the FAA read with regulation
27(1)(d) of the FAR, from holding a financial adviser’s licence to act as a
financial adviser in Singapore in respect of any financial advisory service,
but does not include any person in (a), (b) or (c) which only provides advice by
issuing or promulgating research analyses or research reports, whether in
electronic, print or other form, concerning any investment product;
“financial group” means a group that consists of a legal person or legal

arrangement exercising control and coordinating functions over the rest of the
group for the application of group supervision under the Core Principles, and its
branches and subsidiaries that are financial institutions as defined in section
27A(6) of the MAS Act or the equivalent financial institutions outside Singapore;
“government entity” means a government of a country or jurisdiction, a ministry

within such a government, or an agency specially established by such a
government through written law;
“legal arrangement” means a trust or other similar arrangement;
1
In the case of a limited liability partnership or a limited partnership.

“legal person” means an entity other than a natural person that can establish a
permanent customer relationship with a financial institution or otherwise own
property;
“officer” means any director or any member of the committee of management

of the financial adviser;
“partnership” means a partnership, a limited partnership within the meaning of

the Limited Partnerships Act (Cap. 163B) or a limited liability partnership within
the meaning of the Limited Liability Partnerships Act (Cap. 163A);
“personal data” has the same meaning as defined in section 2(1) of the Personal
Data Protection Act 2012 (Act 26 of 2012);
“reasonable measures” means appropriate measures which are commensurate

with the money laundering or terrorism financing risks;
“STR” means suspicious transaction report;
“STRO” means the Suspicious Transaction Reporting Office, Commercial Affairs

Department of the Singapore Police Force;
“transaction”, in relation to a financial adviser, means any transaction

undertaken in the course of its business relations with a customer and includes
the sale or purchase of an investment product by a customer; and
“TSOFA” means the Terrorism (Suppression of Financing) Act (Cap. 325).
2.2 The expressions used in this Notice shall, except where defined in this Notice or
where the context otherwise requires, have the same meanings as in the FAA.
3. UNDERLYING PRINCIPLES
3.1 Notice No: FAA-N06 is based on the following principles, which shall serve as a
guide for all financial advisers in the conduct of their operations and business
activities:
(a) A financial adviser shall exercise due diligence when dealing with customers,
natural persons appointed to act on the customer’s behalf, connected parties
of the customer and beneficial owners of the customer.
(b) A financial adviser shall conduct its business in conformity with high ethical
standards, and guard against establishing any business relations or
undertaking any transaction, that is or may be connected with or may
facilitate money laundering or terrorism financing.
(c) A financial adviser shall, to the fullest extent possible, assist and cooperate
with the relevant law enforcement authorities in Singapore to prevent money
laundering and terrorism financing.

4. ASSESSING RISKS AND APPLYING A RISK-BASED APPROACH
A. Risk Assessment
4.1 A financial adviser shall take appropriate steps to identify, assess and understand,
its money laundering and terrorism financing risks in relation to:
(a) its customers;
(b) the countries or jurisdictions its customers are from or in;
(c) the countries or jurisdictions the financial adviser has operations in; and
(d) the products, services, transactions and delivery channels of the financial
adviser.
4.2 The appropriate steps referred to in the paragraph above shall include:
(a) documenting the financial adviser’s risk assessments;
(b) considering all the relevant risk factors before determining the level of overall
risk and the appropriate type and extent of mitigation to be applied;
(c) keeping the financial adviser’s risk assessments up-to-date; and
(d) having appropriate mechanisms to provide its risk assessment information to
the Authority.
B. Risk Mitigation
4.3 A financial adviser shall:

(a) develop and implement policies, procedures and controls, which are approved
by senior management, to enable the financial adviser to effectively manage
and mitigate the risks that have been identified by the financial adviser or
notified to it by the Authority or other relevant authorities in Singapore;
(b) monitor the implementation of those policies, procedures and controls, and
enhance them if necessary;
(c) perform enhanced measures where higher risks are identified, to effectively
manage and mitigate those higher risks; and
(d) ensure that the performance of measures or enhanced measures to
effectively manage and mitigate the identified risks, address the risk
assessment and guidance from the Authority or other relevant authorities in
Singapore.
5. NEW PRODUCTS, PRACTICES AND TECHNOLOGIES
5.1 A financial adviser shall identify and assess the money laundering and terrorism
financing risks that may arise in relation to:
(a) the development of new products and new business practices, including new
delivery mechanisms; and

(b) the use of new or developing technologies for both new and pre-existing
products.
5.2 A financial adviser shall undertake the risk assessments, prior to the launch or
use of such products, practices and technologies (to the extent such use is
permitted by Notice No: FAA-N06), and shall take appropriate measures to
manage and mitigate the risks.
5.3 A financial adviser shall, in complying with the requirements of paragraphs above,
pay special attention to any:
(a) new products and new business practices, including new delivery
mechanisms; and
(b) new or developing technologies,
that favour anonymity.
6. CUSTOMER DUE DILIGENCE (“CDD”)
6.1 The following contents in regard to “Customer Due Diligence (“CDD”)” has been
Anonymous or Fictitious Account
6.1 No financial adviser shall open or maintain an anonymous account or an account

in a fictitious name.
Where There Are Reasonable Grounds for Suspicion prior to the Establishment of
Business Relations or Undertaking any Transaction
6.2 Prior to a financial adviser establishing business relations or undertaking any

transaction, where the financial adviser has any reasonable grounds to suspect
that the assets or funds of a customer are proceeds of drug dealing or criminal
conduct as defined in the CDSA, or are property related to the facilitation or
carrying out of any terrorism financing offence as defined in the TSOFA, the
financial adviser shall -
(a) not establish business relations with, or undertake a transaction for, the
customer; and
(b) file an STR2, and extend a copy to the Authority for information.
When CDD is to be Performed
6.3 A financial adviser shall perform the measures as required by paragraphs 6, 7

and 8 when -
(a) the financial adviser establishes business relations with any customer;
(b) there is a suspicion of money laundering or terrorism financing,
notwithstanding that the financial adviser would not otherwise be required
by this Notice to perform the measures as required by paragraphs 6, 7 and
8; or

(c) the financial adviser has doubts about the veracity or adequacy of any
information previously obtained.
(I) Identification of Customer
6.4 A financial adviser shall identify each customer.
6.5 For the purposes of paragraph 6.4, a financial adviser shall obtain at least the
following information:
(a) full name, including any aliases;
(b) unique identification number (such as an identity card number, birth
certificate number or passport number, or where the customer is not a
natural person, the incorporation number or business registration number);
(c) the customer’s -
(i) residential address; or
(ii) registered or business address, and if different, principal place of
business,
as may be appropriate;
(d) date of birth, establishment, incorporation or registration (as may be
appropriate); and
(e) nationality, place of incorporation or place of registration (as may be
appropriate).
6.6 Where the customer is a legal person or legal arrangement, the financial adviser
shall, apart from identifying the customer, also identify the legal form,
constitution and powers that regulate and bind the legal person or legal
arrangement.
6.7 Where the customer is a legal person or legal arrangement, the financial adviser
shall identify the connected parties of the customer, by obtaining at least the
following information of each connected party:
(a) full name, including any aliases; and
(b) unique identification number (such as an identity card number, birth
certificate number or passport number of the connected party).
(II) Verification of Identity of Customer
6.8 A financial adviser shall verify the identity of the customer, using reliable,
independent source data, documents or information. Where the customer is a
legal person or legal arrangement, a financial adviser shall verify the legal form,
proof of existence, constitution and powers that regulate and bind the customer,
using reliable, independent source data, documents or information.
(III) Identification and Verification of Identity of Natural Person Appointed to Act on

a Customer’s Behalf

6.9 Where a customer appoints one or more natural persons to act on his behalf in
establishing business relations with a financial adviser or the customer is not a
natural person, the financial adviser shall -
(a) identify each natural person who acts or is appointed to act on behalf of
the customer by obtaining at least the following information of such natural
person:
(i) full name, including any aliases;
(ii) unique identification number (such as an identity card number, birth
certificate number or passport number);
(iii) residential address;
(iv) date of birth;
(v) nationality; and
(b) verify the identity of each natural person using reliable, independent source
data, documents or information.
6.10 A financial adviser shall verify the due authority of each natural person appointed
to act on behalf of the customer by obtaining at least the following:
(a) the appropriate documentary evidence authorising the appointment of such
natural person by the customer to act on his or its behalf; and
(b) the specimen signature of such natural person appointed.
6.11 Where the customer is a Singapore Government entity, the financial adviser shall
only be required to obtain such information as may be required to confirm that
the customer is a Singapore Government entity as asserted.
(IV) Identification and Verification of Identity of Beneficial Owner
6.12 Subject to paragraph 6.15, a financial adviser shall inquire if there exists any
beneficial owner in relation to a customer.
6.13 Where there is one or more beneficial owner in relation to a customer, the
financial adviser shall identify the beneficial owners and take reasonable
measures to verify the identities of the beneficial owners using the relevant
information or data obtained from reliable, independent sources. The financial
adviser shall -
(a) for customers that are legal persons -
(i) identify the natural persons (whether acting alone or together) who
ultimately own the legal person;
(ii) to the extent that there is doubt under subparagraph (i) as to whether
the natural persons who ultimately own the legal person are the
beneficial owners or where no natural persons ultimately own the
legal person, identify the natural persons (if any) who ultimately
control the legal person or have ultimate effective control of the legal
person; and
(iii) where no natural persons are identified under subparagraph (i) or (ii),
identify the natural persons having executive authority in the legal
person, or in equivalent or similar positions;

(b) for customers that are legal arrangements -

(i) for trusts, identify the settlors, the trustees, the protector (if any),
the beneficiaries (including every beneficiary that falls within a
designated characteristic or class)2 , and any natural person
exercising ultimate ownership, ultimate control or ultimate effective
control over the trust (including through a chain of control or
ownership); and
(ii) for other types of legal arrangements, identify persons in equivalent
or similar positions, as those described under subparagraph (i).
6.14 Where the customer is not a natural person, the financial adviser shall
understand the nature of the customer’s business and its ownership and control
structure.
6.15 A financial adviser shall not be required to inquire if there exists any beneficial
owner in relation to a customer that is -
(a) Deleted with effect from 30 November 2015;
(b) Deleted with effect from 30 November 2015;
(c) an entity listed on the Singapore Exchange;
(d) an entity listed on a stock exchange outside of Singapore that is subject
to -
(i) regulatory disclosure requirements; and
(ii) requirements relating to adequate transparency in respect of its
beneficial owners (imposed through stock exchange rules, law or
other enforceable means);
(e) a financial institution set out in Appendix 6A of this chapter;
(f) a financial institution incorporated or established outside Singapore that is
subject to and supervised for compliance with AML/CFT requirements
consistent with standards set by the FATF; or
(g) an investment vehicle where the managers are financial institutions -
(i) set out in Appendix 1; or
(ii) incorporated or established outside Singapore but are subject to and
supervised for compliance with AML/CFT requirements consistent
with standards set by the FATF,
unless the financial adviser has doubts about the veracity of the CDD
information, or suspects that the customer, business relations with, or
transaction for the customer, may be connected with money laundering or
terrorism financing.
6.16 For the purposes of paragraph 6.15(f) and 6.15(g)(ii), a financial adviser shall
document the basis for its determination that the requirements in those
paragraphs have been duly met.
[MAS Notice FAA-N06 (Amendment) 2015]
2
In relation to a beneficiary of a trust designated by characteristics or by class, the financial
adviser shall obtain sufficient information about the beneficiary to satisfy itself that it will be
able to establish the identity of the beneficiary -
(a) before making a distribution to that beneficiary; or
(b) when that beneficiary intends to exercise vested rights.

(IVA) Identification of Beneficiary
6.16A This paragraph shall apply where a financial adviser distributes life policies on
behalf of a direct life insurer licensed under section 8 of the Insurance Act (Cap.
142).
6.16B A financial adviser shall, as soon as a beneficiary of a life policy is identified to

the financial adviser as a specifically named natural person, legal person or legal
arrangement, obtain the full name, including any aliases, of such beneficiary.
6.16C A financial adviser shall, as soon as a beneficiary of a life policy is designated

by characteristics, class or other means and is known to the financial adviser,
obtain sufficient information concerning the beneficiary to satisfy the direct life
insurer that such direct life insurer will be able to establish the identity of the
beneficiary at the time of payout.
(V) Information on the Purpose and Intended Nature of Business Relations
6.17 A financial adviser shall, when processing the application to establish business
relations, understand and as appropriate, obtain from the customer information
as to the purpose and intended nature of business relations.
(VI) Ongoing Monitoring
6.18 A financial adviser shall monitor on an ongoing basis, its business relations with
customers.
6.19 A financial adviser shall, during the course of business relations with a customer,
observe the conduct of the customer’s account and scrutinise transactions
undertaken throughout the course of business relations, to ensure that the
transactions are consistent with the financial adviser’s knowledge of the
customer, its business and risk profile and where appropriate, the source of
funds.
6.20 A financial adviser shall pay special attention to all complex, unusually large or
unusual patterns of transactions, undertaken throughout the course of business
relations, that have no apparent or visible economic or lawful purpose.
6.21 For the purposes of ongoing monitoring, a financial adviser shall put in place and
implement adequate systems and processes, commensurate with the size and
complexity of the financial adviser, to -
(a) monitor its business relations with customers; and
(b) detect and report suspicious, complex, unusually large or unusual patterns
of transactions.
6.22 A financial adviser shall, to the extent possible, inquire into the background and
purpose of the transactions in paragraph 6.20 and document its findings with a
view to making this information available to the relevant authorities should the
need arise.
6.23 A financial adviser shall ensure that the CDD data, documents and information
obtained in respect of customers, natural persons appointed to act on behalf of
the customers, connected parties of the customers and beneficial owners of the
customers, are relevant and kept up-to-date by undertaking reviews of existing

CDD data, documents and information, particularly for higher risk categories of
customers.
6.24 Where there are any reasonable grounds for suspicion that existing business
relations with or transactions for a customer are connected with money
laundering or terrorism financing, and where the financial adviser considers it
appropriate to retain the customer -
(a) the financial adviser shall substantiate and document the reasons for
retaining the customer; and
(b) the customer’s business relations with the financial adviser shall be subject
to commensurate risk mitigation measures, including enhanced ongoing
monitoring.
6.25 Where the financial adviser assesses the customer or the business relations with
the customer referred to in paragraph 6.24 to be of higher risk, the financial
adviser shall perform enhanced CDD measures, which shall include obtaining the
approval of the financial adviser’s senior management to retain the customer.
CDD Measures for Non-Face-to-Face Business Relations
6.26 A financial adviser shall develop policies and procedures to address any specific
risks associated with non-face-to-face business relations with a customer or
transactions for a customer.
6.27 A financial adviser shall implement the policies and procedures referred to in
paragraph 6.26 when establishing business relations with a customer and when
conducting ongoing due diligence.
6.28 Where there is no face-to-face contact, the financial adviser shall perform CDD
measures that are at least as stringent as those that would be required to be
performed if there was face-to-face contact.
Reliance by Acquiring Financial Adviser on Measures Already Performed
6.29 When a financial adviser (“acquiring financial adviser”) acquires, either in whole
or in part, the business of another financial institution (whether in Singapore or
elsewhere), the acquiring financial adviser shall perform the measures as
required by paragraphs 6, 7 and 8, on the customers acquired with the business
at the time of acquisition except where the acquiring financial adviser has -
(a) acquired at the same time all corresponding customer records (including
CDD information) and has no doubt or concerns about the veracity or
adequacy of the information so acquired; and
(b) conducted due diligence enquiries that have not raised any doubt on the
part of the acquiring financial adviser as to the adequacy of AML/CFT
measures previously adopted in relation to the business or part thereof
now acquired by the acquiring financial adviser, and document such
enquiries.
Timing for Verification
6.30 Subject to paragraphs 6.31 and 6.32, a financial adviser shall complete
verification of the identity of a customer as required by paragraph 6.8, natural
persons appointed to act on behalf of the customer as required by paragraph

6.9(b) and beneficial owners of the customer as required by paragraph 6.13

before the financial adviser establishes business relations with the customer.
6.31 A financial adviser may establish business relations with a customer before
completing the verification of the identity of the customer as required by
paragraph 6.8, natural persons appointed to act on behalf of the customer as
required by paragraph 6.9(b) and beneficial owners of the customer as required
by paragraph 6.13 if -
(a) the deferral of completion of the verification is essential in order not to
interrupt the normal conduct of business operations; and
(b) the risks of money laundering and terrorism financing can be effectively
managed by the financial adviser.
6.32 Where the financial adviser establishes business relations with a customer
before verifying the identity of the customer as required by paragraph 6.8,
natural persons appointed to act on behalf of the customer as required by
paragraph 6.9(b) and beneficial owners of the customer as required by paragraph
6.13, the financial adviser shall -
(a) develop and implement internal risk management policies and procedures
concerning the conditions under which such business relations may be
established prior to verification; and
(b) complete such verification as soon as is reasonably practicable.
Where Measures are Not Completed
6.33 Where the financial adviser is unable to complete the measures as required by
paragraphs 6, 7 and 8, it shall not commence or continue business relations with
any customer, or undertake any transaction for any customer. The financial
adviser shall consider if the circumstances are suspicious so as to warrant the
filing of an STR.
6.34 For the purposes of paragraph 6.33, completion of the measures means the
situation where the financial adviser has obtained, screened and verified
(including by delayed verification as allowed under paragraphs 6.31 and 6.32)
all necessary CDD information under paragraphs 6, 7 and 8, and where the
financial adviser has received satisfactory responses to all inquiries in relation to
such necessary CDD information.
Joint Account
6.35 In the case of a joint account, a financial adviser shall perform CDD measures
on all of the joint account holders as if each of them were individually customers
of the financial adviser.
Existing Customers
6.36 A financial adviser shall perform the measures as required by paragraphs 6, 7

and 8 in relation to its existing customers, based on its own assessment of
materiality and risk, taking into account any previous measures applied, the time
when the measures were last applied to such existing customers and the
adequacy of data, documents or information obtained.

Screening
6.37 A financial adviser shall screen a customer, natural persons appointed to act on
behalf of the customer, connected parties of the customer and beneficial owners
of the customer against relevant money laundering and terrorism financing
information sources, as well as lists and information provided by the Authority
or other relevant authorities in Singapore for the purposes of determining if there
are any money laundering or terrorism financing risks in relation to the customer.
6.38 A financial adviser shall screen the persons referred to in paragraph 6.37 -
(a) when, or as soon as reasonably practicable after, the financial adviser
establishes business relations with a customer;
(b) on a periodic basis after the financial adviser establishes business relations
with the customer; and
(c) when there are any changes or updates to -
(i) the lists and information provided by the Authority or other relevant
authorities in Singapore to the financial adviser; or
(ii) the natural persons appointed to act on behalf of a customer,
connected parties of a customer or beneficial owners of a customer.
6.39 The results of screening and assessment by the financial adviser shall be
documented.
7. SIMPLIFIED CUSTOMER DUE DILIGENCE
7.1 The following contents in regard to “Simple Customer Due Diligence” has been
7.1 Subject to paragraph 7.4, a financial adviser may perform simplified CDD
measures in relation to a customer, any natural person appointed to act on behalf
of the customer and any beneficial owner of the customer (other than any
beneficial owner that the financial adviser is exempted from making inquiries
about under paragraph 6.15) if it is satisfied that the risks of money laundering
and terrorism financing are low.
7.2 The assessment of low risks shall be supported by an adequate analysis of risks
by the financial adviser.
7.3 The simplified CDD measures shall be commensurate with the level of risk, based
on the risk factors identified by the financial adviser.
7.4 A financial adviser shall not perform simplified CDD measures -

(a) where a customer or any beneficial owner of the customer is from or in a
country or jurisdiction in relation to which the FATF has called for
countermeasures;
(b) where a customer or any beneficial owner of the customer is from or in a
country or jurisdiction known to have inadequate AML/CFT measures, as

determined by the financial adviser for itself or notified to financial advisers

generally by the Authority, or other foreign regulatory authorities; or
(c) where the financial adviser suspects that money laundering or terrorism
financing is involved.
7.5 Subject to paragraphs 7.2, 7.3 and 7.4, a financial adviser may perform
simplified CDD measures in relation to a customer that is a financial institution
set out in Appendix 6B of this chapter.
7.6 Where the financial adviser performs simplified CDD measures in relation to a
customer, any natural person appointed to act on behalf of the customer and
any beneficial owner of the customer, it shall document -
(a) the details of its risk assessment; and
(b) the nature of the simplified CDD measures.
7.7 For avoidance of doubt, the term “CDD measures” in paragraph 7 means the
measures required by paragraph 6.
8. ENHANCED CUSTOMER DUE DILIGENCE
8.1 The following contents in regard to “Enhanced Customer Due Diligence” has been
Politically Exposed Persons
8.1 For the purposes of paragraph 8 -
“close associate” means a natural person who is closely connected to a

politically exposed person, either socially or professionally;
“domestic politically exposed person” means a natural person who is or has been
entrusted domestically with prominent public functions;
“family member” means a parent, step-parent, child, step-child, adopted child,

spouse, sibling, step-sibling and adopted sibling of the politically exposed
person;
“foreign politically exposed person” means a natural person who is or has been
entrusted with prominent public functions in a foreign country;
“international organisation” means an entity established by formal political

agreements between member countries that have the status of international
treaties, whose existence is recognised by law in member countries and which
is not treated as a resident institutional unit of the country in which it is located;
“international organisation politically exposed person” means a natural person

who is or has been entrusted with prominent public functions in an international
organisation;

“politically exposed person” means a domestic politically exposed person,

foreign politically exposed person or international organisation politically
exposed person; and
“prominent public functions” includes the roles held by a head of state, a head
of government, government ministers, senior civil or public servants, senior
judicial or military officials, senior executives of state owned corporations, senior
political party officials, members of the legislature and senior management of
international organisations.
8.2 A financial adviser shall implement appropriate internal risk management

systems, policies, procedures and controls to determine if a customer, any
natural person appointed to act on behalf of the customer, any connected party
of the customer or any beneficial owner of the customer is a politically exposed
person, or a family member or close associate of a politically exposed person.
8.3 A financial adviser shall, in addition to performing CDD measures (specified in

paragraph 6), perform at least the following enhanced CDD measures where a
customer or any beneficial owner of the customer is determined by the financial
adviser to be a politically exposed person, or a family member or close associate
of a politically exposed person under paragraph 8.2:
(a) obtain approval from the financial adviser’s senior management to
establish or continue business relations with the customer;
(b) establish, by appropriate and reasonable means, the source of wealth and
source of funds of the customer and any beneficial owner of the customer;
and
(c) conduct, during the course of business relations with the customer,
enhanced monitoring of business relations with the customer. In particular,
the financial adviser shall increase the degree and nature of monitoring of
the business relations with and transactions for the customer, in order to
determine whether they appear unusual or suspicious.
8.4 A financial adviser may adopt a risk-based approach in determining whether to

perform enhanced CDD measures or the extent of enhanced CDD measures to
be performed for -
(a) domestic politically exposed persons, their family members and close
associates;
(b) international organisation politically exposed persons, their family members
and close associates; or
(c) politically exposed persons who have stepped down from their prominent
public functions, taking into consideration the level of influence such
persons may continue to exercise after stepping down from their prominent
public functions, their family members and close associates,
except in cases where their business relations or transactions with the financial
adviser present a higher risk for money laundering or terrorism financing.
Other Higher Risk Categories
8.5 A financial adviser shall implement appropriate internal risk management

systems, policies, procedures and controls to determine if business relations
with or transactions for any customer present a higher risk for money laundering
or terrorism financing.

8.6 For the purposes of paragraph 8.5, circumstances where a customer presents
or may present a higher risk for money laundering or terrorism financing include
but are not limited to the following:
(a) where a customer or any beneficial owner of the customer is from or in a
country or jurisdiction in relation to which the FATF has called for
countermeasures, the financial adviser shall treat any business relations
with or transactions for any such customer as presenting a higher risk for
money laundering or terrorism financing; and
(b) where a customer or any beneficial owner of the customer is from or in a
country or jurisdiction known to have inadequate AML/CFT measures, as
determined by the financial adviser for itself or notified to financial advisers
generally by the Authority or other foreign regulatory authorities, the
financial adviser shall assess whether any such customer presents a higher
risk for money laundering or terrorism financing.
8.7 A financial adviser shall perform the appropriate enhanced CDD measures in
paragraph 8.3 for business relations with or transactions for any customer -
(a) who the financial adviser determines under paragraph 8.5; or
(b) the Authority or other relevant authorities in Singapore notify to the
financial adviser,
as presenting a higher risk for money laundering or terrorism financing.
8.8 A financial adviser shall, in taking enhanced CDD measures to manage and
mitigate any higher risks that have been identified by the financial adviser or
notified to it by the Authority or other relevant authorities in Singapore, ensure
that the enhanced CDD measures take into account the requirements of any
laws, regulations or directions administered by the Authority, including but not
limited to the regulations or directions issued by the Authority under section
27A of the MAS Act.
9. RELIANCE ON THIRD PARTIES
9.1 The following contents in regard to “Reliance On Third Parties” has been entirely
9 RELIANCE ON THIRD PARTIES
9.1 For the purposes of paragraph 9, “third party” means -

(a) a financial institution set out in Appendix 2;
(b) a financial institution which is subject to and supervised by a foreign
authority for compliance with AML/CFT requirements consistent with
standards set by the FATF (other than a holder of a money-changer’s
licence or a holder of a remittance licence, or equivalent licences);
(c) in relation to a financial adviser incorporated in Singapore, its branches,
subsidiaries, the branches and subsidiaries of the parent entity, and other
related corporations; or

(d) in relation to a financial adviser incorporated outside Singapore, its head

office, its parent entity, the branches and subsidiaries of the head office,
the branches and subsidiaries of the parent entity, and other related
corporations.
9.2 Subject to paragraph 9.3, a financial adviser may rely on a third party to perform
the measures as required by paragraphs 6, 7 and 8 if the following requirements
are met:
(a) the financial adviser is satisfied that the third party it intends to rely upon
is subject to and supervised for compliance with AML/CFT requirements
consistent with standards set by the FATF, and has adequate AML/CFT
measures in place to comply with those requirements;
(b) the financial adviser takes appropriate steps to identify, assess and
understand the money laundering and terrorism financing risks particular
to the countries or jurisdictions that the third party operates in;
(c) the third party is not one which financial advisers have been specifically
precluded by the Authority from relying upon; and
(d) the third party is able and willing to provide, without delay, upon the
financial adviser’s request, any data, documents or information obtained
by the third party with respect to the measures applied on the financial
adviser’s customer, which the financial adviser would be required or would
want to obtain.
9.3 No financial adviser shall rely on a third party to conduct ongoing monitoring of
business relations with customers.
9.4 Where a financial adviser relies on a third party to perform the measures as
required by paragraphs 6, 7 and 8, it shall -
(a) document the basis for its satisfaction that the requirements in paragraph
9.2(a) and (b) have been met, except where the third party is a financial
institution set out in Appendix 2; and
(b) immediately obtain from the third party the CDD information which the
third party had obtained.
9.5 For the avoidance of doubt, notwithstanding the reliance upon a third party, the
financial adviser shall remain responsible for its AML/CFT obligations in this
Notice.
10. RECORD KEEPING
10.1 The following contents in regard to “Record Keeping” has been entirely extracted
10.1 A financial adviser shall, in relation to all data, documents and information that
the financial adviser is required to obtain or produce to meet the requirements
under this Notice, prepare, maintain and retain records of such data, documents
and information.

10.2 A financial adviser shall perform the measures as required by paragraph 10.1
such that -
(a) all requirements imposed by law (including this Notice) are met;
(b) any individual transaction undertaken by the financial adviser can be
reconstructed (including the amount and type of currency involved) so as
to provide, if necessary, evidence for prosecution of criminal activity;
(c) the Authority or other relevant authorities in Singapore and the internal and
external auditors of the financial adviser are able to review the financial
adviser's business relations, transactions, records and CDD information
and assess the level of compliance with this Notice; and
(d) the financial adviser can satisfy, within a reasonable time or any more
specific time period imposed by law or by the requesting authority, any
enquiry or order from the relevant authorities in Singapore for information.
10.3 Subject to paragraph 10.5 and any other requirements imposed by law, a
financial adviser shall, for the purposes of record retention under paragraphs
10.1 and 10.2, and when setting its record retention policies, comply with the
following record retention periods:
(a) for CDD information relating to the business relations, as well as account
files, business correspondence and results of any analysis undertaken, a
period of at least 5 years following the termination of such business
relations; and
(b) for data, documents and information relating to a transaction, including
any information needed to explain and reconstruct the transaction, a period
of at least 5 years following the completion of the transaction.
10.4 A financial adviser may retain data, documents and information as originals or
copies, in paper or electronic form or on microfilm, provided that they are
admissible as evidence in a Singapore court of law.
10.5 A financial adviser shall retain records of data, documents and information on
all its business relations with or transactions for a customer pertaining to a
matter which is under investigation or which has been the subject of an STR, in
accordance with any request or order from STRO or other relevant authorities in
Singapore.
11. PERSONAL DATA
11.1 The following contents in regard to “Personal Data” has been entirely extracted
11 PERSONAL DATA
11.1 For the purposes of paragraph 11, “individual” means a natural person, whether
living or deceased.
11.2 Subject to paragraph 11.3 and for the purposes of complying with this Notice,
a financial adviser shall not be required to provide an individual customer, an
individual beneficiary of a life insurance policy, an individual appointed to act on

behalf of a customer, an individual connected party of a customer or an

individual beneficial owner of a customer, with -
(a) any access to personal data about the individual that is in the possession
or under the control of the financial adviser;
(b) any information about the ways in which the personal data of the individual
under subparagraph (a) has been or may have been used or disclosed by
the financial adviser; and
(c) any right to correct an error or omission of the personal data about the
individual that is in the possession or under the control of the financial
adviser.
11.3 A financial adviser shall, as soon as reasonably practicable, upon the request of
an individual customer, an individual appointed to act on behalf of a customer,
an individual connected party of a customer or an individual beneficial owner of
a customer, provide the requesting individual with the right to -
(a) access the following types of personal data of that individual, that is in the
possession or under the control of the financial adviser:
(i) his full name, including any alias;
(ii) his unique identification number (such as an identity card number,
birth certificate number or passport number);
(iii) his residential address;
(iv) his date of birth;
(v) his nationality;
(vi) subject to section 21(2) and (3) read with the Fifth Schedule to the
Personal Data Protection Act 2012 (Act 26 of 2012), any other
personal data of the respective individual provided by that individual
to the financial adviser; and
(b) subject to section 22(7) read with the Sixth Schedule to the Personal Data
Protection Act, correct an error or omission in relation to the types of
personal data set out in subparagraphs (a)(i) to (vi), provided the financial
adviser is satisfied that there are reasonable grounds for such request.
11.4 For the purposes of complying with this Notice, a financial adviser may, whether
directly or through a third party, collect, use and disclose personal data of an
individual customer, an individual beneficiary of a life insurance policy, an
individual appointed to act on behalf of a customer, an individual connected
party of a customer or an individual beneficial owner of a customer, without the
respective individual’s consent.
12. SUSPICIOUS TRANSACTIONS REPORTING
12.1 The following contents in regard to “Suspicious Transactions Reporting” has been
12.1 A financial adviser shall keep in mind the provisions in the CDSA3 and in the
TSOFA that provide for the reporting to the authorities of transactions suspected

of being connected with money laundering or terrorism financing and implement

appropriate internal policies, procedures and controls for meeting its obligations
under the law, including the following:
(a) establish a single reference point within the organisation to whom all
employees, representatives and officers are instructed to promptly refer all
transactions suspected of being connected with money laundering or
terrorism financing, for possible referral to STRO via STRs; and
(b) keep records of all transactions referred to STRO, together with all internal
findings and analysis done in relation to them.
12.2 A financial adviser shall promptly submit reports on suspicious transactions

(including attempted transactions), regardless of the amount of the transaction,
to STRO, and extend a copy to the Authority for information.
12.3 A financial adviser shall consider if the circumstances are suspicious so as to

warrant the filing of an STR and document the basis for its determination,
including where -
(a) the financial adviser is for any reason unable to complete the measures as
required by paragraph 6, 7 and 8; or
(b) the customer is reluctant, unable or unwilling to provide any information
requested by the financial adviser, decides to withdraw a pending
application to establish business relations or a pending transaction, or to
terminate existing business relations.
12.4 Where a financial adviser forms a suspicion of money laundering or terrorism

financing, and reasonably believes that performing any of the measures as
required by paragraph 6, 7 or 8 will tip-off a customer, a natural person
appointed to act on behalf of the customer, a connected party of the customer
or a beneficial owner of the customer, the financial adviser may stop performing
those measures. The financial adviser shall document the basis for its
assessment and file an STR.
____________________
3
Please note in particular Section 48 of the CDSA on tipping-off.
13. INTERNAL POLICIES, COMPLIANCE, AUDIT AND TRAINING
13.1 The following contents in regard to “Internal Policies, Compliance, Audit And
Training” has been entirely extracted from the Notice No: FAA-N06 from the MAS
website:
13.1 A financial adviser shall develop and implement adequate internal policies,
procedures and controls, taking into consideration its money laundering and
terrorism financing risks and the size of its business, to help prevent money
laundering and terrorism financing and communicate these to its employees.
13.2 The policies, procedures and controls shall meet all requirements of this Notice.

Group Policy
13.3 For the purposes of paragraphs 13.4 to 13.9, a reference to financial adviser
means a financial adviser incorporated in Singapore.
13.4 A financial adviser shall develop a group policy on AML/CFT to meet all
requirements of this Notice and extend this to all of its branches and subsidiaries
in its financial group.
13.5 Where a financial adviser has a branch or subsidiary in a host country or

jurisdiction -
(a) in relation to which the FATF has called for countermeasures; or
(b) known to have inadequate AML/CFT measures, as determined by the
financial adviser for itself, notified to financial advisers generally by the
Authority, or other foreign regulatory authorities,
the financial adviser shall ensure that its group policy on AML/CFT is strictly
observed by the management of that branch or subsidiary.
13.6 Subject to the financial adviser putting in place adequate safeguards to protect
the confidentiality and use of any information that is shared, the financial adviser
shall develop and implement group policies and procedures for its branches and
subsidiaries within the financial group, to share information required for the
purposes of CDD and for money laundering and terrorism financing risk
management, to the extent permitted by the law of the countries or jurisdictions
that its branches and subsidiaries are in.
13.7 Such policies and procedures shall include the provision, to the financial
adviser’s group- level compliance, audit, and AML/CFT functions, of customer,
account, and transaction information from its branches and subsidiaries within
the financial group, when necessary for money laundering and terrorism
financing risk management purposes.
13.8 Where the AML/CFT requirements in the host country or jurisdiction differ from
those in Singapore, the financial adviser shall require that the overseas branch
or subsidiary apply the higher of the two standards, to the extent that the law
of the host country or jurisdiction so permits.
13.9 Where the law of the host country or jurisdiction conflicts with Singapore law
such that the overseas branch or subsidiary is unable to fully observe the higher
standard, the financial adviser shall apply additional appropriate measures to
manage the money laundering and terrorism financing risks, report this to the
Authority and comply with such further directions as may be given by the
Authority.
Compliance
13.10 A financial adviser shall develop appropriate compliance management

arrangements, including at least, the appointment of an AML/CFT compliance
officer at the management level.
13.11 A financial adviser shall ensure that the AML/CFT compliance officer, as well as
any other persons appointed to assist him, is suitably qualified and, has adequate
resources and timely access to all customer records and other relevant
information which he requires to discharge his functions.

Audit
13.12 A financial adviser shall maintain an audit function that is adequately resourced
and independent, and that is able to regularly assess the effectiveness of the
financial adviser’s internal policies, procedures and controls, and its compliance
with regulatory requirements.
Employee and Representative Hiring
13.13 A financial adviser shall have in place screening procedures to ensure high
standards when hiring employees, appointing officers and representatives.
Training
13.14 A financial adviser shall take all appropriate steps to ensure that its employees,
officers and representatives (whether in Singapore or elsewhere) are regularly
and appropriately trained on -
(a) AML/CFT laws and regulations, and in particular, CDD measures, detecting
and reporting of suspicious transactions;
(b) prevailing techniques, methods and trends in money laundering and
terrorism financing; and
(c) the financial adviser’s internal policies, procedures and controls on
AML/CFT and the roles and responsibilities of employees, officers and
representatives in combating money laundering and terrorism financing.
14. GUIDELINES TO MAS NOTICE NO: FAA-N06 ON PREVENTION OF MONEY

LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM
14.1 The following contents in regard to “Guidelines to MAS Notice No: FAA-N06 on
Prevention of Money Laundering and Countering the Financing of Terrorism” has
been entirely extracted from Guidelines to MAS Notice No: FAA-N06 from the
MAS website. These Guidelines should be read in conjunction with the MAS
Notice No: FAA-N06 from the MAS website.

GUIDELINES TO MAS NOTICE NO: FAA-N06 ON PREVENTION OF MONEY LAUNDERING

AND COUNTERING THE FINANCING OF TERRORISM
For ease of reference, the chapter numbers in these Guidelines mirror the corresponding
paragraph numbers in the Notice [MAS Notice FAA-N06 on Prevention of Money
Laundering and Countering The Financing of Terrorism - Financial Advisers] (e.g. Chapter
2 of the Guidelines provides guidance in relation to paragraph 2 of the Notice). Not every
paragraph in the Notice has a corresponding paragraph in these Guidelines and this
explains why not all chapter numbers are utilised in these Guidelines. Please refer to the
MAS website at www.mas.gov.sg for MAS Notice FAA-N06.
1 Introduction
1-1 These Guidelines provide guidance on the requirements in MAS Notice FAA
- N06 on Prevention of Money Laundering and Countering the Financing of
Terrorism - Financial Advisers (“the Notice”) to the following, except those
which only provide advice by issuing or promulgating research analyses or
investment product (collectively “financial advisers”):
(b) registered insurance brokers which are exempt under Section 23(1)(c) of
the Financial Advisers Act (Cap. 110), from holding a financial adviser’s
licence to act as a financial adviser in Singapore in respect of any financial
advisory service; and
(c) persons exempt, under Section 23(1)(f) of the Financial Advisers Act read
with Regulation 27(1)(d) of the Financial Advisers Regulations (Rg. 2), from
holding a financial adviser’s licence to act as a financial adviser in
Singapore in respect of any financial advisory service.
These Guidelines should be read in conjunction with the Notice.
1-2 The expressions used in these Guidelines have the same meanings as those
found in the Notice, except where expressly defined in these Guidelines or where
the context otherwise requires. For the purposes of these Guidelines, a reference
to “CDD measures” shall mean the measures as required by paragraphs 6, 7 and
8 of the Notice.
1-3 The degree of observance with these Guidelines by a financial adviser may have
an impact on the Authority's overall risk assessment of the financial adviser,
including the quality of its board and senior management oversight, governance,
internal controls and risk management.
1-4 Key Concepts
Money Laundering
1-4-1 Money laundering (“ML”) is a process intended to mask the benefits derived from
criminal conduct so that they appear to have originated from a legitimate source.
Singapore’s primary legislation to combat ML is the Corruption, Drug Trafficking
and Other Serious Crimes (Confiscation of Benefits) Act (Cap. 65A). A financial
adviser should refer to the Commercial Affairs Department’s (“CAD”) website
for more information.

1-4-2 Generally, the process of ML comprises three stages, namely:

(a) Placement - The physical or financial disposal of the benefits derived from
criminal conduct.
(b) Layering - The separation of these benefits from their original source by
creating layers of financial transactions designed to disguise the ultimate
source and transfer of these benefits.
(c) Integration - The provision of apparent legitimacy to the benefits derived

from criminal conduct. If the layering process succeeds, the integration
schemes place the laundered funds back into the economy so that they
re- enter the financial system appearing to be legitimate funds.
Terrorism Financing
1-4-3 Acts of terrorism seek to influence or compel governments into a particular
course of action or to intimidate the public or a section of the public. Financial
advisers are reminded of the definitions of terrorism set out in the Terrorism
(Suppression of Financing) Act (Cap. 325) (“TSOFA”) and the United Nations
(Anti-terrorism Measures) Regulations (Rg. 1).
1-4-4 Terrorists require funds to carry out acts of terrorism, and terrorism financing
(“TF”) is the act of providing these funds. Such funds may be derived
from criminal activities such as robbery, drug-trafficking, kidnapping, extortion,
fraud or hacking of online accounts. In such cases, there may be an element
of ML involved to disguise the source of funds.
1-4-5 However, terrorist acts and organisations may also be financed from legitimate
sources such as donations from charities, legitimate business operations, self-
funding by individuals etc. Coupled with the fact that TF need not always
involve large sums of money, TF can be hard to detect and financial advisers
should remain vigilant.
1-4-6 Singapore’s primary legislation to combat TF is the TSOFA. Financial advisers

may refer to the Inter-Ministry Committee on Terrorist Designation’s (“IMC-
TD”) website for more information.
The Three Lines of Defence

1-4-7 Each financial adviser is reminded that the ultimate responsibility and
accountability for ensuring compliance with anti-money laundering and
countering the financing of terrorism (“AML/CFT”) laws, regulations and notices
rests with its board of directors and senior management.
1-4-8 A financial adviser’s board of directors and senior management are responsible
for ensuring strong governance and sound AML/CFT risk management and
controls at the financial adviser. While certain responsibilities can be delegated
to senior AML/CFT employees, final accountability rests with the financial
adviser’s board of directors and senior management. A financial adviser should
ensure a strong compliance culture throughout its organisation, where the
board of directors and senior management set the right tone. The board of
directors and senior management should set a clear risk appetite and ensure
a compliance culture where financial crime is not acceptable.
1-4-9 Business units (e.g. front office, customer-facing functions) constitute the first
line of defence in charge of identifying, assessing and controlling the ML/TF
risks of their business. The second line of defence includes the AML/CFT
compliance function, as well as other support functions such as operations,

human resource or technology, which work together with the AML/CFT

compliance function to identify ML/TF risks when they process transactions
or applications or deploy systems or technology. The third line of defence is
the financial adviser’s internal audit function.
1-4-10 As part of the first line of defence, business units require robust controls to
detect illicit activities. They should be allocated sufficient resources to perform
this function effectively. The financial adviser’s policies, procedures and
controls on AML/CFT should be clearly specified in writing, and communicated
to all relevant employees, officers and representatives in the business units. The
financial adviser should adequately train employees, officers and
representatives to be aware of their obligations, and provide instructions as well
as guidance on how to ensure the financial adviser’s compliance with
prevailing AML/CFT laws, regulations and notices.
1-4-11 As the core of the second line of defence, the AML/CFT compliance function
is responsible for ongoing monitoring of the fulfilment of all AML/CFT duties by
the financial adviser. This implies sample testing and the review of exception
reports. The AML/CFT compliance function should alert the financial adviser’s
senior management or the board of directors if it believes that the employees or
officers in the line departments are failing or have failed to adequately address
ML/TF risks and concerns. Other support functions such as operations, human
resource or technology also play a role to help mitigate the ML/TF risks that
the financial adviser faces. The AML/CFT compliance function is typically the
contact point regarding all AML/CFT issues for domestic and foreign
authorities, including supervisory authorities, law enforcement authorities and
financial intelligence units.
1-4-12 As the third line of defence, the financial adviser’s internal audit function or
an equivalent function plays an important role in independently evaluating the
AML/CFT risk management framework and controls for purposes of reporting
to the audit committee of the financial adviser’s board of directors, or a
similar oversight body. This independent evaluation is achieved through the
internal audit or equivalent function’s periodic evaluations of the
effectiveness of the financial adviser’s compliance with prevailing AML/CFT
policies, procedures and controls. A financial adviser should establish policies
for periodic AML/CFT internal audits covering areas such as:
(a) the adequacy of the financial adviser’s AML/CFT policies, procedures and
controls in identifying ML/TF risks, addressing the identified risks and
complying with laws, regulations and notices;
(b) the effectiveness of the financial adviser’s employees, officers and
representatives in implementing the financial adviser’s policies, procedures
and controls;
(c) the effectiveness of the compliance oversight and quality control including
parameters and criteria for transaction alerts; and
(d) the effectiveness of the financial adviser’s training of relevant employees,
officers and representatives.
Governance
1-4-13 Strong board and senior management leadership is indispensable in the
oversight of the development and implementation of a sound AML/CFT risk
management framework across the financial adviser. The board of directors and
senior management should ensure that the financial adviser’s processes are
robust and there are adequate risk mitigating measures in place. The successful

implementation and effective operation of a risk-based approach to AML/CFT

depends on the financial adviser’s employees, officers and representatives
having a good understanding of the ML/TF risks inherent in the financial adviser’s
business.
1-4-14 A financial adviser’s board of directors and senior management should

understand the ML/TF risks the financial adviser is exposed to and how
the financial adviser’s AML/CFT control framework operates to mitigate those
risks. This should involve the board and senior management:
(a) receiving sufficient, frequent and objective information to form an accurate
picture of the ML/TF risks including emerging or new ML/TF risks, which
the financial adviser is exposed to through its activities and individual
business relations;
(b) receiving sufficient and objective information to assess whether the
financial adviser’s AML/CFT controls are adequate and effective;
(c) receiving information on legal and regulatory developments and the impact
these have on the financial adviser’s AML/CFT framework; and
(d) ensuring that processes are in place to escalate important decisions that
directly impact the ability of the financial adviser to address and control
ML/TF risks, especially where AML/CFT controls are assessed to be
inadequate or ineffective.
2 Notice Paragraph 2 – Definitions, Clarifications and Examples
Connected Party
2-1 The term “partnership” as it appears in the definition of “connected parties”
includes foreign partnerships. The term “manager” as it appears in limb (b) of
the definition of “connected parties” takes reference from Section 2(1) of the
Limited Liability Partnership Act (Cap. 163A) and Section 28 of the Limited
Partnership Act (Cap. 163B).
2-2 Examples of natural persons with executive authority in a company include

the Chairman and Chief Executive Officer. An example of a natural person with
executive authority in a partnership is the Managing Partner.
Customer
2-3 When performing Customer Due Diligence (“CDD”) measures in the scenarios
below, the following approaches may be adopted:
(a) Portfolio Managers

A financial adviser may encounter cases where, to its knowledge, the
customer is a manager of a portfolio of assets and who is operating
the account in that capacity. In such cases, the underlying investors of the
portfolio shall be beneficial owners within the meaning of the Notice.
However, the Authority recognises that a financial adviser may not be able
to perform CDD measures on the underlying investors. For instance, the
portfolio manager may be reluctant, for commercial reasons, to reveal
information on the underlying investors to the financial adviser. In such
circumstances, the financial adviser should evaluate the risks arising from
each case and determine the appropriate CDD measures to take. The
financial adviser may consider whether simplified CDD (“SCDD”) measures
could be applied to underlying investors under paragraph 7 of the Notice.

However, where the customer falls within paragraph 6.15 of the Notice
the financial adviser is exempted from making inquiries about the existence
of such underlying investors (i.e. beneficial owners). Therefore, the
financial adviser does not need to identify and verify such underlying
investors.
(b) Location of Relationship Management

Given the globalised nature of modern financial advisory business, it may
be the case that a financial adviser’s relationship and transactions with a
particular customer is managed by a financial adviser employee, officer
or representative based in one country or jurisdiction but the account
itself is held with an office in another country or jurisdiction for book-
keeping purposes. The Authority will generally look at the substance of
the relationship management as a whole. A financial adviser should perform
the applicable CDD measures if in substance, the relationship or account
is managed by an employee, officer or representative of the financial adviser
in Singapore even though the account is booked in another country or
jurisdiction. However, the financial adviser may rely on the CDD measures
carried out by its related entity (or in the case of a branch network, another
branch of the financial adviser) in accordance with paragraph 9 of the Notice.
Legal Arrangements
2-4 In relation to the definition of “legal arrangement” in the Notice, examples of
legal arrangements are trust, fiducie, treuhand and fideicomiso.
Legal Persons
2-5 In relation to the definition of “legal person” in the Notice, examples of
legal persons are companies, bodies corporate, foundations, anstalt,
partnerships, joint ventures or associations.
Officer
2-6 A reference to “officers” refers to a financial adviser’s board of directors
and senior management.
4 Notice Paragraph 4 – Assessing Risks and Applying a Risk-Based Approach
Countries or Jurisdictions of its Customers

4-1 In relation to a customer who is a natural person, this refers to the nationality
and place of domicile, business or work. For a customer who is a legal
person or arrangement, this refers to both the country or jurisdiction of
establishment, incorporation, or registration, and, if different, the country or
jurisdiction of operations as well.
Other Relevant Authorities in Singapore

4-2 Examples include law enforcement authorities (e.g. Singapore Police Force,
Commercial Affairs Department, Corrupt Practices Investigation Bureau) and
other government authorities (e.g. Attorney General’s Chambers, Ministry of
Home Affairs, Ministry of Finance, Ministry of Law).
Risk Assessment
4-3 In addition to assessing the ML/TF risks presented by an individual customer,
a financial adviser shall identify and assess ML/TF risks on an enterprise-
wide level. This shall include a consolidated assessment of the financial
adviser’s ML/TF risks that exist across all its business units, product lines
and delivery channels. The enterprise-wide ML/TF risk assessment relates to a

financial adviser in the following ways:

(a) A financial adviser incorporated in Singapore shall take into account
the ML/TF risks of its branches and subsidiaries, including those outside
Singapore, as part of its consolidated assessment of its enterprise-wide
ML/TF risks.
(b) The Singapore branch of a financial adviser incorporated outside Singapore
may refer to an enterprise-wide ML/TF risk assessment performed by the
head office, group or regional AML/CFT function, provided that the
assessment adequately reflects the ML/TF risks faced in the context of
its operations in Singapore.
4-4 The enterprise-wide ML/TF risk assessment is intended to enable the financial
adviser to better understand its overall vulnerability to ML/TF risks and forms
the basis for the financial adviser’s overall risk-based approach.
4-5 A financial adviser’s senior management shall approve its enterprise-wide ML/TF
risk assessment and relevant business units should give their full support and
active co-operation to the enterprise-wide ML/TF risk assessment.
4-6 In conducting an enterprise-wide risk assessment, the broad ML/TF risk factors
that the financial adviser should consider include:
(a) in relation to its customers:
(i) the target customer markets and segments;
(ii) the profile and number of customers identified as higher risk; and
(iii) the volumes and sizes of its customers’ transactions and funds
transfers, considering the usual activities and the risk profiles of its
customers;
(b) in relation to the countries or jurisdictions its customers are from or in,
or where the financial adviser has operations in:
(i) countries or jurisdictions the financial adviser is exposed to, either
through its own activities (including where its branches and subsidiaries
operate in) or the activities of its customers, especially countries or
jurisdictions with relatively higher levels of corruption, organised crime
or inadequate AML/CFT measures, as identified by the Financial
Action Task Force (“FATF”);
(ii) when assessing ML/TF risks of countries and jurisdictions, the
following criteria may be considered:
- evidence of adverse news or relevant public criticism of a country
or jurisdiction, including FATF public documents on High Risk and
Non- cooperative jurisdictions;
- independent and public assessment of the country’s or jurisdiction’s
overall AML/CFT regime such as FATF or FATF-Styled Regional
Bodies’ (“FSRBs”) Mutual Evaluation reports, the IMF / World Bank
Financial Sector Assessment Programme Reports or Reports on the
Observance of Standards and Codes for guidance on the country’s
or jurisdiction’s AML/CFT measures;
- the AML/CFT laws, regulations and standards of the country or
jurisdiction;
- implementation standards (including quality and effectiveness of
supervision) of the AML/CFT regime;
- whether the country or jurisdiction is a member of international

groups that only admit countries or jurisdictions which meet certain

AML/CFT benchmarks; and
- contextual factors, such as political stability, maturity and
sophistication of the regulatory and supervisory regime, level of
corruption, financial inclusion etc;
(c) in relation to the products, services, transactions and delivery channels of
the financial adviser:
(i) the nature, scale, diversity and complexity of the financial adviser’s
business activities;
(ii) the nature of products and services offered by the financial adviser; and
(iii) the delivery channels, including the extent to which the financial
adviser deals directly with the customer, relies on third parties to
perform CDD measures or uses technology.
4-7 The scale and scope of the enterprise-wide ML/TF risk assessment should be
commensurate with the nature and complexity of the financial adviser’s business.
4-8 As far as possible, a financial adviser’s enterprise-wide ML/TF risk assessment

should entail both qualitative and quantitative analyses to ensure that the
financial adviser accurately understands its exposure to ML/TF risks. A
quantitative analysis of the financial adviser’s exposure to ML/TF risks should
involve evaluating data on the financial adviser’s activities using the applicable
broad risk factors set out in paragraph 4-6.
4-9 As required by paragraph 4.1(d) of the Notice, a financial adviser shall take
into account all its existing products, services, transactions and delivery
channels offered as part of its enterprise-wide ML/TF risk assessment.
4-10 In assessing its overall ML/TF risks, a financial adviser should make its own
determination as to the risk weights to be given to the individual factor or
combination of factors.
Singapore’s National ML/TF Risk Assessment (“NRA”) Report

4-11 A financial adviser should incorporate the results of Singapore’s NRA Report into
its enterprise-wide ML/TF risk assessment process. When performing the
enterprise-wide risk assessment, a financial adviser should take into account any
financial or non-financial sector that has been identified as presenting higher
ML/TF risks. A financial adviser should consider the NRA results and enterprise-
wide ML/TF risk assessment results when assessing the ML/TF risks presented
by customers from specific sectors.
4-12 The NRA also identifies certain prevailing crime types as presenting higher ML/TF
risks. A financial adviser should consider these results when assessing its
enterprise-wide ML/TF risks of products, services, transactions and delivery
channels and whether it is more susceptible to the higher risk prevailing crime
types. Where appropriate, a financial adviser should also take these results into
account as part of the financial adviser’s ongoing monitoring of the conduct
of customers’ accounts and scrutiny of customers’ transactions.
Risk Mitigation
4-13 The nature and extent of AML/CFT risk management systems and controls
implemented should be commensurate with the ML/TF risks identified via
the financial adviser’s enterprise-wide ML/TF risk assessment. A financial
adviser shall put in place adequate policies, procedures and controls to

mitigate the ML/TF risks.
4-14 A financial adviser’s enterprise-wide ML/TF risk assessment serves to guide the
allocation of AML/CFT resources within the financial adviser.
4-15 A financial adviser should assess the effectiveness of its risk mitigation
procedures and controls by monitoring the following:
(a) the financial adviser’s ability to identify changes in a customer profile
(e.g. Politically Exposed Persons status) and transactional behaviour
observed in the course of its business;
(b) the potential for abuse of new business initiatives, products, practices
and services for ML/TF purposes;
(c) the compliance arrangements (through its internal audit or quality assurance
processes or external review);
(d) the balance between the use of technology-based or automated solutions
with that of manual or people-based processes, for AML/CFT risk
management purposes;
(e) the coordination between AML/CFT compliance and other functions of
the financial adviser;
(f) the adequacy of training provided to employees, officers and representatives,
and awareness of the employees, officers and representatives on AML/CFT
matters;
(g) the process of management reporting and escalation of pertinent AML/CFT
issues to the financial adviser’s senior management;
(h) the coordination between the financial adviser and regulatory or law
enforcement agencies; and
(i) the performance of third parties relied upon by the financial adviser to
carry out CDD measures.
Documentation
4-16 The documentation should include:
(a) the enterprise-wide ML/TF risk assessment by the financial adviser;
(b) details of the implementation of the AML/CFT risk management systems
and controls as guided by the enterprise-wide ML/TF risk assessment;
(c) the reports to senior management on the results of the enterprise-wide
ML/TF risk assessment and the implementation of the AML/CFT risk
management systems and controls; and
(d) details of the frequency of review of the enterprise-wide ML/TF risk
assessment.
4-17 A financial adviser should ensure that the enterprise-wide ML/TF risk assessment
and the risk assessment information are made available to the Authority upon
request.
Frequency of Review
4-18 To keep its enterprise-wide risk assessments up-to-date, a financial adviser
should review its risk assessment at least once every two years or when material
trigger events occur, whichever is earlier. Such material trigger events include,
but are not limited to, the acquisition of new customer segments or delivery
channels, or the launch of new products and services by the financial adviser.
The results of these reviews should be documented and approved by senior
management even if there are no significant changes to the financial adviser’s
enterprise-wide risk assessment.

5 Notice Paragraph 5 – New Products, Practices and Technologies
5-1 International developments of new technologies to provide financial services are

fast-changing and growing at an accelerated pace. A financial adviser shall keep
abreast of such new developments and the ML/TF risks associated with them.
5-2 A financial adviser’s assessment of ML/TF risks in relation to new products,

practices and technologies is separate from, and in addition to, the financial
adviser’s assessment of other risks such as credit risks, operational risks
or market risks. For example, in the assessment of ML/TF risks, a financial
adviser should pay attention to new products, practices and technologies that
deal with customer funds or the movement of such funds. These assessments
should be approved by senior management and heads of business, risk and
compliance.
5-3 An example of a “new delivery mechanism” as set out in paragraph 5 of

the Notice is online financial investments.
6 Notice Paragraph 6 – Customer Due Diligence
Notice Paragraph 6.2
6-1 Where There Are Reasonable Grounds for Suspicion prior to the Establishment of
Business Relations or Undertaking any Transaction
6-1-1 In arriving at its decision for each case, a financial adviser should take
into account the relevant facts, including information that may be made
available by the authorities and conduct a proper risk assessment.
6-2 When CDD is to be Performed
6-2-1 A financial adviser need not perform CDD measures where the financial adviser
solely prospects natural persons, legal persons or legal arrangements, without
the provision of financial advice.
Notice Paragraphs 6.4 to 6.17
6-3 CDD Measures under Paragraphs 6.4 to 6.17
6-3-1 When relying on documents, a financial adviser should be aware that the best
documents to use to verify the identity of the customer are those most difficult
to obtain illicitly or to counterfeit. These may include government-issued
identity cards or passports, reports from independent company registries,
published or audited annual reports and other reliable sources of information. The
rigour of the verification process should be commensurate with the customer’s
risk profile.
6-3-2 A financial adviser should exercise greater caution when dealing with an
unfamiliar or a new customer. Apart from obtaining the identification
information required by paragraph 6.5 of the Notice, a financial adviser should
(if not already obtained as part of its account opening process) also obtain
additional information on the customer’s background such as occupation,
employer’s name, nature of business, range of annual income, other related

accounts with the same financial adviser and whether the customer holds or
has held a prominent public function. Such additional identification information
enables a financial adviser to obtain better knowledge of its customer’s risk
profile, as well as the purpose and intended nature of the account.
6-4 Identification of Customer
6-4-1 With respect to paragraph 6.5(c) of the Notice, a P.O. box address should
only be used for jurisdictions where the residential address (e.g. street name or
house number) is not applicable or available in the local context.
6-4-2 A financial adviser should obtain a customer’s contact details such as personal,
office or work telephone numbers.
6-5 Identification of Customer that is a Legal Person or Legal Arrangement
6-5-1 Under paragraph 6 and paragraph 8 of the Notice, a financial adviser is required
to identify and screen all the connected parties of a customer. However, a
financial adviser may verify their identities using a risk-based approach1. A
financial adviser is reminded of its obligations under the Notice to identify
connected parties and remain apprised of any changes to connected parties.
6-5-2 Identification of connected parties may be done using publicly available sources
or databases such as company registries, annual reports or based on
substantiated information provided by the customers.
6-5-3 In relation to legal arrangements, a financial adviser shall perform CDD

measures on the customer by identifying the settlors, trustees, the protector
(if any), the beneficiaries (including every beneficiary that falls within a
designated characteristic or class) and any natural person exercising ultimate
ownership, ultimate control or ultimate effective control over the trust
(including through a chain of control or ownership) as required by paragraph
6.13 of the Notice.
6-6 Verification of Identity of Customer
6-6-1 Where the customer is a natural person, a financial adviser should obtain
identification documents that contain a clear photograph of that customer.
6-6-2 In verifying the identity of a customer, a financial adviser may obtain the
following documents:
a) Natural Persons:
(i) name, unique identification number, date of birth and nationality based
on a valid passport or a national identity card that bears a photograph
of the customer; and
------------------------------------
1
For the guidance on SCDD measures in relation to the identification and verification of the identities of
connected parties of a customer, financial advisers are to refer to paragraph 7-3 of these Guidelines.

(ii) residential address based on national identity card, recent utility or

telephone bill, bank statement or correspondence from a government
agency;
b) Legal Persons or Legal Arrangements:
(i) name, legal form, proof of existence and constitution based on
certificate of incorporation, certificate of good standing, partnership
agreement, trust deed, constitutional document, certificate of
registration or any other documentation from a reliable independent
source; and
(ii) powers that regulate and bind the legal person or arrangement based
on memorandum and articles of association, or board resolution
authorising the opening of an account and appointment of authorised
signatories.
6-6-3 Further guidance on verification of different types of customers (including

legal persons or legal arrangements) is set out in Appendix A.
6-6-4 In exceptional circumstances where the financial adviser is unable to retain

a copy of the documentation used to verify the customer’s identity, the
financial adviser should record the following:
(a) information that the original documentation had served to verify;
(b) title and description of the original documentation produced to the financial
adviser’s employee or officer for verification, including any particular or
unique features or condition of that documentation (e.g. whether it is
worn out, or damaged);
(c) reasons why a copy of that documentation could not be made; and
(d) name of the financial adviser’s employee or officer who carried out the
verification, a statement by that employee or officer certifying verification
of the information against the documentation and the date of the verification.
Reliability of Information and Documentation

6-6-5 Where a financial adviser obtains data, documents or information from the
customer or a third party, it should ensure that such data, documents or
information or document is current at the time they are provided to the financial
adviser.
6-6-6 Where the customer is unable to produce an original document, a financial

adviser may consider accepting a copy of the document:
(a) that is certified to be a true copy by a suitably qualified person (e.g. a
notary public, a lawyer or a certified public or professional accountant); or
(b) if a staff of the financial adviser independent of the customer relationship
has confirmed that he has sighted the original document.
6-6-7 Where a document is in a foreign language, appropriate steps should be taken by

a financial adviser to be reasonably satisfied that the document does in
fact provide evidence of the customer’s identity. The financial adviser should
ensure that any document that is critical for performance of any measures
required under the Notice is translated into English by a suitably qualified
translator. Alternatively, the financial adviser may rely on a translation of such
document by a staff of the financial adviser independent of the customer
relationship who is conversant in that foreign language. This is to allow all

employees, officers and representatives of the financial adviser involved in the

performance of any measures required under the Notice to understand the
contents of the documents, for effective determination and evaluation of ML/TF
risks associated with the customer.
6-6-8 The financial adviser should ensure that documents obtained for performing any
measures required under the Notice are clear and legible. This is important for
the establishment of a customer’s identity, particularly in situations where
business relations are established without face-to-face contact.
6-7 Identification and Verification of Identity of Natural Person Appointed to Act on

a Customer’s Behalf
6-7-1 Appropriate documentary evidence of a customer’s appointment of a natural

person to act on its behalf includes a board resolution or similar authorisation
documents.
6-7-2 Where there is a long list of natural persons appointed to act on behalf of
the customer (e.g. a list comprising more than 10 authorised signatories), the
financial adviser should verify at a minimum those natural persons who deal
directly with the financial adviser.
6-8 Identification and Verification of Identity of Beneficial Owner
6-8-1 A financial adviser should note that measures listed under paragraph 6.13(a)(i),
(ii) and (iii) as well as paragraph 6.13(b)(i) and (ii) of the Notice are not alternative
measures but are cascading measures with each to be used where the
immediately preceding measure has been applied but has not resulted in the
identification of a beneficial owner.
6-8-2 In relation to paragraph 6.13(a)(i) and (b)(i) of the Notice, when identifying
the natural person who ultimately owns the legal person or legal arrangement,
the shareholdings within the ownership structure of the legal person or legal
arrangement should be considered. It may be based on a threshold (e.g. any
person owning more than 25% of the legal person or legal arrangement, taking
into account any aggregated ownership for companies with cross-shareholdings).
6-8-3 A natural person who does not meet the shareholding threshold referred to
in paragraph 6-8-2 above but who controls the customer (e.g. through
exercising significant influence), is a beneficial owner under the Notice.
6-8-4 A financial adviser may also consider obtaining an undertaking or declaration

from the customer on the identity of, and the information relating to, the
beneficial owner. Notwithstanding the obtaining of such an undertaking or
declaration, the financial adviser remains responsible for complying with its
obligations under the Notice to take reasonable measures to verify the identity
of the beneficial owner by, for example, researching publicly available
information on the beneficial owner or arranging a face-to-face meeting with
the beneficial owner, to corroborate the undertaking or declaration provided by
the customer.

6-8-5 Where the customer is not a natural person and has a complex ownership
or control structure, a financial adviser should obtain enough information to
sufficiently understand if there are legitimate reasons for such an ownership
or control structure.
6-8-6 A financial adviser should take particular care when dealing with companies with
bearer shares, since the beneficial ownership is difficult to establish. For such
companies, a financial adviser should adopt procedures to establish the identities
of the beneficial owners of such shares and ensure that the financial adviser
is notified whenever there is a change of beneficial owner of such shares.
At a minimum, these procedures should require the financial adviser to
obtain an undertaking in writing from the beneficial owner of such bearer shares
stating that the financial adviser shall be immediately notified if the shares are
transferred to another natural person, legal person or legal arrangement.
Depending on its risk assessment of the customer, the financial adviser may
require that the bearer shares be held by a named custodian, with an
undertaking from the custodian that the financial adviser will be notified of
any changes to ownership of these shares or the named custodian.
6-8-7 For the purposes of paragraph 6.15 of the Notice, where the customer is a
legal person publicly listed on a stock exchange and subject to regulatory
disclosure requirements relating to adequate transparency in respect of its
beneficial owners (imposed through stock exchange rules, law or other
enforceable means), it is not necessary to identify and verify the identities of
the beneficial owners of the customer.
6-8-8 In determining if the foreign stock exchange imposes regulatory disclosure and
adequate transparency requirements, the financial adviser should put in place an
internal assessment process with clear criteria, taking into account, amongst
others, the country risk and the level of the country’s compliance with the
FATF standards.
6-8-9 Where the customer is a majority-owned subsidiary of a publicly listed legal

person, it is not necessary to identify and verify the identities of beneficial
owners of the customer. However, for such a customer, if there are other
non-publicly listed legal persons who own more than 25% of the customer or
who otherwise control the customer, the beneficial owners of such non-publicly
listed legal persons should be identified and verified.
6-8-10 Deleted with effect from 30 November 2015.
6-8-11 Deleted with effect from 30 November 2015.
6-8-12 Where a customer is one which falls within paragraph 6.15 of the Notice,
this does not in itself constitute an adequate analysis of low ML/TF risks
for the purpose of performing SCDD measures under paragraph 7 of the Notice.
6-9 Information on Purpose and Intended Nature of Business Relations
6-9-1 The measures taken by a financial adviser to understand the purpose and
intended nature of business relations should be commensurate with the
complexity of the customer’s business and risk profile. For higher risk customers,
a financial adviser should seek to understand upfront the expected account

activity (e.g. types of transactions likely to pass through, expected amount

for each transaction, names of counterparties) and consider, as part of
ongoing monitoring, whether the activity corresponds with the stated purpose
of the accounts. This will enable a more effective ongoing monitoring of the
customer’s business relations and transactions.
6-10 Ongoing Monitoring
6-10-1 Ongoing monitoring of business relations is a fundamental feature of an effective

AML/CFT risk management system. Ongoing monitoring should be conducted
in relation to all business relations, but the financial adviser may adjust the
extent and depth of monitoring of a customer according to the customer’s
ML/TF risk profile. The adequacy of monitoring systems and the factors leading
the financial adviser to adjust the level of monitoring should be reviewed
regularly for effectiveness in mitigating the financial adviser’s ML/TF risks.
6-10-2 Where there are indications that the risks associated with an existing business
relations may have increased, the financial adviser should request additional
information and conduct a review of the customer’s risk profile in order to
determine if additional measures are necessary.
6-10-3 A key part of ongoing monitoring includes maintaining relevant and up-to-
date CDD data, documents and information so that the financial adviser can
identify changes to the customer’s risk profile:
(a) for higher risk categories of customers, a financial adviser should obtain CDD
information (including updated copies of the customer’s passport or
identity documents if these have expired), as part of its periodic CDD review,
or upon the occurrence of a trigger event as deemed necessary by the
financial adviser, whichever is earlier; and
(b) for all other risk categories of customers, a financial adviser should obtain
updated CDD information upon the occurrence of a trigger event.
6-10-4 Examples of trigger events are when (i) a significant transaction takes place, (ii)
a material change occurs in the way the customer’s business relations are
managed, (iii) the financial adviser’s policies, procedures or standards relating
to the documentation of CDD information change substantially, and (iv) the
financial adviser becomes aware that it lacks sufficient information about the
customer concerned.
6-10-5 The frequency of CDD review may vary depending on each customer’s risk
profile. Higher risk customers should be subject to more frequent periodic review
(e.g. on an annual basis) to ensure that CDD information such as nationality,
passport details, certificate of incumbency, ownership and control information
that the financial adviser has previously obtained remains relevant and up-
to- date.
6-10-6 In determining what would constitute suspicious, complex, unusually large

or unusual pattern of transactions, a financial adviser should consider,
amongst others, international typologies and information obtained from law
enforcement and other authorities that may point to jurisdiction-specific
considerations. As part of ongoing monitoring, a financial adviser should pay
attention to transaction characteristics, such as:
(a) the nature of a transaction (e.g. abnormal size or frequency for that customer

or peer group);
(b) whether a series of transactions is conducted with the intent to avoid
reporting thresholds;
(c) the geographic destination or origin of a payment (e.g. to or from a higher
risk country); and
(d) the parties concerned (e.g. a request to make a payment to or from a person
on a sanctions list).
6-10-7 A financial adviser’s transaction monitoring processes or systems may vary

in scope or sophistication (e.g. using manual spreadsheets to automated and
complex systems). The degree of automation or sophistication of processes and
systems depends on the size and complexity of the financial adviser’s operations.
6-10-8 Nevertheless, the processes and systems used by the financial adviser should
provide its business units (e.g. front office) and compliance officers
(including employees and officers who are tasked with conducting
investigations) with timely information needed to identify, analyse and
effectively monitor customer accounts for ML/TF.
6-10-9 The transaction monitoring processes and systems should enable the financial
adviser to monitor multiple accounts of a customer holistically within a
business unit and across business units to identify any suspicious
transactions. In the event that a business unit discovers suspicious
transactions in a customers’ account, such information should be shared
across their business units (e.g. High Net-Worth Clients and Retail Business
units) to facilitate a holistic assessment of the ML/TF risks presented by the
customer. Therefore, financial advisers should have processes in place to
share such information across business units. In addition, financial advisers
should perform trend analyses of transactions to identify unusual or suspicious
transactions. Financial advisers should also monitor transactions with parties
in high risk countries or jurisdictions.
6-10-10 In addition, financial advisers should have processes in place to monitor related
customer accounts holistically within or across business units, so as to
better understand the risks associated with such customer groups, identify
potential ML/TF risks and report suspicious transactions.
6-10-11 The parameters and thresholds used by a financial adviser to identify

suspicious transactions should be properly documented and independently
validated to ensure that they are appropriate to its operations and context. A
financial adviser should periodically review the appropriateness of the
parameters and thresholds used in the monitoring process.
6-11 CDD Measure for Non-Face-to-Face Business Relations
6-11-1 A reference to “specific risks” in paragraph 6.26 of the Notice includes

risks arising from establishing business relations and undertaking
transactions according to instructions conveyed by customers over the
internet, post, fax or telephone. A financial adviser should note that
applications and transactions undertaken across the internet may pose
greater risks than other non-face-to- face business due to the following
factors:
(a) the ease of unauthorised access to the facility, across time zones and

location;
(b) the ease of making multiple fictitious applications without incurring extra
cost or the risk of detection;
(c) the absence of physical documents; and
(d) the speed of electronic transactions,
that may, taken together, amplify the ML/TF risks.
6-11-2 The measures taken by a financial adviser for verification of an identity in

respect of non-face-to-face business relations with or transactions for the
customer will depend on the nature and characteristics of the product or
service provided and the customer’s risk profile.
6-11-3 Where verification of identity is performed without face-to-face contact (e.g.

electronically), a financial adviser should apply additional checks to manage
the risk of impersonation. The additional checks may consist of robust
anti-fraud checks that the financial adviser routinely undertakes as part of its
existing procedures, which may include:
(a) telephone contact with the customer at a residential or business number
that can be verified independently;
(b) confirmation of the customer’s address through an exchange of
correspondence or other appropriate method;
(c) subject to the customer’s consent, telephone confirmation of the
customer’s employment status with his employer’s human resource
department at a listed business number of the employer;
(d) confirmation of the customer’s salary details by requiring the presentation
of recent bank statements, where applicable;
(e) provision of certified identification documents by lawyers or notaries public;
or
(f) requiring the customer to make an initial deposit into the account with
the financial adviser from funds held by the customer in an account with
a bank in Singapore.
6-12 Reliance by Acquiring Financial adviser on Measures Already Performed
6-12-1 When a financial adviser acquires the business of another financial institution
(“FI”), either in whole or in part, it is not necessary for the identity of all
existing customers to be verified again, provided that the requirements of
paragraph 6.29 of the Notice are met. A financial adviser shall maintain proper
records of its due diligence review performed on the acquired business.
6-12-2 Notwithstanding the reliance on identification and verification that has

already been performed, an acquiring financial adviser is responsible for its
obligations under the Notice.
6-12-3 When a financial adviser acquires the business of another FI, either in whole or
in part, the financial adviser is reminded that in addition to complying with
paragraph 6.29 of the Notice, it is also required to comply with ongoing
monitoring requirements set out in paragraphs 6.18 to 6.25 of the Notice.

6-13 Timing for Verification
6-13-1 With reference to paragraph 6.31 of the Notice, an example of when the
deferral of completion of the verification is essential in order not to interrupt
the normal conduct of business operations is securities trades, where timely
execution of trades is critical given changing market conditions. One way a
financial adviser could effectively manage the ML/TF risks arising from the
deferral of completion of verification is to put in place appropriate limits on the
financial services available to the customer (e.g. limits on the number, type
and value of transactions that can be effected) and institute closer monitoring
procedures, until the verification has been completed.
6-13-2 With reference to paragraph 6.32 of the Notice:

(a) the completion of verification should not exceed 30 business days after
the establishment of business relations;
(b) the financial adviser should suspend business relations with the
customer and refrain from carrying out further transactions (except to
return funds to their sources, to the extent that this is possible) if such
verification remains uncompleted 30 business days after the establishment
of business relations;
(c) the financial adviser should terminate business relations with the customer
if such verification remains uncompleted 120 business days after the
establishment of business relations; and
(d) the financial adviser should factor these time limitations in its policies,
procedures and controls.
6-14 Existing Customers
6-14-1 In relation to customer accounts which pre-date the coming into force of
the current Notice, the financial adviser should prioritise the remediation of
higher risk customers.
6-14-2 In taking into account any previous measures as referred to in paragraph 6.36
of the Notice, a financial adviser should consider whether:
(a) there has been any significant transaction undertaken, since the
measures were last performed, having regard to the manner in which
the account is ordinarily operated;
(b) there is a material change, since the measures were last performed, in
the way that business relations with the customer are conducted;
(c) it lacks adequate identification information on a customer; and
(d) there is a change in the ownership or control of the customer, or the
persons authorised to act on behalf of the customer in its business
relations with the financial adviser.

6-15 Screening
6-15-1 Screening is intended to be a preventive measure. A financial adviser is

reminded that all parties identified pursuant to the Notice are required to
be screened, irrespective of the risk profile of the customer.
6-15-2 Where screening results in a positive hit against sanctions lists, a financial
adviser is reminded of its obligations to freeze without delay and without
prior notice, the funds or other assets of designated persons and entities
that it has control over, so as to comply with applicable laws and regulations
in Singapore, including the TSOFA and MAS Regulations issued under Section
27A of the MAS Act (Cap. 186) (“MAS Act”) relating to sanctions and freezing
of assets of persons. Any such assets should be reported promptly to the
relevant authorities and a Suspicious Transaction Report (“STR”) should be
filed.
6-15-3 A financial adviser should put in place policies, procedures and controls
that clearly set out:
(a) the ML/TF information sources used by the financial adviser for
screening (including commercial databases used to identify adverse
information on individuals and entities, individuals and entities covered
under MAS Regulations issued pursuant to Section 27A of the MAS Act,
individuals and entities identified by other sources such as the financial
adviser’s head office or parent supervisory authority, lists and
information provided by the Authority and relevant authorities in
Singapore);
(b) the roles and responsibilities of the financial adviser’s employees involved
in the screening, reviewing and dismissing of alerts, maintaining and
updating of the various screening databases and escalating hits;
(c) the frequency of review of such policies, procedures and controls;
(d) the frequency of periodic screening;
(e) how apparent matches from screening are to be resolved by the
financial adviser’s employees, including the process for determining that
an apparent match is a positive hit and for dismissing an apparent match
as a false hit; and
(f) the steps to be taken by the financial adviser’s employees for reporting
positive hits to the financial adviser’s senior management and to the
relevant authorities.
6-15-4 The level of automation used in the screening process should take into
account the nature, size and risk profile of a financial adviser’s business.
A financial adviser should be aware of any shortcomings in its automated
screening systems. In particular, it is important to consider “fuzzy matching”
to identify non- exact matches. The financial adviser should ensure that
the fuzzy matching process is calibrated to the risk profile of its business. As
application of the fuzzy matching process is likely to result in the generation
of an increased number of apparent matches which have to be checked, the
financial adviser’s employees will need to have access to CDD information
to enable them to exercise their judgment in identifying true hits.
6-15-5 A financial adviser should be aware that performing screening after

business relations have been established could lead to a breach of relevant

laws and regulations in Singapore relating to sanctioned parties. When the
financial adviser becomes aware of such breaches, it should immediately take
the necessary actions and inform the relevant authorities.
6-15-6 In screening periodically as required by paragraph 6.38(c) of the Notice, a

financial adviser should pay particular attention to changes in customer
status (e.g. whether the customer has over time become subject to
prohibitions and sanctions) or customer risks (e.g. a connected party of the
customer, a beneficial owner of the customer or a natural person appointed
to act on behalf of the customer subsequently becomes a Politically Exposed
Person or presents higher ML/TF risks, or a customer subsequently becomes
a Politically Exposed Person or presents higher ML/TF risks) and assess
whether to subject the customer to the appropriate ML/TF risk mitigation
measures (e.g. enhanced CDD measures).
6-15-7 A financial adviser should ensure that the identification information of a

customer, a connected party of the customer, a natural person appointed to
act on behalf of the customer and a beneficial owner of the customer is
entered into the financial adviser’s customer database for periodic name
screening purposes. This will help the financial adviser to promptly identify
any existing customers who have subsequently become higher risk parties.
6-15-8 The financial adviser should ensure that it has adequate arrangements to
perform screening of the financial adviser’s customer database when there
are changes to the lists of sanctioned individuals and entities, covered by the
TSOFA, MAS Regulations issued under Section 27A of the MAS Act2 and
MAS Notice MA-N-EXT1/2012 (“Prohibition on Transactions with the Iranian
Government and with Iranian Financial Institutions”). The financial adviser
should implement “four-eye checks” on alerts from sanction reviews before
closing an alert, or conduct quality assurance checks on the closure of
such alerts on a sample basis.
7 Notice Paragraph 7 – Simplified Customer Due Diligence
7-1 Paragraph 7.1 of the Notice permits a financial adviser to adopt a risk-
based approach in assessing the necessary measures to be performed, and to
perform appropriate SCDD measures in cases where the financial adviser
is satisfied, upon analysis of risks, that the ML/TF risks are low.
7-2 Where a financial adviser applies SCDD measures, it is still required to

perform ongoing monitoring of business relations under the Notice.
7-3 Under SCDD, a financial adviser may adopt a risk-based approach in assessing
whether any measures should be performed for connected parties of the
customer.
----------------------------------
2
Please refer to the following link for the relevant MAS ML/TF Regulations -
http://www.mas.gov.sg/Regulations-and-Financial-Stability/Anti-Money-Laundering-Countering-The-
Financing-Of-Terrorism-And-Targeted-Financial-Sanctions/Targeted-Financial-Sanctions/MAS-
Regulations.aspx

7-4 Where a financial adviser is satisfied that the risks of money laundering
and terrorism financing are low, a financial adviser may perform SCDD
measures. Examples of possible SCDD measures include:
(a) reducing the frequency of updates of customer identification information;
(b) reducing the degree of ongoing monitoring and scrutiny of transactions,
based on a reasonable monetary threshold; and
(c) choosing another method to understand the purpose and intended nature
of business relations by inferring this from the type of transactions or
business relations to be established, instead of collecting information as to
the purpose and intended nature of business relations.
7-5 Subject to the requirement that a financial adviser’s assessment of low

ML/TF risks is supported by an adequate analysis of risks, examples of
potentially lower ML/TF risk situations include:
(a) Customer risk
(i) a Singapore Government entity;
(ii) entities listed on a stock exchange and subject to regulatory disclosure
requirements relating to adequate transparency in respect of beneficial
owners (imposed through stock exchange rules, law or other
enforceable means); and
(iii) an FI incorporated or established outside Singapore that is subject to
and supervised for compliance with AML/CFT requirements consistent
with standards set by the FATF.
(b) Product, service, transaction or delivery channel risk
(i) a pension, superannuation or similar scheme that provides retirement
benefits to employees, where contributions are made by way of
deduction from wages, and the scheme rules do not permit the
assignment of a member’s interest under the scheme; and
(ii) financial products or services that provide appropriately defined and
limited services to certain types of customers (e.g. to increase
customer access for financial inclusion purposes).
8 Notice Paragraph 8 – Enhanced Customer Due Diligence
8-1 Where the ML/TF risks are identified to be higher, a financial adviser shall
take enhanced CDD (“ECDD”) measures to mitigate and manage those risks.
8-2 Examples of potentially higher risk categories under paragraph 8.7 of the
Notice include:
(a) Customer risk
(i) customers from higher risk businesses / activities / sectors identified
in Singapore’s NRA, as well as other higher risk businesses / activities
/ sectors identified by the financial adviser;
(ii) the ownership structure of the legal person or arrangement appears
unusual or excessively complex given the nature of the legal person’s
or legal arrangement’s business;
(iii) legal persons or legal arrangements that are personal asset holding
vehicles;

(iv) the business relations is conducted under unusual circumstances (e.g.

significant unexplained geographic distance between the financial
adviser and the customer);
(v) companies that have nominee shareholders or shares in bearer form;
and
(vi) cash-intensive businesses.
(b) Country or geographic risk
(i) countries or jurisdictions the financial adviser is exposed to, either
through its own activities (including where its branches and
subsidiaries operate in) or the activities of its customers which have
relatively higher levels of corruption, organised crime or inadequate
AML/CFT measures, as identified by the FATF; and
(ii) countries identified by credible bodies (e.g. reputable international
bodies such as Transparency International) as having significant levels
of corruption, terrorism financing or other criminal activity.
(c) Product, service, transaction or delivery channel risk
(i) anonymous transactions (which may involve cash); and
(ii) frequent payments received from unknown or un-associated third
parties.
8-3 When considering the ML/TF risks presented by a country or jurisdiction, a

financial adviser should take into account, where appropriate, variations in
ML/TF risks across different regions or areas within a country.
8-4 Politically Exposed Persons (“PEPs”) Definitions
8-4-1 The definitions in paragraph 8.1 of the Notice are drawn from the FATF
Recommendations. The definition of PEPs is not intended to cover middle-
ranking or more junior individuals in the categories listed.
8-4-2 In the context of Singapore, domestic PEPs should include at least all
Government Ministers, Members of Parliament, Nominated Members of
Parliament and Non-Constituency Members of Parliament.
8-4-3 When determining whether a person is a “close associate” of a PEP, the

financial adviser may consider factors such as the level of influence the PEP
has on such a person or the extent of his exposure to the PEP. The financial
adviser may rely on information available from public sources and information
obtained through customer interaction.
8-4-4 With reference to paragraph 8.1 of the Notice, examples of an “international

organisation” include the United Nations and affiliated agencies such as
the International Maritime Organisation and the International Monetary Fund;
regional international organisations such as the Asian Development Bank,
Association of Southeast Asian Nations Secretariat, institutions of the
European Union, the Organisation for Security and Cooperation in Europe;
military international organisations such as the North Atlantic Treaty
Organisation; and economic organisations such as the World Trade
Organisation or the Asia-Pacific Economic Cooperation Secretariat.

8-4-5 Examples of persons who are or have been entrusted with prominent
functions by an international organisation are members of senior
management such as directors, deputy directors and members of the board
or equivalent functions. Other than relying on information from a customer,
the financial adviser may consider information from public sources in
determining whether a person has been or is entrusted with prominent
functions by an international organisation.
8-5 PEPs
8-5-1 If a financial adviser determines that any natural person appointed to act
on behalf of a customer or any connected party of a customer is a PEP, the
financial adviser should assess the ML/TF risks presented and consider
factors such as the level of influence that the PEP has on the customer.
Financial advisers should consider factors such as whether the PEP is able
to exercise substantial influence over the customer, to determine the overall
ML/TF risks presented by the customer. Where the customer presents higher
ML/TF risks, the financial adviser should apply ECDD measures on the
customer accordingly.
8-5-2 It is generally acceptable for a financial adviser to refer to commercially

available databases to identify PEPs. However, a financial adviser should
obtain from the customer details of his occupation and the name of his
employer. In addition, a financial adviser should consider other non-public
information that the financial adviser is aware of. A financial adviser shall
exercise sound judgment in identifying any PEP, having regard to the risks and
the circumstances.
8-5-3 In relation to paragraph 8.3(a) of the Notice, the approval shall be obtained
from senior management. Inputs should also be obtained from the financial
adviser’s AML/CFT compliance function.
8-5-4 In relation to paragraph 8.3(b) of the Notice, a financial adviser may refer
to information sources such as asset and income declarations, which some
jurisdictions expect certain senior public officials to file and which often
include information about an official’s source of wealth and current business
interests. A financial adviser should note that not all declarations are publicly
available. A financial adviser should also be aware that certain jurisdictions
impose restrictions on their PEPs’ ability to hold foreign investment
accounts, to hold other office or paid employment.
8-5-5 Source of wealth generally refers to the origin of the customer’s and
beneficial owner’s entire body of wealth (i.e. total assets). This relates to how
the customer and beneficial owner have acquired the wealth which is distinct
from identifying the assets that they own. Source of wealth information
should give an indication about the size of wealth the customer and beneficial
owner would be expected to have, and how the customer and beneficial owner
acquired the wealth. Although the financial adviser may not have specific
information about assets that are not processed by the financial adviser, it
may be possible to obtain general information from the customer,
commercial databases or other open sources. Examples of appropriate and
reasonable means of establishing source of wealth are information and
documents such as evidence of title, copies of trust deeds, audited accounts,

salary details, tax returns and bank statements.
8-5-6 Source of funds refers to the origin of the particular funds or other assets
which are the subject of the establishment of business relations (e.g. the
amounts being invested, deposited, or wired as part of the business relations).
In order to ensure that the funds are not proceeds of crime, the financial
adviser should not limit its source of funds inquiry to identifying the other FI
from which the funds have been transferred, but more importantly the activity
that generated the funds. The information obtained should be substantive and
facilitate the establishment of the provenance of the funds or reason for the
funds having been acquired. Examples of appropriate and reasonable means
of establishing source of funds are information such as salary payments or
sale proceeds.
8-5-7 Based on its risk assessment of the PEP, a financial adviser should consider
whether the information regarding source of wealth and source of funds
should be corroborated. In relation to paragraph 8.3(b) of the Notice, examples
of “appropriate and reasonable means” for establishing source of wealth or
source of funds are financial statements of the legal person or legal
arrangement owned or controlled by the PEP, site visits, a copy of the will (in
cases where the source of wealth or funds is an inheritance), and
conveyancing documents (in cases where the source of wealth or funds is a
sale of property).
8-5-8 In relation to paragraph 8.3 of the Notice, other ECDD measures that may
be performed include:
(a) requiring the first payment to be carried out through an account in the
customer’s name with another FI subject to similar or equivalent CDD
standards;
(b) using public sources of information (e.g. websites) to gain a better
understanding of the reputation of the customer or any beneficial owner
of a customer. Where the financial adviser finds information containing
allegations of wrongdoing by a customer or a beneficial owner of a
customer, the financial adviser should assess how this affects the level
of risk associated with the business relations; and
(c) commissioning external intelligence reports where it is not possible
for a financial adviser to easily obtain information through public sources
or where there are doubts about the reliability of public information.
8-5-9 In relation to paragraphs 8.4(a) and (b) of the Notice, where the financial
adviser assesses that the business relations or transactions with a domestic
PEP or an international organisation PEP do not present higher ML/TF risks
and that therefore ECDD measures need not be applied, the financial adviser
shall nevertheless apply measures under paragraph 6 of the Notice on the
customer. However, where changes in events, circumstances or other factors
lead to the financial adviser’s assessment that the business relations or
transactions with the customer present higher ML/TF risks, the financial
adviser should review its risk assessment and apply ECDD measures.
8-5-10 While domestic PEPs and international organisation PEPs may be subject to
a risk-based approach, it does not preclude such persons from presenting
the same ML/TF risks as a foreign PEP.
8-5-11 With reference to paragraph 8.4(c) of the Notice, while the time elapsed

since stepping down from a prominent public function is a relevant factor

to consider when determining the level of influence a PEP continues to
exercise, it should not be the sole determining factor. Other risk factors that
the financial adviser should consider are:
(a) the seniority of the position that the individual previously held when he
was a PEP; and
(b) whether the individual’s previous PEP position and current function are
linked in any way (e.g. whether the ex-PEP was appointed to his current
position or function by his successor, or whether the ex-PEP continues
to substantively exercise the same powers in his current position or
function).
8-6 Other Higher Risk Categories
8-6-1 In relation to paragraph 8.7 of the Notice, a financial adviser may refer to
the preceding paragraphs 8-5-8 of these Guidelines for further guidance on
the ECDD measures to be performed.
8-6-2 For customers highlighted in paragraph 8.6(a) of the Notice, the financial
adviser shall assess them as presenting higher ML/TF risks. For such
customers, the financial adviser shall ensure that the ECDD measures
performed are commensurate with the risks. For customers highlighted in
paragraph 8.6(b) of the Notice, a financial adviser shall assess whether any
such customer presents a higher risk for ML/TF and ensure that the measures
under paragraph 6 of the Notice, or ECDD measures where the financial
adviser assesses the customer to present a higher risk for ML/TF, performed
are commensurate with the risk.
8-6-3 With reference to paragraph 8.6(a) of the Notice, a financial adviser should
refer to the FATF Public Statement on High Risk and Non-Cooperative
Jurisdictions on which FATF has called for counter-measures3. FATF updates
this Public Statement on a periodic basis and financial advisers should regularly
refer to the FATF website for the latest updates4.
8-6-4 For higher risk business which inherently presents higher ML/TF risks, a
financial adviser should, regardless of the financial adviser’s internal risk
classification of the customer, refer to the sound practices highlighted in
the MAS Information Paper, “Guidance on Private Banking Controls”5. Such
practices include ensuring that:
(a) information obtained on the source of wealth of the customers and
beneficial owners should be independently corroborated against
documentary evidence or public information sources;
(b) parties screened should include operating companies and individual
benefactors contributing to the customer’s and beneficial owner’s
wealth / funds;
(c) the financial adviser conducts periodic reviews of such customers; and
---------------------------
3
http://www.fatf-gafi.org/topics/high-riskandnon-cooperativejurisdictions/
4
The link to the FATF website is as follows: http://www.fatf-gafi.org/
5
http://www.mas.gov.sg/news-and-publications/monographs-and-information-papers/2014/guidance-on-
private-banking-controls.aspx

(d) where the financial adviser is aware of customers having a common

beneficial owner or a customer having multiple accounts with the
financial adviser, the financial adviser should scrutinise transactions of
these customer accounts holistically to better identify suspicious,
complex, unusually large or unusual patterns of transactions, and
perform periodic reviews on a consolidated basis.
8-6-5 For the purposes of paragraph 8.8 of the Notice, regulations issued by the
Authority include the Regulations relating to the freezing of assets of persons
and sanctioning of persons.
8-6-6 With regard to tax and other serious crimes, as a preventive measure,
financial advisers are expected to reject a prospective customer where there
are reasonable grounds to suspect that the customer’s assets are the
proceeds of serious crimes, including wilful and fraudulent tax evasion.
Where there are grounds for suspicion in an existing customer relationship,
financial advisers should conduct enhanced monitoring and where
appropriate, discontinue the relationship. If the financial adviser is inclined
to retain the customer, approval shall be obtained from senior management
with the substantiating reasons properly documented, and the account
subjected to close monitoring and commensurate risk mitigation measures.
This requirement applies to serious foreign tax offences, even if the foreign
offence is in relation to the type of tax for which an equivalent obligation
does not exist in Singapore. Examples of tax crime related suspicious
transactions are set out in Appendix B of these Guidelines.
9 Notice Paragraph 9 – Reliance on Third Parties
9-1 Paragraph 9 does not apply to outsourcing. Third party reliance under
paragraph 9 of the Notice is different from an outsourcing arrangement or
agreement.
9-2 In a third party reliance scenario, the third party will typically have an
existing relationship with the customer that is independent of the relationship
to be formed by the customer with the relying financial adviser. The third
party will therefore perform the CDD measures on the customer according
to its own AML/CFT policies, procedures and controls.
9-3 In contrast to a third party reliance scenario, the outsourced service

provider performs the CDD measures (e.g. performs centralised transaction
monitoring functions) on behalf of the financial adviser, in accordance with
the financial adviser’s AML/CFT policies, procedures and standards, and is
subject to the financial adviser’s control measures to effectively implement
the financial adviser’s AML/CFT procedures.
9-4 The financial adviser may take a variety of measures, where applicable, to
satisfy the requirements in paragraphs 9.2(a) and 9.2(b) of the Notice,
including:
(a) referring to any independent and public assessment of the overall
AML/CFT regime to which the third party is subject, such as the
FATF’s or FSRBs’ Mutual Evaluation reports and the IMF / World Bank
Financial Sector Assessment Programme Reports / Reports on the
Observance of Standards and Codes;
(b) referring to any publicly available reports or material on the quality of

that third party’s compliance with applicable AML/CFT rules;

(c) obtaining professional advice as to the extent of AML/CFT obligations
to which the third party is subject to respect to the laws of the
jurisdiction in which the third party operates;
(d) examining the AML/CFT laws in the jurisdiction where the third party
operates and determining its comparability with the AML/CFT laws of
Singapore; and
(e) reviewing the policies and procedures of the third party.
9-5 The reference to “documents” in paragraph 9.2(d) of the Notice includes a

reference to the underlying CDD-related documents and records obtained by
the third party to support the CDD measures performed (e.g. copies of
identification information, CDD / Know Your Customer forms). Where these
documents and records are kept by the third party, the financial adviser should
obtain an undertaking from the third party to keep all underlying CDD-related
documents and records for at least five years following the termination of the
financial adviser’s business relations with the customer or the completion of
transactions undertaken.
9-6 Paragraph 9.3 of the Notice prohibits the financial adviser from relying on
the third party to carry out ongoing monitoring. Paragraph 9.3 of the Notice
on ongoing monitoring should be read with the ongoing monitoring
requirements in Part (VI) of paragraph 6 of the Notice.
9-7 For the avoidance of doubt, paragraph 9 of the Notice does not apply to
the outsourcing of the ongoing monitoring process by a financial adviser,
including to its parent entity, branches and subsidiaries. A financial adviser
may outsource the first-level review of the alerts from the transaction
monitoring systems, or sanctions reviews, to another party. However, the
financial adviser remains responsible for complying with ongoing monitoring
requirements under the Notice.
12 Notice Paragraph 12 – Suspicious Transactions Reporting
12-1 A financial adviser should ensure that the internal process for evaluating
whether a matter should be referred to the Suspicious Transaction Reporting
Office (“STRO”) via an STR is completed without delay and should not
exceed 15 business days of the case being referred by the relevant employee,
representative or officer, unless the circumstances are exceptional or
extraordinary.
12-2 A financial adviser should note that an STR filed with STRO would also meet
the reporting obligations under the TSOFA.
12-3 Examples of suspicious transactions are set out in Appendix B of these

Guidelines. These examples are not intended to be exhaustive and are
only examples of the most basic ways in which money may be laundered or
used for TF purposes. Identification of suspicious transactions should prompt
further enquiries and where necessary, investigations into the source of
funds. A financial adviser should also consider filing an STR if there is any
adverse news on its customers in relation to financial crimes. A transaction
or activity may not be suspicious at the time, but if suspicions are raised later,
an obligation to report then arises.

12-4 Once suspicion has been raised in relation to a customer, business relations
with a customer or any transaction undertaken in the course of business
relations for that customer, in addition to reporting the suspicious activity, a
financial adviser should ensure that appropriate action is taken to adequately
mitigate the risk of the financial adviser being used for ML/TF activities.
This may include strengthening its AML/CFT processes. This may also
include a review of either the risk classification of the customer, or the
business relations with the customer. Appropriate action should be taken,
including escalating the issue to the appropriate decision making level,
taking into account any other relevant factors, such as cooperation with law
enforcement agencies.
12-5 STR reporting templates are available on CAD’s website 6 . However,

financial advisers are strongly encouraged to use the online system provided
by STRO to lodge STRs. In the event that the financial adviser is of the
view that STRO should be informed on an urgent basis, particularly where a
transaction is known to be part of an ongoing investigation by the relevant
authorities, the financial adviser should give initial notification to STRO by
telephone or email and follow up with such other means of reporting as STRO
may direct.
12-6 A financial adviser should document all transactions that have been brought
to the attention of its AML/CFT compliance function, including transactions
that are not reported to STRO. To ensure that there is proper accountability
for decisions made, the basis for not submitting STRs for any suspicious
transactions escalated by its employees, officers and representatives should be
properly substantiated and documented.
12-7 Financial advisers are reminded to read paragraph 12.4 of the Notice
together with paragraphs 6.33 and 6.34 of the Notice. Where a financial
adviser stops performing CDD measures as permitted under paragraph 12.4
and is as a result unable to complete CDD measures (as specified under
paragraph 6.34), the financial adviser is reminded that it shall not
commence or continue business relations with that customer or undertake
any transaction for that customer.
13 Notice Paragraph 13 – Internal Policies, Compliance, Audit and Training
13-1 As internal policies and procedures serve to guide employees, officers and
representatives in ensuring compliance with AML/CFT laws and regulations,
it is important that a financial adviser update its policies and procedures in
a timely manner, to take into account new operational, legal and regulatory
developments and emerging or new ML/TF risks.
--------------------------------
6
The website address as at 24 April 2015: http://www.cad.gov.sg/aml-cft/suspicious-transaction-reporting-
office/suspicious-transaction-reporting.

13-2 Group Policy
13-2-1 For the avoidance of doubt, Singapore branches of financial advisers

incorporated outside Singapore need not comply with paragraphs 13.4 to 13.9
of the Notice. Paragraphs 13.3 to 13.9 of the Notice are intended to be applied
by a financial adviser incorporated in Singapore to its branches and
subsidiaries, but not to its parent entity and the financial adviser’s other related
corporations.
13-2-2 In relation to paragraph 13.6 of the Notice, examples of the types of

information that should be shared within the financial group for risk
management purposes are positive name matches arising from screening
performed against ML/TF information sources, a list of customers who have
been exited by the financial adviser, its branches and subsidiaries based on
suspicion of ML/TF and names of parties on whom STRs have been filed.
Such information should be shared by a branch or subsidiary of a financial
adviser incorporated in Singapore with the financial adviser’s group level
compliance, audit, and AML/CFT functions (whether in or outside Singapore),
for risk management purposes.
13-3 Compliance
13-3-1 A financial adviser should ensure that the AML/CFT compliance officer has
the necessary seniority and authority within the organisation to effectively
perform his responsibilities.
13-3-2 The responsibilities of the AML/CFT compliance officer should include:

(a) carrying out, or overseeing the carrying out of, ongoing monitoring of
business relations and sample review of accounts for compliance with
the Notice and these Guidelines;
(b) promoting compliance with the Notice and these Guidelines, as well as
MAS Regulations issued under Section 27A of the MAS Act, and taking
overall charge of all AML/CFT matters within the organisation;
(c) informing employees, officers and representatives promptly of regulatory
changes;
(d) ensuring a speedy and appropriate reaction to any matter in which ML/TF
is suspected;
(e) reporting, or overseeing the reporting of, suspicious transactions;
(f) advising and training employees, officers and representatives on
developing and implementing internal policies, procedures and controls on
AML/CFT;
(g) reporting to senior management on the outcome of reviews of the
financial adviser’s compliance with the Notice and these Guidelines, as
well as MAS Regulations issued under Section 27A of the MAS Act and
risk assessment procedures; and
(h) reporting regularly on key AML/CFT risk management and control
issues, and any necessary remedial actions, arising from audit, inspection,
and compliance reviews, to the financial adviser’s senior management, and

in the case of locally incorporated financial advisers, to the board of

directors, at least annually and as and when needed.
13-3-3 The business interests of a financial adviser should not interfere with the
effective discharge of the above-mentioned responsibilities of the AML/CFT
compliance officer, and potential conflicts of interest should be avoided. To
enable unbiased judgments and facilitate impartial advice to management, the
AML/CFT compliance officer should, for example, be distinct from the
internal audit and business line functions. Where any conflicts between
business lines and the responsibilities of the AML/CFT compliance officer
arise, procedures should be in place to ensure that AML/CFT concerns are
objectively considered and addressed at the appropriate level of the financial
adviser’s management.
13-4 Audit
13-4-1 A financial adviser’s AML/CFT framework should be subject to periodic

audits, (including sample testing). Such audits should be performed not just on
individual business functions but also on an organisation-wide basis. Auditors
should assess the effectiveness of measures taken to prevent ML/TF. This
would include, among others:
(a) determining the adequacy of the financial adviser’s AML/CFT policies,
procedures and controls, ML/TF risk assessment framework and
application of risk-based approach;
(b) reviewing the content and frequency of AML/CFT training programmes,
and the extent of employees’, officers’ and representatives’ compliance
with established AML/CFT policies and procedures; and
(c) assessing whether instances of non-compliance are reported to senior
management on a timely basis.
13-4-2 The frequency and extent of the audit should be commensurate with the
ML/TF risks presented and the size and complexity of the financial adviser’s
business.
13-5 Employee and Representative Hiring
13-5-1 The screening procedures applied when a financial adviser in Singapore

hires employees and appoints representatives and officers should include:
(a) background checks with past employers;
(b) screening against ML/TF information sources; and
(c) bankruptcy searches.
13-5-2 In addition, a financial adviser should conduct credit history checks, on a

risk- based approach, when hiring employees and appointing officers and
representatives.

13-6 Training
13-6-1 As stated in paragraph 13.14 of the Notice, it is a financial adviser’s

responsibility to provide adequate training for its employees, officers and
representatives so that they are adequately trained to implement its
AML/CFT policies and procedures. The scope and frequency of training should
be tailored to the specific risks faced by the financial adviser and pitched
according to the job functions, responsibilities and experience of the
employees, officers and representatives. New employees, officers and
representatives should be required to attend training as soon as possible after
being hired or appointed.
13-6-2 Apart from the initial training, a financial adviser should also provide
refresher training at least once every two years, or more regularly as
appropriate, to ensure that employees, officers and representatives are
reminded of their responsibilities and are kept informed of new developments
related to ML/TF. A financial adviser should maintain the training records for
audit purposes.
13-6-3 A financial adviser should monitor the effectiveness of the training provided
to its employees and representatives. This may be achieved by:
(a) testing employees’ and representatives’ understanding of the financial
adviser’s policies and procedures to combat ML/TF, their obligations
under relevant laws and regulations, and their ability to recognise
suspicious transactions;
(b) monitoring employees’ and representatives’ compliance with the financial
adviser’s AML/CFT policies, procedures and controls as well as the
quality and quantity of internal reports so that further training needs may
be identified and appropriate action taken; and
(c) monitoring attendance and following-up with employees and
representatives who miss such trainings without reasonable cause.
I Other Key Topics - Guidance to Financial Advisers on Proliferation Financing
I-1 Overview
I-1-1 MAS issues Regulations under Section 27A of the MAS Act in order to
discharge or facilitate the discharge of any obligation binding on Singapore
by virtue of a United Nations Security Council Resolution (“UNSCR”)7. These
Regulations apply to all FIs (including financial advisers) regulated by MAS
and generally impose financial sanctions on designated persons.
I-1-2 Specifically, a UNSCR may designate certain individuals and entities involved
in the proliferation of weapons of mass destruction and its financing. The
relevant information and full listings of persons designated by UNSCRs can
be found on the UN website8.
----------------------------------------
7
Please refer to the MAS website for a full listing of Regulations issued by MAS pursuant to the United
Nations Security Council Resolutions
8
Please see : http://www.un.org/sc/committees/1718 and http://www.un.org/sc/committees/1737.

I-1-3 MAS has given effect to UNSCRs as listed by the FATF Recommendations
(2012) to be relevant to combating proliferation financing by issuing
Regulations. Examples of such Regulations are the MAS (Sanctions and
Freezing of Assets of Persons – Iran) Regulations 2007, MAS (Freezing of
Assets of Persons – Democratic People’s Republic of Korea) Regulations 2009
and MAS (Sanctions – Democratic People’s Republic of Korea) Regulations
2009.
I-1-4 A financial adviser should rely on its CDD measures (including screening
measures) under the Notice to detect and prevent proliferation financing
activities and transactions.
I-1-5 A financial adviser should also ensure compliance with legal instruments
issued by MAS relating to proliferation financing risks. An example is the MAS’
Notice on Prohibition on Transactions with the Iranian Government and with
Iranian Financial Institutions.
I-2 CDD and Internal Controls
I-2-1 It is important to ensure that name screening by a financial adviser, as

required under the Notice, is performed against the latest UN listings as they
are updated from time to time. A financial adviser should have in place
policies, procedures and controls to continuously monitor the listings and
take necessary follow-up action within a reasonable period of time, as
required under the applicable laws and regulations.
I-2-2 A financial adviser should also have policies and procedures to detect
attempts by its employees, officers or representatives to circumvent the
applicable laws and regulations (including MAS Regulations), such as:
(a) omitting, deleting or altering information in payment messages for the
purpose of avoiding detection of that information by the financial adviser
itself or other FIs involved in the payment process;
(b) structuring transactions with the purpose of concealing the involvement
of designated persons.
I-2-3 A financial adviser should have policies and procedures to prevent such
attempts, and take appropriate measures against such employees, officers
and representatives.
I-3 Obligation of Financial Adviser to Freeze without Delay
I-3-1 A financial adviser is reminded of its obligations under the MAS Regulations
issued under Section 27A of the MAS Act 9 to immediately freeze any
funds, financial assets or economic resources owned or controlled, directly or
indirectly, by designated persons that the financial adviser has in its
possession, custody or control. The financial adviser should also file an STR in
such cases.
------------------------------
9
Please refer to the following link for the relevant MAS ML/TF Regulations-
http://www.mas.gov.sg/Regulations-and-Financial-Stability/Anti-Money-Laundering-Countering-The-
Financing-Of-Terrorism-And-Targeted-Financial-Sanctions/Targeted-Financial-Sanctions/MAS-
Regulations.aspx

I-4 Potential Indicators of Proliferation Financing
I-4-1 A financial adviser should develop indicators that would alert it to customers
and transactions (actual or proposed) that are possibly associated with
proliferation financing-related activities, including indicators such as whether:
(a) the customer is vague and resistant to providing additional information
when asked;
(b) the customer’s activity does not match its business profile or the end-
user information does not match the end-user’s business profile;
(c) the transaction involves designated persons;
(d) the transaction involves higher risk countries or jurisdictions which are
known to be involved in proliferation of weapons of mass destruction or
proliferation financing activities;
(e) the transaction involves other FIs with known deficiencies in AML/CFT
controls or controls for combating proliferation financing;
(f) the transaction involves possible shell companies (e.g. companies that
do not have a high level of capitalisation or display other shell company
indicators).
I-5 Other Sources of Guidance on Proliferation Financing
I-5-1 The FATF has also provided guidance on measures to combat proliferation
financing and a financial adviser may wish to refer to the FATF website for
additional information.
II Useful Links
Financial Action Task Force (FATF): http://www.fatf-gafi.org/

International Organization of Securities Commissions: http://www.iosco.org

APPENDIX A – Examples of CDD Information for Customers (including Legal Persons

/Arrangements)
Customer Type Examples of CDD Information

Sole proprietorships • Full registered business name
• Business address or principal place of business
• Information about the purpose and intended nature of
the business relations with the financial adviser
• Names of all natural persons who act on behalf of the
sole proprietor (where applicable)
• Name of the sole proprietor
• Information about the source of funds
• A report of the customer’s visit to the customer’s place
of business, where the financial adviser assesses it as
necessary
• Structure of the sole proprietor’s business (where
applicable)
• Records in an independent company registry or evidence
of business registration
Partnerships and • Full Name of entity
unincorporated bodies • Business address or principal place of business
entity
• Names of all connected parties
• Names of all beneficial owners
• A report of the financial adviser’s visit to customer’s
place of business, where the financial adviser assesses
it as necessary
• Ownership and control structure
• Records in an independent company registry
• Partnership deed
• The customer’s membership with a relevant professional
body
• Any association the entity may have with other
countries or jurisdictions (e.g. the location of the
entity’s headquarters, operating facilities, branches,
subsidiaries)


Companies • Full name of entity
• Business address or principal place of business
entity
• A report of the financial adviser’s visit to customer’s
place of business, where the financial adviser assesses
it as necessary
• Records in an independent company registry
• Certificate of incumbency, certificate of good standing,
share register, as appropriate
• Memorandum and Articles of Association
• Certificate of Incorporation
• Board resolution authorising the opening of the
customer’s account with the financial adviser
• Any association the entity may have with other
countries or jurisdictions (e.g. the location of the
entity’s headquarters, operating facilities, branches,
subsidiaries)
Public sector bodies, • Full name of entity

government, state- • Nature of entity (e.g. overseas government, treaty
owned companies and organisation)
supranationals (other • Business address or principal place of business
than sovereign wealth • Information about the purpose and intended nature of
funds) the business relations with the financial adviser
• Name of the home state authority and nature of its
relationship with its home state authority
entity
• A report of the customer’s place of business, where
the financial adviser assesses it as necessary
• Board resolution authorising the opening of the
customer’s account with the financial adviser


Clubs, Societies and • Full name of entity
Charities • Business address or principal place of business
business relations with the financial adviser
• Information about the nature of the entity’s activities
and objectives
• Names of all trustees (or equivalent)
Names of all natural persons who act on behalf of the
entity
• A report of the financial adviser’s visit to the
customer’s place of business, where the financial
adviser assesses it as necessary
• Constitutional document
• Certificate of registration
• Committee/Board resolution authorising the opening of
the customer’s account with the financial adviser
• Records in a relevant and independent registry in the
country of establishment

Trusts and Other • Full name of entity
Similar Arrangements • Business address or principal place of business
(e.g. Foundations, • Information about the nature, purpose and objectives of
Fiducie, Treuhand and the entity (e.g. discretionary, testamentary)
Fideicomiso) • Names of all natural persons who act on behalf of the
entity
• A report of the financial adviser’s visit to the
customer’s place of business, where the financial
adviser assesses it as necessary
business relations with the financial adviser
• Records in a relevant and independent registry in the
country or jurisdiction of constitution
• Country or jurisdiction of constitution
• Trust deed
• Names of the settlors/trustees/beneficiaries or any
person who has power over the disposition of any
property that is subject to the trust
• Declaration of trusts
• Deed of retirement and appointment of trustees (where
applicable)

APPENDIX B – Examples of Suspicious Transactions
B-1 General Comments
B-1-1 The list of situations given below is intended to highlight some basic ways
in which money may be laundered or used for TF purposes. While each
individual situation may not be sufficient to suggest that ML or TF is taking
place, a combination of such situations may be indicative of a suspicious
transaction. The list is intended solely as an aid, and must not be applied as
a routine instrument in place of common sense.
B-1-2 The list is not exhaustive and may be updated due to changing
circumstances and new methods of laundering money or financing terrorism.
Financial advisers are to refer to STRO’s website for the latest list of red flags10.
B-1-3 A customer’s declarations regarding the background of such transactions

should be checked for plausibility. Not every explanation offered by the
customer can be accepted without scrutiny.
B-1-4 It is reasonable to suspect any customer who is reluctant to provide

normal information and documents required routinely by the financial adviser
in the course of the business relations. Financial advisers should pay attention
to customers who provide minimal, false or misleading information, or when
applying to open an account, provide information that is difficult or expensive
for the financial adviser to verify.
B-2 Transactions Which Do Not Make Economic Sense
i) Transactions that cannot be reconciled with the usual activities of

the customer, for example switching from investing predominantly in blue
chip stocks to penny stocks.
ii) A customer relationship with the financial adviser where the customer
carries out frequent large transactions which are beyond the customer’s
apparent financial means (for example, customer requests for a single
premium contract with large sum assured).
iii) Transactions where the nature, size or frequency appears unusual, for
example, a sudden request for a significant purchase of a lump sum
contract from an existing customer whose current contracts are small and
of regular payment only.
iv) Transactions in which funds are received by way of a third party cheque,
especially where there is no apparent connection between the third party
and the customer.
v) Transactions which, without plausible reason, result in the intensive use

of what was previously a relatively inactive account.
vi) Request by a customer for financial advisory services where the source of
funds is unclear or not consistent with the customer’s apparent standing.
-------------------------------
10
The website address as at 24 April 2015: http://www.cad.gov.sg/aml-cft/suspicious-transaction-
reporting- office/suspicious-transaction-reporting.

B-3 Transactions Involving Large Amounts of Cash
i) Payments made via large amounts of cash. A guideline to what

constitutes a large or substantial cash amount would be a cash amount
exceeding S$20,000 (or its equivalent in any currency).
ii) Customers whose funds contain counterfeit notes or forged instruments.
iii) Transactions in which funds are received from or paid to a customer’s

bank account in a financial haven, or in foreign currency, especially
when such transactions are not consistent with the customer’s transaction
history.
iv) Overpayment of premiums with a request to refund the excess to a

third party or to a bank account held in a different country.
B-4 Transactions Involving Accounts of the Customer with the Financial Advisers
i) Paying in large third party cheques endorsed in favour of the customer in

settlement for investment services rendered, or for other financial services
provided.
ii) Substantial increases in deposits of cash or negotiable instruments by a

professional firm or company, using customer accounts or in-house
company or trust accounts, especially if the deposits are promptly
transferred between other customer company and trust accounts.
iii) An account operated in the name of an offshore company with structured

movement of funds.
iv) Transfers of funds from various third parties into an account, which
is inconsistent with the nature of the customer’s business.
B-5 Transactions Involving Transfers Abroad
i) A customer introduced by an overseas FI, affiliate or other customer,

where both the customer and introducer are based in countries or
jurisdictions associated with (a) the production, processing or marketing
of narcotics or other illegal drugs; or (b) other criminal conduct.
ii) Large and regular injection of funds that cannot be clearly identified as
bona fide transactions, from and to countries associated with a) the
production, processing or marketing of narcotics or other illegal drugs or
b) other criminal conduct.
B-6 Transactions Involving Unidentified Parties
i) A customer, who is a natural person, for whom verification of identity

proves unusually difficult and who is reluctant to provide details.
ii) A customer, which is a corporation, where there are difficulties and delays
in obtaining copies of the financial accounts or other documents of
incorporation.
iii) Assignment of a policy to unidentified third parties and for which no

plausible reasons could be ascertained.
iv) A number of policies taken out by the same customer for low premiums,
each purchased with cash and then cancelled with return of premiums to
a third party.
B-7 Tax Crimes Related Transactions
i) Negative tax-related reports from the media or credible information

sources.
ii) Unconvincing or unclear purpose or motivation for having accounts
opened in Singapore
iii) Reinvestment of funds back into the original country or jurisdiction after
being transferred to another country or jurisdiction, often a tax haven
with poor track record on CDD or record keeping requirements.
iv) Life insurance solutions used for illegal purposes.
v) Accounts managed by external asset managers who may not be
adequately regulated and supervised.
vi) Purchase or sale of large amounts of precious metals by a customer which
is not in line with his business or background.
vii) Purchase of bank cheques on a large scale by an interim customer.
B-8 Other Types of Transactions
i) Account activity is not commensurate with the customer’s known

profile (e.g. age, occupation, income).
ii) Transactions with countries or entities that are reported to be associated
with terrorism activities or with persons that have been designated
as terrorists.
iii) Frequent changes to the address or authorised signatories.
iv) A large amount of funds is received and immediately used as collateral for
investment.
v) When a young person (aged about 17-26) opens an account and either
withdraws or transfers the funds within a short period, which could be
an indication of terrorism financing.
vi) When a person receives funds from a religious or charitable organisation
and utilises the funds for purchase of assets or transfers out the funds
within a relatively short period.
vii) The customer uses intermediaries which are not subject to adequate
AML/CFT laws.
viii) Transactions that are suspected to be in violation of another country’s
foreign exchange laws and regulations.

Appendix 6A
1. Financial institutions that are licensed, approved, registered (including a fund

management company registered under paragraph 5(1)(i) of the Second Schedule to
the Securities and Futures (Licensing and Conduct of Business) Regulations (Rg. 10))
or regulated by the Authority but do not include:
(a) holders of stored value facilities, as defined in Section 2(1) of the Payment
Systems (Oversight) Act (Cap. 222A); and
(b) a person (other than a person referred to in paragraphs 2 and 3) who is exempted
from licensing, approval or regulation by the Authority under any Act
administrated by the Authority, including a private trust company exempted from
licensing under Section 15 of the Trust Companies Act (Cap. 336) read with
Regulation 4 of the Trust Companies (Exemption) Regulations (Rg. 1).
2. Persons exempted under Section 23(1)(f) of the Financial Advisers Act (Cap. 110)
read with Regulation 27(1)(d) of the Financial Advisers Regulations (Rg. 2).
3. Persons exempted under Section 99(1)(h) of the Securities and Futures Act (Cap.
289) read with Paragraph 7(1)(b) of the Second Schedule to the Securities and
Futures (Licensing and Conduct of Business) Regulations.
Note: For the avoidance of doubt, the financial institutions set out in Appendix 6B fall
within Appendix 6A.
Copyright reserved by Singapore College of Insurance Limited 291

Appendix 6B
1. Banks in Singapore licensed under Section 7 of the Banking Act (Cap.19).
2. Merchant banks approved under Section 28 of the Monetary Authority of Singapore

Act (Cap. 186).
3. Finance companies licensed under Section 6 of the Finance Companies Act (Cap.
108).
4. Financial advisers licensed under Section 6 of the Financial Advisers Act (Cap. 110)
except those which only provide advice by issuing or promulgating research analyses
or research reports, whether in electronic, print or other form, concerning any
investment product.
5. Holders of a capital markets services licence under Section 82 of the Securities and
6. Fund management companies registered under Paragraph 5(1)(i) of the Second

Schedule to the Securities and Futures (Licensing and Conduct of Business)
Regulations (Rg. 10).
7. Persons exempted under Section 23(1)(f) of the Financial Advisers Act read with
Regulation 27(1)(d) of the Financial Advisers Regulations (Rg. 2) except those which
only provide advice by issuing or promulgating research analyses or research reports,
whether in electronic, print or other form, concerning any investment product.
8. Persons exempted under Section 99(1)(h) of the Securities and Futures Act read with
Paragraph 7(1)(b) of the Second Schedule to the Securities and Futures (Licensing
and Conduct of Business) Regulations.
9. Approved trustees approved under Section 289 of the Securities and Futures Act.
10. Trust companies licensed under Section 5 of the Trust Companies Act (Cap. 336).
11. Direct life insurers licensed under Section 8 of the Insurance Act (Cap. 142).
12. Insurance brokers registered under the Insurance Act which, by virtue of such
registration, are exempted under Section 23(1)(c) of the Financial Advisers Act except
those which only provide advice by issuing or promulgating research analyses or
investment product.
292 Copyright reserved by Singapore College of Insurance Limited

7. MAS Notices – Part III [Notice Nos: FAA-N17; FAA-N18; FAA-N19; FAA-N21]
CHAPTER 7
MAS NOTICES – PART III [NOTICE NOS: FAA-N17; FAA-N18; FAA-N19 & FAA-
N21]
CHAPTER OUTLINE
1. Introduction
2. Notice On Reporting Suspicious Activities & Incidents Of Fraud [Notice No: FAA-N17]
3. Notice On Technology Risk Management [Notice No: FAA-N18]
4. Notice on the Distribution of Direct Purchase Insurance Products [“DPI”] [Notice No:
FAA-N19]
5. Notice On Cyber Hygiene [Notice No: FAA-N21]
Appendix 7A – Notice On Reporting Suspicious Activities & Incidents Of Fraud [Notice
No: FAA-N17]
Appendix 7B – Notice On Technology Risk Management [Notice No: FAA-N18]
Appendix 7C – Notice on the Distribution of Direct Purchase Insurance Products [“DPI”]
Appendix 7D – Notice On Cyber Hygiene [Notice No: FAA-N21]
KEY LEARNING POINTS

- Notice On Reporting Suspicious Activities & Incidents Of Fraud [Notice No: FAA-
N17]
- Notice On Technology Risk Management [Notice No: FAA-N18]
- Notice on the Distribution of Direct Purchase Insurance Products [“DPI”] [Notice
No: FAA-N19]
- Notice On Cyber Hygiene [Notice No: FAA-N21]

1. INTRODUCTION
1.1 In this chapter, we will cover four of the MAS Notices relating to Reporting
Suspicious Activities & Incidents Of Fraud, Distribution of Direct Purchase
Insurance Products and Cyber Hygiene.
2. NOTICE ON REPORTING SUSPICIOUS ACTIVITIES & INCIDENTS OF FRAUD

[NOTICE NO: FAA-N17]
2.1 This Notice is issued pursuant to section 58 of the Financial Advisers Act (Cap.
110) (the “Act”) and applies to all licensed financial advisers.
2.2 The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same meanings as in
the Act.
2.3 This notice applies to all licensed financial advisers.
2.4 It sets out the requirements for financial advisers to lodge Form F1 with MAS
within 5 working days after the discovery of any suspicious activity or incident
of fraud that will affect their safety, soundness or reputation. Please refer to
Appendix 7A for Notice No: FAA-N17 which has been entirely extracted from
MAS website.
3. NOTICE ON TECHNOLOGY RISK MANAGEMENT [NOTICE NO: FAA-N18]
110) (the “Act”) and applies to all licensed financial advisers (“licensee”).
3.2 This notice applies to all licensed financial advisers and exempt financial advisers.
3.3 It sets out requirements for a high level of reliability, availability and recoverability
of critical IT systems and for financial advisers to implement IT controls to protect
customer information from unauthorised access or disclosure. Please refer to
Appendix 7B for Notice No: FAA-N18 which has been entirely extracted from
MAS website.
4. NOTICE ON THE DISTRIBUTION OF DIRECT PURCHASE INSURANCE PRODUCTS

[“DPI”] [NOTICE NO: FAA-N19]
110) [the “Act”].
4.2 This Notice sets out the requirements for the distribution of DPI.
4.3 This notice applies to licensed financial advisers, exempt financial advisers and
their representatives.

4.4 It covers the following requirements in respect of the distribution of direct

purchase insurance products:
▪ Implementation of safeguards.
▪ Provision of product information.
▪ Provision of avenues to address general queries.
▪ Implementation of internal policies and processes.
▪ Roles and responsibilities of a representative or customer service officer.
4.5 Please refer to Appendix 7C for Notice No: FAA-N19 which has been entirely
extracted from MAS website.
5. NOTICE ON CYBER HYGIENE [NOTICE NO: FAA-N21]
5.1 This Notice is issued pursuant to section 58(1) of the Financial Advisers Act (Cap.
110) (the “Act”) and applies to all licensed financial advisers (each a “relevant
entity”).
5.2 This notice applies to all licensed financial advisers.
5.3 It sets out cyber security requirements on securing administrative accounts,

applying security patching, establishing baseline security standards, deploying
network security devices, implementing anti-malware measures and
strengthening user authentication. Please refer to Appendix 7D for Notice No:
FAA-N21 which has been entirely extracted from MAS website.

Appendix 7A
Notice No : FAA-N17
Issue Date : 23 January 2013
NOTICE ON REPORTING SUSPICIOUS ACTIVITIES & INCIDENTS OF FRAUD
Introduction
1.1 This Notice is issued pursuant to section 58 of the Financial Advisers Act
Cap.110) (the “Act”) and applies to all licensed financial advisers.
1.2 The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same meanings as in the Act.
Report on Suspicious Activities and Incidents of Fraud
2 A licensed financial adviser shall lodge with the Monetary Authority of Singapore
(the “Authority”), a report in the form, manner and within such time as specified in
paragraph 4, upon discovery of any suspicious activities and incidents of fraud where
such activities or incidents are material to the safety, soundness or reputation of the
licensed financial adviser.
3 For the avoidance of doubt, a licensed financial adviser shall still file suspicious
transaction reports to the Suspicious Transaction Reporting Office, Commercial Affairs
Department of the Singapore Police Force, as required under the various Prevention Of
Money Laundering and Countering The Financing Of Terrorism Notices applicable to it. For
incidents of fraud, a licensed financial adviser should lodge a police report and submit to
the Authority a copy of the report. Where the licensed financial adviser has not lodged a
police report, it should notify the Authority of the reasons for its decision.
4 For the purpose of paragraph 2, the report shall be in Form F1 (“Suspicious

Activities & Incidents of Fraud Report”) and shall be lodged not later than 5 working days
after the discovery of the activity or incident by the licensed financial adviser.
5 Where a licensed financial adviser has not reported to the Authority a suspicious
activity or incident of fraud, it shall document the reasons for its decision.
6 This Notice shall take immediate effect.

SUSPICIOUS ACTIVITIES AND INCIDENTS OF FRAUD REPORT
This report is being submitted by post, fax or encrypted email under:
Notice No. FAA-N17 under the Financial Advisers Act (Cap. 110)
1 Identification details of reporting financial institution
Reporting FI:
Reporting Officer: (CEO /
Principal Officer / Director)
Designation:
Contact Officer: (if different
from Reporting Officer)
Designation:
Telephone number:
Email address:
2 Details of suspicious activity / incident of fraud that is material to the safety, soundness
or reputation of the financial institution
Please include information on:

a. date and circumstances under which the activity / incident was discovered;
b. the number of clients/users/customers affected by the incident;
c. details of persons involved in the suspicious activity;
d. the monetary amounts involved; and e. any other relevant information.
________________________________________________________________
________________________________________________________________
__________________________________________________________________
Where available, please attach supporting documents such as written and signed
3 Reasons why the activity / incident is material to the safety, soundness or reputation of
the financial institution.
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
4 Reasons for not lodging a police report on the incident of fraud.
________________________________________________________________
________________________________________________________________
________________________________________________________________
________________________________________________________________
Signature: _________________________
Date: __________________________

Appendix 7B
Notice No : MAS FAA-N18

Issue Date : 21 JUNE 2013
NOTICE ON TECHNOLOGY RISK MANAGEMENT
Introduction
110) (the “Act”) and applies to all licensed financial advisers (“licensee”).
Definitions
2 For the purpose of this Notice—
“critical system” in relation to a licensee, means a system, the failure of which will
cause significant disruption to the operations of the licensee or materially impact the
licensee’s service to its customers, such as a system which—
(a) processes transactions that are time critical; or

(b) provides essential services to customers;
“IT security incident” means an event that involves a security breach, such as hacking
of, intrusion into, or denial of service attack on, a critical system, or a system which
compromises the security, integrity or confidentiality of customer information;
“relevant incident” means a system malfunction or IT security incident, which has a

severe and widespread impact on the licensee’s operations or materially impacts the
licensee’s service to its customers;
“system” means any hardware, software, network, or other information technology

(“IT”) component which is part of an IT infrastructure;
“system malfunction” means a failure of any of the licensee’s critical systems.
3 Any expression used in this Notice shall, except where expressly defined in this
Notice or where the context requires, have the same meaning as in the Act.
Technology Risk Management
4 A licensee shall put in place a framework and process to identify critical systems.
5 A licensee shall make all reasonable effort to maintain high availability for critical
systems. The licensee shall ensure that the maximum unscheduled downtime for each
critical system that affects the licensee’s operations or service to its customers does
not exceed a total of 4 hours within any period of 12 months.
6 A licensee shall establish a recovery time objective (“RTO”) of not more than 4
hours for each critical system. The RTO is the duration of time, from the point of
disruption, within which a system must be restored. The licensee shall validate and
document at least once every 12 months, how it performs its system recovery testing
and when the RTO is validated during the system recovery testing.

7 A licensee shall notify the Authority as soon as possible, but not later than 1
hour, upon the discovery of a relevant incident.
8 A licensee shall submit a root cause and impact analysis report to the Authority,
within 14 days or such longer period as the Authority may allow, from the discovery of
the relevant incident. The report shall contain—
(a) an executive summary of the relevant incident;

(b) an analysis of the root cause which triggered the relevant incident;
(c) a description of the impact of the relevant incident on the licensee’s— i.
compliance with laws and regulations applicable to the licensee; ii. operations;
and iii. service to its customers; and
(d) a description of the remedial measures taken to address the root cause and
consequences of the relevant incident.
9 A licensee shall implement IT controls to protect customer information from

unauthorised access or disclosure.
Effective Date
10 This Notice shall take effect on 1 July 2014.

Appendix 7C
Notice No : MAS FAA-N19

Issue Date : 30 March 2015
Last revised on: 30 August 2019*

(Refer to endnote for history of amendments)
Notice on the Distribution of Direct Purchase Insurance Products [“DPI”]
110) [the “Act”].
2 Subject to paragraph 3, this Notice applies to –
(a) a licensed financial adviser;

(b) an exempt financial adviser; or
(c) a representative of a financial adviser,
when providing either or both of the following types of financial advisory service which
are solely incidental to the distribution of DPI:
(i) advising others, either directly or through any publication or writing (other
than by issuing or promulgating any research analysis or research report),
concerning any DPI;
(ii) arranging any contract of insurance in respect of any DPI.
3 This Notice does not apply to a financial adviser or representative of the financial
adviser, which or who is exempt from section 27 of the Act under regulations 32B(1)
and (3) or regulation 34(1) (read with regulation 34(2)), of the Financial Advisers
Regulations [“FAR”] in respect of the activity or activities for which the financial adviser
or the representative of the financial adviser is exempt under those respective
provisions.
4 This Notice sets out the requirements for the distribution of DPI.
Definitions
5 For the purposes of this Notice –
“conditional acceptance”, in relation to a DPI, refers to any additional conditions

or exclusions imposed by a direct life insurer in respect of the application for a
DPI;
“customer service officer” means a customer service officer who is exempt from
section 23B(1) of the Act under regulation 40A;
“direct life insurer” means a direct insurer licensed under section 8 of the
Insurance Act (Cap. 142) to carry on life business;

“exempt financial adviser” means a person who is exempt from holding a

financial adviser’s licence under section 23(1)(a), (b), (c), (d) or (e) of the Act;

adviser;
“online direct channel”, in relation to a DPI, means any web portal in the Internet
created, developed, maintained or operated by a financial adviser or a direct life
insurer, on which a client may purchase the DPI;
“representative” means an appointed or provisional representative; and
“Tier 1 life insurer” means a financial adviser which is a registered insurer that
meets the conditions under regulation 4 of the Insurance (Corporate
Governance) Regulations 2013.
6 The expressions used in this Notice, except where expressly defined in this
Notice or where the context otherwise requires, have the same respective meanings as
in the Act and the FAR.
Representatives of Financial Advisers
7 Unless otherwise specified, a representative must comply with every

requirement imposed on a financial adviser in this Notice when acting on the financial
adviser’s behalf in relation to the distribution of DPI.
Requirements on Distribution of DPI
8 Subject to paragraph 9, a financial adviser must only distribute DPI through its
representative or customer service officer, or by way of an online direct channel.
9 A financial adviser referred to in paragraph 8 who is a Tier 1 life insurer must,

at the minimum, distribute DPI either through its representative or customer service
officer at the Tier 1 life insurer’s principal place of business or branch office (not being
a mobile branch). For the avoidance of doubt, the financial adviser may distribute DPI
by way of an online direct channel provided that the financial adviser also distributes
DPI in accordance with this paragraph 9.
10 A financial adviser must comply with the following requirements in respect of

the financial adviser’s distribution of DPI through its representatives or customer service
officers, or by way of an online direct channel:
(a) Implementation of safeguards: Where a client intends to purchase a DPI, the

financial adviser must implement the safeguards as set out in paragraphs 11
to 14 so as to ensure that the client has carried out steps to check that –
(i) he is able to afford the premiums payable in respect of the DPI;

(ii) the DPI adequately covers his protection needs; and
(iii) he has not misunderstood any features or terms and conditions of
the DPI;

(b) Provision of product information: The financial adviser must put in place
procedures to ensure that information relating to the DPI is provided to a
client who intends to purchase DPI, as set out in paragraphs 13 and 14;
(c) Provision of avenues to address general queries, complaints and claims: The
financial adviser must set up appropriate avenues to address general queries
from its clients relating to DPI, including but not limited to phone or email
helplines. The financial adviser must also provide information, such as
contact details, information on the claims process and the process for filing
complaints;
(d) Implementation of internal policies and processes: The financial adviser must
implement the internal policies and processes as set out in paragraph 15 in
relation to the financial adviser’s distribution of DPI, including adequate
control systems and procedures to ensure that the financial adviser’s
customer service officer does not provide any financial advisory service
which is not solely incidental to the distribution of DPI; and
(e) Roles and responsibilities of a representative or customer service officer:

The financial adviser must set out in its policies and procedures the
respective roles and scope of responsibilities of a representative and a
customer service officer, who distributes DPI on behalf of the financial
adviser, as set out in paragraphs 16 and 17.
Implementation of safeguards
11 A financial adviser must, in respect of every DPI it distributes, make available to

a client such tools and calculators which enable the client to calculate –
(a) the coverage of the DPI, so that the client may determine if the DPI
adequately covers his protection needs; and
(b) the total amount of premiums payable for the DPI, so that the client may
determine if he is able to afford the DPI based on his income and financial
commitments.
12 Where a financial adviser distributes DPI through its representative or customer

service officer who distributes DPI on the financial adviser’s behalf to a client, the
financial adviser must require the representative or customer service officer to –
(a) provide the information relating to the DPI as set out in paragraph 13 of this
Notice, to the client;
(b) highlight to the client:

(i) any disclaimer, exclusion or warning of the DPI; and
(ii) any conditions, including special exclusions or additional premium loadings
imposed by a direct life insurer as a result of underwriting the policy
application, and where the client intends to purchase a DPI with a
conditional acceptance, obtain the client’s acknowledgement that he has
read and understood such conditions before purchasing the DPI;

(c) prompt the client to make the necessary declarations in the proposal form,
including declarations on any pre-existing medical conditions and whether the
client has any other existing life policies;
(d) highlight any portion of the proposal form for the purchase of the DPI which,
to the knowledge of the representative or customer service officer, has been
incorrectly completed, to the client, and ensure that all mandatory fields in the
proposal form for the purchase of the DPI have been completed; and
(e) before the client completes his application for the DPI, alert the client in a
clear, simple and concise manner that:
(i) the DPI is not a savings account or deposit;

(ii) the client may not get back the premiums paid (partially or in full) if the
client terminates or surrenders the policy early;
(iii) some benefits of the DPI are not guaranteed (only if applicable); and
(iv)there is a 14-day free-look period.
For the purpose of sub-paragraph (b)(ii), examples of conditional acceptance include

instances where the direct life insurer’s acceptance of a client’s policy is contingent
upon exclusion of the client’s pre-existing medical condition; or upon additional
premium loading imposed by the direct life insurer due to the client’s pre-existing
medical condition.
Provision of product information
13 Where a financial adviser distributes DPI through its representative or customer

service officer, the financial adviser must ensure that at the point of a client’s
application for the purchase of a DPI, the financial adviser’s representative or customer
service officer furnishes the following documents to the client:
(a) the documents set out in paragraph 37(b) of the MAS Notice on
Recommendations on Investment Products (FAA-N16);
(b) the fact sheet and checklist that are prepared by a direct life insurer in
accordance with the industry standards for DPI, as issued by the Life
Insurance Association, Singapore.
14 Where a financial adviser distributes DPI by way of an online direct channel, the
financial adviser shall –
(a) provide the information required in paragraphs 12 (a) to (b) through the online
direct channel to the client;
(b) comply with the requirements under paragraphs 12 (c) and (e) through the
online direct channel;
(c) ensure that all mandatory fields in the proposal form for the purchase of the
DPI have been completed before processing the proposal form; and
(d) at the point of a client’s application for the purchase of a DPI, provide the
information required in paragraph 13 (a) and (b), and an online copy of, or
access to the full and actual policy wordings of the DPI.

Implementation of internal policies and processes
15 A financial adviser must implement internal policies and processes, including

adequate control systems and procedures, relating to the distribution of DPI. These
internal policies and processes must include the following:
(a) policies and processes which set out the respective responsibilities of the
representative and customer service officer, in relation to the representative’s
and customer service officer’s respective distribution of DPI on behalf of the
financial adviser, including clear guidelines relating to the manner of
distribution of DPI and informing clients the manner in which and the locations
at where a DPI may be purchased;
(b) training for every representative or customer service officer, who distributes
DPI on behalf of the financial adviser, and the training provided must, at the
minimum, cover –
(i) the role and scope of responsibilities of a representative or customer
service officer in relation to his distribution of DPI on behalf of the
(ii) the risks and features of DPI;
(c) in relation to the online direct channel, policies and processes for distribution
of DPI, including instituting controls and safeguards to adequately address
information security risks, and putting in place an appropriate business
continuity plan to minimise system downtime or component failures to the
online direct channel, and to ensure the functionality and continued operation
of the online direct channel at all times; and
(d) controls and procedures to ensure the proper conduct of the representative or
customer service officer who distributes DPI, including, where appropriate,
instituting procedures to make call-backs to clients or conducting mystery
shopping exercises.
Roles and responsibilities of a representative or customer service officer
16 For avoidance of doubt, where a financial adviser or representative of the

financial adviser provides any recommendation in relation to a DPI which is not solely
incidental to the distribution of the DPI, the financial adviser and the representative of
the financial adviser must comply with the Act, as well as the Regulations and Notices
which apply to the provision of financial advice.
17 A financial adviser, or a representative or customer service officer of the

financial adviser, is expected to meet the following general standards in all product
information disclosures and information provided to clients in relation to a DPI:
(a) Clear
(i) Information disclosed to clients in any advertisement or publicity material
in any media should be presented in plain language, and in a manner that
is easy for clients to understand.
(ii) Jargon or technical terms used should be clearly explained to clients.

(b) Adequate
(i) Information disclosed to clients should meet regulatory requirements
and accord with industry best practices. In addition, the information
provided should be sufficient to help clients make an informed
decision.
(ii) Warnings and important information such as the nature and objective
of DPI, risks of DPI, fees and charges, and contractual rights and
obligations of clients, should be prominently presented and clearly
explained.
(c) Not False or Misleading

(i) Information disclosed to clients should not be ambiguous in language
or presentation.
(ii) Information relating to DPI, should be disclosed in an objective and
unbiased manner.
(iii) Where an opinion is expressed, there should be a reasonable basis for
expressing the opinion and it should be unambiguously stated that it is
a statement of opinion.
(iv) Documents to be given to clients should be kept up-to-date and
reviewed at least annually.
Transitional Arrangements for Implementation of Revised Safeguards
18 Notwithstanding the effective date of FAA-N19 (Amendment) 2019, paragraphs

12 to 14 of the Notice in force immediately before 30 August 2019 continue to apply
to financial advisers who have distributed DPI on an online direct channel prior to 30
August 2019 as if the amendments to paragraphs 12 to 14 in FAA-N19 (Amendment)
2019 have not been made, until 31 December 2019.
Note:
Under section 58(5) of the Act, any person who contravenes any requirement
specified in a written direction issued by the Authority (which would include this
Notice), shall be guilty of an offence and shall be liable on conviction to a fine not
exceeding $25,000 and, in the case of a continuing offence, to a further fine not
exceeding $2,500 for every day or part thereof during which the offence continues
after conviction.
*Note on History of Amendments
1. FAA-N19 (Amendment) 2019 with effect from 30 August 2019.

Appendix 7D
MAS Notice No: FAA-N21

Notice to licensed financial advisers
Financial Advisers Act (Cap. 110)
Issue Date : 06 August 2019
NOTICE ON CYBER HYGIENE
I. Introduction
1.1 This Notice is issued pursuant to section 58(1) of the Financial Advisers Act
(Cap. 110) (the “Act”) and applies to all licensed financial advisers (each a
“relevant entity”).
II. Definitions
2.1 For the purpose of this Notice----
“administrative account”, means any user account, that has full privileges and
unrestricted access to any one or more of the following systems:
(a) an operating system;
(b) a database;
(c) an application;
(d) a security appliance; or
(e) a network device;
“customer information” means any information relating to, or any particulars of, any
customer of the relevant entity, where a named customer or group of named customers
can be identified, or is capable of being identified, from such information;
“critical system” in relation to a relevant entity, means a system, the failure of which
will cause significant disruption to the operations of the relevant entity or materially
impact the relevant entity’s service to its customers such as a system which—
(a) processes transactions that are time critical; or

(b) provides essential services to customers;
“multi-factor authentication” means the use of two or more factors to verify an account
holder’s claimed identity. Such factors include, but are not limited to—
(a) something that the account holder knows such as a password or a personal
identification number;
(b) something that the account holder has such as a cryptographic identification
device or token;
(c) something that the account holder is such as an account holder’s biometrics or
his behaviour;

“security patch”, in relation to a system, means an update that can be applied to the
system to address a vulnerability;
“security standards”, in relation to a system, means a set of configurations for the

purpose of safeguarding and improving the security of the system;
“system”, in relation to a relevant entity, means any hardware or software that is used
by the relevant entity;
“vulnerability”, in relation to a system, means any weakness, susceptibility or flaw of

the system that can be exploited, including but not limited to by allowing an
unauthorised person to access the system, or to compromise the security configuration
settings of the system.
2.2 Any expression used in this Notice shall, except where expressly defined in this
Notice or where the context requires, have the same meaning as in the Act.
III. Application of Notice
3.1 A relevant entity need not comply with a requirement in this Notice to the extent
that it is unable to exercise control over a system to ensure compliance with that
requirement, in all of the following ways:
(a) the relevant entity cannot exercise direct control over the system to ensure
compliance with that requirement;
(b) a relevant entity cannot exercise indirect control over the system by requiring
the system provider to ensure compliance with that requirement;
(c) it is not reasonable for the relevant entity to procure an alternative system
provider over whom the relevant entity is able to exercise such indirect control
referred to in sub-paragraph (b), to provide the system.
IV. Cyber Hygiene Practices
4.1 Administrative Accounts: A relevant entity must ensure that every

administrative account in respect of any operating system, database, application,
security appliance or network device, is secured to prevent any unauthorised access to
or use of such account.
4.2 Security Patches:

(a) A relevant entity must ensure that security patches are applied to address
vulnerabilities to every system, and apply such security patches within a
timeframe that is commensurate with the risks posed by each vulnerability.
(b) Where no security patch is available to address a vulnerability, the relevant
entity must ensure that controls are instituted to reduce any risk posed by
such vulnerability to such a system.
4.3 Security Standards:

(a) A relevant entity must ensure that there is a written set of security
standards for every system.
(b) Subject to sub-paragraph (c), a relevant entity must ensure that every
system conforms to the set of security standards.
(c) Where the system is unable to conform to the set of security standards, the
relevant entity must ensure that controls are instituted to reduce any risk
posed by such non-conformity.

4.4 Network Perimeter Defense: A relevant entity must implement controls at its
network perimeter to restrict all unauthorised network traffic.
4.5 Malware protection: A relevant entity must ensure that one or more malware
protection measures are implemented on every system, to mitigate the risk of malware
infection, where such malware protection measures are available and can be
implemented.
4.6 Multi-factor Authentication: Subject to paragraph 4.7, a relevant entity must

ensure that multi-factor authentication is implemented for the following:
(a) all administrative accounts in respect of any operating system, database,
application, security appliance or network device that is a critical system;
and
(b) all accounts on any system used by the relevant entity to access customer
information through the internet.
4.7 (a) Paragraph 4.6 shall not apply to a relevant entity for the period between 6
August 2020 and 5 February 2021 (both dates inclusive), if the relevant entity meets
all of the following conditions:
(i) the relevant entity identifies all the risks or potential risks posed by its
noncompliance with paragraph 4.6 during that period;
(ii) the relevant entity implements controls to reduce the risks identified in sub
paragraph (i);
(iii) a committee of the relevant entity, or a member of the senior management
of the relevant entity—
(A) agrees with the risk assessment in sub-paragraph (i); and
(B) is satisfied that the controls to be implemented in sub-paragraph (ii) are
adequate to reduce the risks identified in sub-paragraph (i).
(b) In this paragraph—

“committee of the relevant entity” means a group of persons that—
(i) comprises at least 2 persons, each of whom is a person who is not a member
of the senior management of the relevant entity but is concerned with or
takes part in the management of the relevant entity on a day-to-day basis;
and
(ii) is appointed by a member of the senior management of the relevant entity
to—
(A) assess the risks or potential risks posed by the relevant entity’s
noncompliance with paragraph 4.6 during the period between 6 August
2020 and 5 February 2021; and
(B) approve the implementation of the controls to reduce the risks posed by
the non conformity with paragraph 4.6.
“member of the senior management” means a person for the time being holding
the office of chief executive officer or an equivalent person of the relevant entity
and includes a person carrying out the duties of any such office if the office is
vacant.
V. Effective Date
5.1 This Notice shall take effect on 6 August 2020.

8. MAS Notice Nos: MAS 302 And MAS 307
CHAPTER 8
MAS NOTICE NOS: MAS 302 AND MAS 307
CHAPTER OUTLINE
1. Introduction
2. Notice No: MAS 302 - Product Development And Pricing
3. Notice No: MAS 307 - Investment-linked Policies (ILPs)
Annex Ad – Additional Disclosure Requirements for Index ILP Sub-Funds
Appendix F – Information To Be Disclosed in Advertisements And Publications
Appendix H – Product Highlights Sheet
Annex Ha – Information to be disclosed in the Product Highlights Sheet
KEY LEARNING POINTS

- Notice No: MAS 302 on Products Development and Pricing
- Notice No: MAS 307 on Investment-linked Policies (ILPs)

1. INTRODUCTION
1.1 In this chapter, we will cover two of the MAS Notices, Notice Nos: MAS 302
and 307 relating to Product Development and Pricing of Life Insurance Products,
as well as Investment-linked Policies.
2. NOTICE NO: MAS 302 – PRODUCT DEVELOPMENT AND PRICING
2.1 Notice No: MAS 302 is issued pursuant to Section 64(2) of the Insurance Act
(Cap. 142). It comprises both mandatory requirements (Part 1) and guidelines
(Part 2). Notice No: MAS 302 shall be read in conjunction with the provisions of
the Insurance Act and the Insurance (Actuaries) Regulations 2013 (SL
239/2013). Notice No: MAS 302 applies to all direct insurers licensed under the
Act to carry on life business.
A. Part I – Mandatory Requirements
A1. Prudent Management Oversight
2.2 An insurer shall exercise prudent management oversight and shall implement and
maintain adequate controls in respect of the development and pricing of insurance
products and investment-linked policy sub-funds [“ILP sub-funds”]. An insurer
shall also ensure that the Board of Directors approves the policies and procedures
in respect of the development and pricing of insurance products and ILP sub-
funds.
2.3 The items to be included in the policies and procedures in respect of the
development and pricing of insurance products and ILP sub-funds are available on
the MAS website.
A2. Prohibited Payout Features
2.4 An insurer shall not include, in any insurance product for which a policy holder or
new customer has submitted a proposal to the insurer on or after 1 October 2013,
a term or condition which–
(a) if the insurance contract is entered into, provides a settlement option; or
(b) in a case of an insurance product where policy moneys are to be paid out
over a period of time and the policy no longer provides for any payment of
policy moneys on the happening of any subsequent contingency, allows the
payment of any part of the policy moneys ascertained to be due and payable
under the policy to be made more than 10 years after the occurrence of the
insured event. For avoidance of doubt, an insurer need not comply with this
sub-paragraph in respect of an insurance product where outstanding
payments are contingent on the termination or continuance of human life or
the insured event, such as a policy which covers total and permanent
disability or long term care.

A3. Disclosure to Policyholders and Entitled Persons who have exercised a Settlement
Option and the Settlement Option has not come into effect
2.5 An insurer shall notify−
(a) a policyholder or an entitled person:

(i) who has exercised a settlement option prior to 1 October 2013, and
(ii) the settlement option has not come into effect,
on or before the date the insurer next sends a policy statement to the policy
holder or entitled person, as the case may be; or
(b) a policyholder or an entitled person:

(i) who exercises a settlement option on or after 1 October 2013, and
(ii) the settlement option has not come into effect,
within one month of the date of the exercise of the settlement option,
that moneys payable in accordance with the settlement option−

(i) is not covered under the PPF Scheme; and
(ii) in the event of insolvency of the insurer, rank after policy liabilities and
equally with the unsecured liabilities of the insurer.
A4. Disclosure to Policyholders and Entitled Persons who have exercised a Settlement
option and the Settlement Option has come into effect
2.6 An insurer shall notify−
(a) a policyholder or an entitled person:

(i) who has exercised a settlement option, and
(ii) the settlement option has come into effect prior to 1 October 2013,
on or before the date the insurer next sends a policy statement to the policy
holder or entitled person, as the case may be, and thereafter at least annually;
or
(b) a policyholder or an entitled person:

(i) who has exercised a settlement option, and
(ii) the settlement option comes into effect on or after 1 October 2013,
within one month from the date the settlement option comes into effect and
thereafter, at least annually,
of the following particulars:

(i) that moneys payable in accordance with the settlement option−
(A) is not covered under the PPF Scheme;

(B) in the event of insolvency of the insurer, rank after policy liabilities
and equally with the unsecured liabilities of the insurer;
(ii) the interest rate applicable to moneys payable in accordance with a

settlement option, and whether such interest rate is guaranteed and the
amount of such moneys together with any interest accrued, due to the
policyholder or entitled person as the case may be.
A5. Approval for New Products
2.7 Subject to the paragraph below, an insurer shall obtain written approval from the
MAS before offering any product with any feature that does not appear in any
product in the insurer’s then-existing business portfolio. Any request for such
approval shall be made in writing (in both hardcopy and softcopy1) and submitted
to the MAS no later than one month before the proposed official launch date of
the product. The request shall be accompanied by relevant information and
product documents.
2.8 Details of the requirements are found on the MAS website.
2.9 The above paragraph shall not apply in respect of:

(a) a short-term Accident and Health policy; or
(b) a Term policy having a duration of five years or less.
(c) a Direct Purchase Insurance Product as defined under MAS Notice 321 –
Notice on Direct Purchase Insurance Products2.
2.10 When in doubt, the insurer may check with the MAS on whether any proposed
product requires such written approval.
A6. Contravention of Requirements Imposed
2.11 Contravention of any requirement imposed under the Mandatory Requirements of

Notice No: MAS 302 shall be an offence and shall attract the penalty as specified
in Section 55(2) of the Insurance Act (Cap. 142).
B. Part II – Guidelines
B1. Notification For Products Launched
2.12 Subject to the paragraph below, an insurer should notify the MAS in writing (in
both hardcopy and soft copy1) launched by the insurer that does not require the
approval of the MAS. Such notice should be given to the MAS within seven
1
The softcopy is to be submitted as an attachment to an email using AES 256 encryption or higher. The
insurer shall deliver the corresponding password of minimum 12 characters in length or encryption key via
a separate transmission channel (e.g. telephone) to the Authority. The Authority uses WinZip12AES 256
encryption to protect such information.
2
Please refer to MAS Notice 321 – Notice on Direct Purchase Insurance Products for the approval
requirements which apply to a Direct Purchase Insurance Product.

working days after the official launch date of the product. The notification should
contain relevant information and be accompanied by product documents. Details
of the requirements are in the MAS website.
2.13 The above-mentioned paragraph 2.12 of this chapter does not apply in respect
of:
 a short-term Accident and Health policy; or
 a Term policy having a duration of five years or less.
 a Direct Purchase Insurance Product as defined under MAS Notice 321 –
Notice on Direct Purchase Insurance Products2
2.14 Without prejudice to the generality of the first paragraph of this subsection, the
circumstances in which an insurer should notify the MAS under the paragraph
include, but are not limited to:
(a) when the single-premium endowment products in the then-existing business
portfolio of the insurer have durations of five years, and the insurer wishes
to introduce longer or shorter policy terms for any such products;
(b) when the insurer wishes to increase the number of dread diseases covered
under their whole life products;
(c) when the insurer wishes to provide prospective or existing policy owners of
a product in the insurer’s then-existing business portfolio with the option of
paying premiums at any frequency, which is then unavailable to such policy
owners; and
(d) when total permanent disability cover is an existing feature of any products
other than whole life products in the insurer’s then-existing business
portfolio, and the insurer wishes to offer total permanent disability cover
under any of its whole life products.
B2. Compliance With Guidelines
2.15 The standards set out in Part II are not mandatory in that failure by an insurer to
comply with any of the standards shall not by itself render the insurer to be in
breach of Notice No: MAS 302. However, the MAS expects insurers to observe
the standards as set forth in this Part II.
2.16 The MAS may take into account a failure to comply with these standards in
considering whether to:
(a) approve a new product;
(b) revoke the approval for a product; or
(c) issue directions for the withdrawal of a product.

3. NOTICE NO: MAS 307 – INVESTMENT-LINKED POLICIES (ILPs)
3.1 The Monetary Authority of Singapore (MAS) issued a new MAS Notice 307:
Investment-linked Policies on 23 September 2011 which replaced the Notice
dated 2 September 2004, which came into effect on 1 October 2011. A copy of
the Notice is available on the MAS website at: www.mas.gov.sg
3.2 The following contents in regard to “NOTICE NO: MAS 307 – INVESTMENT-
LINKED POLICIES (ILPs)” has been entirely extracted from NOTICE NO: MAS 307
– INVESTMENT-LINKED POLICIES (ILPs) from the MAS website.

Investment-Linked Policies
Notice No. : MAS 307

Issue Date : 23 September 2011
(last revised on 8 October 2018)
This Notice replaces MAS 307 dated 2 September 2004.
INVESTMENT-LINKED POLICIES
Introduction
1. This Notice is issued pursuant to section 64(2) of the Insurance Act (Cap. 142)
(“the Act”). It comprises both mandatory requirements (Part I) and non-mandatory
standards (Part II) in relation to disclosure, investment guidelines, borrowing limits
and operational practices for investment-linked policies (“ILPs”).
[MAS Notice 307 (Amendment) 2012]
2. This Notice shall be read in conjunction with the provisions of the Act. It is not
intended to override any provision of the Act.
3. This Notice applies to any direct insurer registered to carry on life business
(“insurer”).

Definition
4. In this Notice -
(a) “collective investment scheme” has the same meaning as in section 2 of the
Securities and Futures Act (Cap. 289);
(b) “discretionary fund” refers to any fund managed in-house by the manager,
where the manager has substantial input in the investment management
process or authority to make investment decisions;
(ba) “Excluded Investment Product” has the same meaning as in the Notice on
Recommendations on Investment Products [Notice No. FAA-N16];
(bb) “financial adviser” has the same meaning as in section 2(1) of the Financial
Advisers Act (Cap. 110);
(c) “financial derivative” refers to a financial instrument as defined in section 2 of

Securities and Futures Act (Cap. 289) which derives its value from, or whose
value depends on, the characteristics of one or more underlying assets, reference
rates or indices;

(d) “hedging” refers to the use of combinations of trades on transferable securities,
money market instruments, units in other sub-funds, collective investment
schemes or financial derivatives which are concluded with the sole purpose of
offsetting risks linked to positions taken through other transferable securities,
money market instruments, units in other sub funds, collective investment
schemes or financial derivatives;
(e) “investment-linked policy sub-fund” (“ILP sub-fund”) refers to each separate sub-
fund within an ILP to which a policyholder can choose to allocate his or her
premiums under the ILP;
(ea) “investment product” has the same meaning as in section 2(1) of the Financial
Advisers Act (Cap. 110);
(f) “manager” means –

(i) an insurer, if the insurer fully or partly manages the ILP sub-fund itself; or
(ii) a fund manager, other than the insurer, if the fund manager fully manages
the ILP sub-fund or the underlying collective investment scheme(s) in which
the ILP sub-fund is fully invested in;
(g) “net asset value” or “NAV” means total assets less total liabilities (excluding
policyholders’ interest if this is classified as a liability);
(h) “organised market” refers to an exchange, over-the-counter market or

government securities market:
(i) that is of good repute;

(ii) that is open to the public or a substantial number of market participants;
and
(iii) on which financial instruments are regularly traded.
(i) “policyholder”, in relation to an ILP or ILP sub-fund, means a policy owner of

the ILP;
(j) “quoted” means being listed for quotation, quoted or traded on an organised
market;
(k) “Relevant Audit Report” means the Annual Audited Report where an audit by
way of the first method [as described in paragraph 15(a)] is carried out or the
Annual Report with an audit report where an audit by way of the second method
[as provided in paragraph 15(b)] is carried out;
(ka) “Relevant Policyholder” refers to an individual who is a policyholder of an ILP

sub-fund, the units of which are Excluded Investment Products;
[MAS Notice 307 (Amendment)

2012]

(kb) “Specified Investment Product” has the same meaning as in the Notice on
Recommendations on Investment Products [Notice No. FAA-N16];
(l) “soft dollars” refers to arrangements under which products or services, other
than the execution of securities transactions, are obtained from or through a
broker in exchange for the direction by the manager of transactions to the
broker. Soft dollars include research and advisory services, economic and
political analyses, portfolio analyses, market analyses, data and quotation
services, and computer hardware and software used for or in support of the
investment process of managers;
(m) “structured products” means any product tailor-made for an ILP sub-fund such
that the issuer(s) of the securities or instruments, or both, or an entity other
than the issuer(s), stands ready to unwind the products at prevailing market
prices so as to enable the ILP sub-fund to meet redemptions on each dealing
day;
(n) “Code on Collective Investment Schemes” (“the Code”) means the code issued
by the Authority under section 321 of the Securities and Futures Act (Cap.
289);
(o) the words “property ILP sub-fund”, “money market ILP sub-fund”, “hedge ILP
sub-fund”, “capital guaranteed ILP sub-fund”, and “index ILP sub-fund” shall
have the same meaning as “property fund”, “money market fund”, “hedge
fund”, “capital guaranteed fund” and “index fund” respectively, in the relevant
appendices of the Code, with the necessary modifications as provided in
paragraph 5.
5. When applying the Code for the purpose of this Notice:
(a) a reference to “collective investment scheme”, “scheme” or “fund” in the

Code should be read as a reference to an ILP sub-fund; and
(b) a reference to “trustee” in the Code should be read as a reference to the
insurer.
6. The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same respective meanings
as in the Act.
Part I – Mandatory Requirements
Notification to the Authority
7. An insurer shall notify the Authority of:
(a) the insurer’s intention to launch any ILP sub-fund at least 21 days before the
ILP sub-fund is established; and

(b) any significant change to any ILP sub-fund no later than 1 month before the
change is to take effect such as the following:
(i) a change in the investment objective or focus of the ILP sub-fund or in

the investment approach of the manager as stated in the product
summary or policy, where “investment approach” refers to how the
manager selects securities for the portfolio of the ILP sub-fund;
(ii) an increase in the remuneration payable to the insurer or manager (even

where the remuneration is not increased beyond the maximum amount
provided for in the product summary or policy) or a change in the basis
upon which such remuneration is determined;
(iii) an increase in any other fees or charges payable out of the ILP sub-fund
that are 0.1% or more of the NAV of the ILP sub-fund;
(iv) a new form of remuneration or expense payable out of the ILP sub-fund;
(v) the replacement, removal or appointment of a new manager, sub-

manager, or investment adviser to the ILP sub-fund;
(vi) a variation in the rights or obligations of a policyholder as set out in the

product summary or policy where the variation is materially prejudicial to
policyholders;
(vii) a change from direct investment to feeder fund structure or vice versa;
(viii) a change referred to in sub-paragraphs (i) to (vii) in relation to an

underlying fund into which the ILP sub-fund feeds significantly (i.e. 30%
or more of the NAV of the ILP sub-fund);
(ix) the closure of the ILP sub-fund except when it is a termination due to the
maturity of the ILP sub-fund;
(x) a change in the collateral policy from that disclosed in the product
summary; and
(xi) a change in the classification of the units in an ILP sub-fund from

Excluded Investment Products to Specified Investment Products, or vice
versa.
8. Notwithstanding paragraph 7(b), where an insurer is unable to determine

whether a significant change would occur at least one month before the change
is to take effect, the insurer shall inform the Authority and existing policyholders
in writing of the significant change as soon as practicable. Examples of such
changes include the following:

(a) suspension and resumption of dealings as a result of exceptional

circumstances;
(b) any change which may materially affect the risks and returns of an ILP
sub-fund1;
(c) any change which may materially affect the ability of any key
counterparty2 to an over-the-counter (“OTC”) financial derivative,
securities lending or repurchase transactions to fulfil its obligations to the
ILP sub-fund; or
(d) the cessation of market making activity by designated market makers.
9. For the purposes of paragraph 7(a), an insurer shall submit a copy of each of
the following to the Authority:
(a) a product summary containing the information specified in Appendix A and

the annexes to Appendix A;
(b) the policy containing the information specified in Appendix B;
(c) a policy illustration of the ILP;
(d) information required under Appendix G; and
(e) a product highlights sheet (“PHS”) containing the information specified in
Appendix H.
9A. Where the units in an ILP sub-fund are Excluded Investment Products, an insurer
shall also state in the product summary and the PHS referred to in paragraphs
9(a) and (e) above respectively that the units in the ILP sub-fund are Excluded
Investment Products.
10. For the purpose of paragraph 7(b), where there is any significant change to any
ILP sub-fund that will result in a change to any of the documents listed in
paragraph 9, the insurer shall submit a copy of that document, where the change
has been made, to the Authority for notification purpose.
11. The Authority may issue directions to the insurer to withdraw any ILP sub-fund
which does not meet the regulatory standards required under this Notice.
Valuation of units in the ILP sub-fund
12. The units of an ILP sub-fund shall be issued, redeemed or repurchased at a price
arrived at by dividing the NAV of the ILP sub-fund by the number of units
outstanding. The price of units may be adjusted by adding or subtracting, as the
case may be, fees and charges, in compliance with the fees and charges as
disclosed in the product summary of the ILP.
_________________________________
1
Changes that may materially affect the risks and returns of an ILP sub-fund include significant unexpected changes
in general market conditions, the industry, sector or country or specific aspects of the financial instruments which
the ILP sub-fund invests in.
2
For example, the counterparty to an OTC financial derivative used by an index fund to replicate an index would be
considered a key counterparty.
5

13. Paragraph 12 does not apply during the initial offer period of the ILP sub-fund.
14. At the maturity of a capital guaranteed ILP sub-fund, the units shall be redeemed
at a price equal to the guaranteed amount or the NAV of the ILP sub-fund divided
by the number of units outstanding, whichever is higher.
Audit of ILP sub-funds
15. The insurer shall appoint an external auditor to carry out an audit annually by
one of the following methods:
a) audit on the financial statements of each ILP sub-fund (“audit by way of

the first method”); or
b) audit on the internal control and processes of the ILP sub-funds (“audit by
way of the second method”).
16. The insurer shall notify the Authority in writing before the first change from
carrying out an audit by way of the first method to an audit by way of the second
method.
17. Upon the change to the audit by way of the second method, no insurer shall,
without the approval of the Authority, make any change to the audit method.
The Authority may grant approval for any change to the audit method subject to
such conditions as the Authority may think fit to impose on the insurer and the
insurer shall comply with the conditions imposed.
18. Where the audit is carried out by way of the second method, the insurer shall
ensure that the inaugural audit is completed not later than 3 months after the
ILP sub-fund’s year end.
19. Subject to paragraph 20, upon completion of the inaugural audit, the insurer
shall ensure that every subsequent audit by way of the second method is
completed not later than the next financial year end of the insurer.
20. Where the immediate financial year end of the insurer after the completion of
the inaugural audit is not more than 12 months from the date of the ILP sub-
fund’s year end for which the inaugural audit was based on, the insurer shall
ensure that the audit by way of the second method is carried out by the following
financial year end of the insurer.
21. The period under review of an audit by way of the second method shall be for a
period of not less than 12 months.
22. Where an audit by way of the second method is carried out, the insurer shall
ensure that an audit report is prepared which includes the following objectives:
(a) outstanding unit holdings of the insurer’s ILP sub-funds are properly
maintained, with subscriptions (including top-ups), redemption (including
partial redemption) and switching of units of the ILP subfunds properly
accounted in the correct period and allocated into the correct ILP sub-funds;

(b) units of the ILP sub-funds are properly priced;
(c) charges and expenses directly attributable to each ILP sub-fund are
properly accounted in the correct period and allocated to the correct ILP
sub-funds while common expenses are properly apportioned amongst the
ILP sub-funds;
(d) existing assets and liabilities are properly accrued for each ILP sub-fund;
and
(e) assets and liabilities of the ILP sub-funds are properly valued in
accordance with consistent accounting policies applied to all ILP sub-
funds by the insurer.
Audit certificate relating to ILP sub-funds which are terminated or matured
23. For every ILP sub-fund which is terminated or matured, the insurer shall appoint
an external auditor to prepare an audit certificate certifying that it has not come
to the auditor’s notice, through the course of the audit, that:
(a) the insurer has failed to realise all the assets of the ILP sub-fund as at the
date of termination or maturity;
(b) the insurer has failed to distribute all resultant proceeds (net of outstanding
liabilities) to policyholders in the same proportion as their holdings in the ILP
sub-fund; and
(c) the insurer has failed to comply with any of the requirements as set out in
this Notice in relation to the ILP sub-fund from the date immediately after the
period of the latest completed audit to the date of termination or maturity
(final distribution to policyholders).
A list and description of liabilities which have not been settled but have been
accrued to the ILP sub-fund and excluded from the final distribution shall be
attached in the Appendix to the audit certificate.
24. The insurer shall ensure that the audit certificate is completed within 6 months
after the termination or maturity of the ILP sub-fund.
25. The insurer shall send to the Authority a copy of the audit certificate on the ILP
sub-funds which are terminated or matured within 30 days after the completion
of the audit.
26. The insurer shall retain a copy of the audit certificate on the ILP sub-funds which
are terminated or matured for a period of 5 years, from the date of termination
or maturity of the ILP sub-fund.

27. The insurer shall make available the audit certificate to the policyholder, within
30 days of the policyholder’s request, if such request is made within 5 years
from the date of termination or maturity of the ILP sub-funds.
Disclosure
Guiding principles
28. An insurer issuing ILPs shall not provide any information about the ILP or ILP
sub-fund that is false or misleading.
29. An insurer shall inform existing policyholders of any significant change to be

made to the ILP or ILP sub-fund, not later than 1 month before the change is to
take effect.
30. Any notification made by an insurer shall be made in clear and simple language
that policyholders can easily understand. The insurer shall avoid using technical
terms but where the use of such terms is unavoidable, the insurer shall provide
the policyholders with clear explanations of the meanings of such terms.
31. An insurer shall not market any ILP or ILP sub-fund with any sales material,
including any product summary, PHS and brochure, containing information
which has not been updated within the 12 months prior to such marketing.
Product summary, Policy and Product highlights sheet
32. An insurer issuing an ILP shall ensure that –
(a) information specified in Appendix A and the annexes to Appendix A is

disclosed in the product summary;
(b) information specified in Appendix B is disclosed in the policy; and
(c) information specified in Appendix H is disclosed in the PHS.
33. An insurer shall prepare the PHS for every ILP sub-fund together with the product
summary.
Statement and Reports to policyholders
34. The insurer shall prepare, or cause to be prepared for each ILP and ILP sub-fund
–
(a) a Statement to Policyholders containing the information required in
Appendix C;
(b) in respect of ILP sub-funds other than property ILP sub-funds, the
following containing the information required in Appendix D –
(i) a Semi-Annual Report; and
(ii) the Relevant Audit Report.

(c) in respect of property ILP sub-funds, the Relevant Audit Report containing
the information required in Appendix E.
Statement to Policyholders
35. The insurer shall send, to all policyholders, the Statement to Policyholders within
30 days after each policy anniversary or a specified date by the insurer in each
policy year. The insurer may send the Statement to Policyholders by electronic
means.
Semi-Annual Report and Relevant Audit Report
36. The insurer shall send, to all policyholders, the Semi-Annual Report (in respect
of ILP sub-funds other than property ILP sub-funds) and the Relevant Audit
Report on each of the policyholders’ ILP sub-funds within 2 months and 3
months respectively from the last date of the period to which the report relates.
37. Notwithstanding paragraph 36, the insurer may send to policyholders, within the
time as provided in paragraph 36, the underlying fund reports prepared by the
managers if the following conditions are met:
(a) the ILP sub-fund feeds substantially into the underlying fund;
(b) the policyholders shall have each purchased an ILP to which the ILP sub-
fund belongs with a minimum single premium of USD50,000 or an
annualized regular premium of USD5,000, or the equivalent in other
currencies;
(c) the ILP sub-fund is not available for investment using CPF monies; and
(d) the insurer has obtained written consent from the policyholders.
38. Where the insurer sends to the policyholders the underlying fund reports
prepared by the managers in paragraph 37, the insurer need not send to the
policyholders–
(a) the Semi-Annual Report;
(b) the Annual Audited Report (except the audited financial statements of the
ILP sub-fund) where the audit by way of the first method is carried out; or
(c) the Annual Report (except the audit report) where the audit by way of the
second method is carried out.
39. Notwithstanding paragraph 36, the insurer need not prepare and send to the
policyholders the Semi-Annual Report or the Relevant Audit Report if –
(a) the Semi-Annual Report or the Relevant Audit Report covers a period ending
3 months or less from the start of the initial launch period of the ILP sub-
funds. However, the first Semi-Annual Report and the Relevant

Audit Report prepared and sent to the policyholders should cover the period
from the start of the initial launch period of the ILP sub-funds; or
(b) [Deleted by MAS Notice 307 (Amendment) 2012 wef 11/12/2012]

(c) the termination or maturity date of the ILP sub-fund is within 1 month from
the date the Semi-Annual Report or the Relevant Audit Report is due to be
sent to the policyholders3.
40. The insurer may send or make available to policyholders the statements and
reports referred to in paragraphs 35 to 39 by electronic means. Examples of
electronic means include:
(a) transmitting via email with softcopy attachments to the email address
provided by the policyholder for correspondence purposes;
(b) making available via an electronic storage medium (e.g. CD-ROM); and
(c) posting on a website where the statements and reports would remain posted
on that website for at least 12 months from the date of posting.
For the purposes of paragraphs 40 (b) and (c), the insurer shall notify the
policyholder by either a hardcopy letter or an email if the policyholder had
previously provided an email address for correspondence purposes, that the
statements and reports are available and how they may be accessed, for
example where the insurer has provided the relevant Uniform Resource Locator
(‘URL’).
41. The insurer shall give its policyholders an option to request for hardcopy
statements and reports within one month from the notification of the availability
of the statements and reports. The insurer shall make available, or cause to be
made available, hardcopies of the statements and reports to any policyholder
who requests for them within two weeks of the request. The insurer shall allow
a policyholder to opt, at any time, for hardcopies for all future reports and
statements at no cost to him.
Advertisements and Publications
42. An insurer issuing an ILP or an ILP sub-fund shall ensure that the advertisements
and publications relating to the ILP or ILP sub-fund comply with the requirements
specified in Appendix F.
Payments from the ILP sub-fund
43. The insurer shall not pay or cause or permit to be paid, out of the assets of the
ILP sub-fund:
_______________________
3
For example, the annual report for an ILP sub-fund for the financial year ended 31 December 20X1 (i.e. due to be
sent to policyholders on 31 March 20X2) need not be prepared, audited and sent if the termination or maturity date
of the ILP sub-fund is on or before 30 April 20X2.
10

(a) any marketing or promotion expenses such as, expenses for advertisements
in the media, mailers, fact sheets;
(b) any fees from ILP sub-fund that have not been provided for in the product
summary and policy contract; and
(c) any payment which is unfair to, or materially prejudices the interests of, any
policyholder or prospective investor.
Cash rebates and soft dollars
44. The insurer shall ensure that the manager does not retain, for its own account,
cash or commission rebates arising out of transactions for the ILP sub-fund
executed in or outside Singapore.
45. The insurer shall ensure that the manager shall not receive—
(a) soft dollars in the management of the ILP sub-fund unless the following
requirements are met:
(i) the soft dollars received can reasonably be expected to assist in the
manager’s provision of investment advice or related services to the ILP
sub-fund;
(ii) transactions are executed on the best available terms, taking into account
the following execution factors: price, costs, speed, likelihood of
execution and settlement, size, nature or any other consideration relevant
to the execution of a trade or transaction as may be specified by the
Authority;
(iii) the manager does not enter into unnecessary trades in order to achieve
a sufficient volume of transactions to qualify for soft dollars; and
(b) goods and services such as travel, accommodation and entertainment which
fall within the definition of “soft dollars” but do not qualify for the exceptions
in paragraph 45(a).
46. The insurer shall ensure that the manager maintains a record of all soft dollars
received.
ILP sub-funds admitted under the CPF Investment Scheme
47. The insurer shall not charge any costs arising from CPF failed trades to the ILP
sub-fund.
Requirements on the insurer issuing an ILP, where the units in an ILP sub-fund within
the ILP are Excluded Investment Products
47A. The insurer issuing an ILP, where the units in an ILP sub-fund within the ILP are
Excluded Investment Products (the “EIP-ILP sub-fund”) shall, where the EIP-ILP sub-
fund holds units in a collective investment scheme, the units of which are
11

Excluded Investment Products (the “underlying EIP-CIS”), and such units cease to
be classified as Excluded Investment Products, elect to:
(a) maintain the classification of the units in the EIP-ILP sub-fund as Excluded
Investment Products by disposing the units in the underlying EIP-CIS as soon
as practicable and in any event:
(i) within 3 months from the date the units in the underlying EIP-CIS cease to
be classified as Excluded Investment Products (hereinafter referred to as
the “initial 3 months”); or
(ii) before the expiry of the initial 3 months, the insurer is satisfied that such
units should not be disposed within the initial 3 months on the basis that
a longer period is in the best interests of the policyholders of the EIP-ILP
sub-fund, such longer period not exceeding 12 months from the date the
units in the underlying EIP-CIS cease to be classified as Excluded
Investment Products, provided that the insurer continues to be satisfied at
the end of each successive month after the initial 3 months that such
longer period is in the best interests of the policyholders of the EIP-ILP sub-
fund; or
(b) cause the units in the EIP-ILP sub-fund to be classified as Specified Investment
Products by continuing to hold on to the units in the underlying EIP-CIS and
changing the investment objective or investment focus of the EIP-ILP sub-fund,
or investment approach of the manager in accordance with paragraph 47B as
soon as practicable and in any event within 4 months from the date the units
in the underlying EIP-CIS cease to be classified as Excluded Investment
Products.
47B The insurer issuing an ILP, where there is an EIP-ILP sub-fund within the ILP, shall
prior to any change in investment objective or investment focus of the EIPILP sub-
fund, or investment approach of the manager, which would cause the units in the
EIP-ILP sub-fund to be classified as Specified Investment Products, ensure that a
Customer Knowledge Assessment (including the procedures in paragraphs [15] to
[26] of the Notice on Recommendations on Investment Products (Notice No. FAA-
N16)) has been conducted by a financial adviser for every existing Relevant
Policyholder of the EIP-ILP sub-fund unless the financial adviser for an existing
Relevant Policyholder is able to demonstrate to the insurer that it is unable to
conduct the aforementioned Customer Knowledge Assessment for reasons beyond
its reasonable control, including where it is unable to contact the existing Relevant
Policyholder despite it having written to that existing Relevant Policyholder
regarding the conduct of such Customer Knowledge Assessment and having made
repeated attempts thereafter to establish contact, or where the existing Relevant
Policyholder refuses to undergo the aforementioned Customer Knowledge
Assessment.
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Naming of ILP sub-fund
48. An insurer shall name an ILP sub-fund clearly4. It shall not give potential
investors a misleading view of the true nature and risks of the ILP sub-fund.
Part II – Non-Mandatory Standards

Compliance with non-mandatory standards
49. The standards set out in Part II of this Notice are not mandatory in that failure
by an insurer to comply with any of the standards shall not of itself render the
insurer to be in breach of this Notice. However, the Authority expects insurers
to observe the standards set forth in Part II of this Notice.
50. A failure by any insurer to comply with the non-mandatory standards shall not
of itself render the insurer liable to criminal proceedings but such failure may,
in any proceedings whether civil or criminal, be relied upon by any party to the
proceedings as tending to establish or to negate any liability which is in
question in the proceedings. In addition, the Authority may take into account
a failure to comply with these standards in considering whether to issue
directions to the insurer to withdraw the ILP sub-fund.
Investment guidelines, borrowing limits and other requirements
51. The core investment guidelines and borrowing limits which the ILP sub-fund
should adhere to are set out in the appendices to the Code. An insurer should
ensure that an ILP sub-fund complies with the investment and borrowing
guidelines unless otherwise stated in the relevant appendices of the Code, as
if the ILP sub-fund were a “fund”, “scheme” or “collective investment scheme”
and product summary were a “prospectus”. In particular, an insurer should
ensure the requirements of the Code apply to -
(a) a money market ILP sub-fund as if it were a money market fund;
(b) a hedge ILP sub-fund as if it were a hedge fund;
(c) a capital guaranteed ILP sub-fund as if it were a capital guaranteed fund;
(d) an index ILP sub-fund as if it were an index fund; and
(e) a property ILP sub-fund as if it were a property fund.
52. Where the ILP sub-fund contains a novel or new structure or new risk, the
manager should consult the Authority prior to the notification referred to in
paragraph 7 of this Notice.
Payment of redemption proceeds

53. An insurer should treat a redemption request as received on day T if it is
received with all requisite documents and information by the close of dealing
as specified
______________________
4
Please refer to paragraph 93 of Part II Non-Mandatory Standards for guidance on the naming of ILP sub-funds.
13

in the product summary. An insurer should pay out, or cause to be paid out,
redemption proceeds to policyholders:
(a) in respect of bond and money market ILP sub-funds, within T+4 business
days;
(b) in respect of property ILP sub-funds, within the period allowed under the
guidelines in Appendix 6 on Property Funds as contained in the Code;
(c) in respect of hedge ILP sub-funds, according to what is stated in the

product summary as required under Annex Ab of this Notice;
(d) in respect of ILP sub-funds which invest all or significantly all of the assets
in another collective investment scheme, within T+7 business days; and
(e) in respect of other types of ILP sub-funds not listed above, within T+6
business days.
54. For the purposes of paragraph 53 -
(a) “bond ILP sub-fund” means an ILP sub-fund which objective is to invest
primarily in debt securities and that does not invest in equity securities;
(b) day T is the date of the next pricing of the ILP sub-fund immediately
following the receipt of a redemption request by an insurer with all
requisite documents and information; and
(c) redemption proceeds are considered paid on the day the account of the
policyholder is credited or a cheque is mailed to the policyholder.
Transactions with related corporations
55. The manager should not invest funds belonging to the ILP sub-fund under its
management in the insurer or manager’s own securities or those of any related
corporation of such insurer or manager, unless the securities are constituents
of the ILP sub-fund’s reference benchmark that is constructed by an
independent party and the funds comply with paragraph 2.3 of Appendix 1 in
the Code.
Guidance
For the avoidance of doubt, this prohibition does not extend to collective
investment schemes or other ILP sub-funds managed by the manager or its
related corporations.
56. The manager should not lend monies of the ILP sub-fund under its management
to related corporations of such manager or the insurer, as applicable.
Guidance
For the avoidance of doubt, a deposit made with a bank licensed under the
Banking Act (Cap.19), a merchant bank approved as a financial institution
under the Monetary Authority of Singapore Act (Cap. 186), or a finance
company licensed under the Finance Companies Act (Cap. 108) to carry on
finance
14

business or any other deposit-taking institution licensed under an equivalent

law in a foreign jurisdiction, in the ordinary course of business of the ILP sub-
fund, is not construed as monies lent to such institutions.
57. The manager should not purchase, for or on behalf of any ILP sub-fund under
its management, real estate assets owned by the insurer or manager, as
applicable, or their respective related corporations, unless such purchases are
allowed under the Appendix 6 on Property Funds contained in the Code.
Transactions at arm’s length
58. The insurer and manager should conduct all transactions with or for an ILP sub-
fund at arm’s length.
Transactions consistent with ILP sub-fund’s objective and approach
59. The manager should acquire permissible investments as defined in Appendix 1

of the Code and enter into transactions which are consistent with the
investment objective and approach of the ILP sub-fund.
Best execution
60. The manager should take all reasonable steps to obtain the best possible result
for the ILP sub-fund, taking into account the following execution factors: price,
costs, speed, likelihood of execution and settlement, size, nature or any other
consideration relevant to the execution of a trade or transaction.
Use of financial derivatives
61. For an ILP sub-fund which uses financial derivatives, the manager should
ensure that the risks related to such financial instruments are duly measured,
monitored and managed on an ongoing basis. The insurer or manager should
not act as the counterparty of an OTC financial derivative that is invested into
by the ILP sub-fund.
Use of credit ratings
62. The manager should not rely solely or mechanistically on ratings issued by
credit rating agencies. The manager should, where possible, make its own
credit assessments to verify ratings issued by credit rating agencies. In the
event of a difference between the ratings issued by credit rating agencies, or
between such external ratings and the manager’s internal credit assessment,
the lowest rating should be used. For the avoidance of doubt, all ratings used
should be based on a rating scale that is globally comparable.
Significant influence
63. The insurer and manager should not, through the ILP sub-fund, carry out its
investment activities in manner which would enable it to exercise significant
influence over the management of an issuer of permissible investments.
15

Exercise of voting rights
64. In the case where the insurer exercises the votes or has appointed another
party to exercise the votes on its behalf in relation to investments of an ILP
sub-fund, the insurer or manager should:
(a) maintain a record of how the votes should be exercised; and
(b) ensure that there is no conflict of interest in the exercise of the votes.
Dealing in Units
65. The insurer should deal in units in an ILP sub-fund in accordance with the
product summary, and it should be at least one dealing day a month.
Suspension of Dealings
66. The insurer may suspend dealing in units in an ILP sub-fund only in exceptional
circumstances, after having determined that a suspension is in the best interest
of policyholders.
Guidance
Difficulties in realising ILP sub-fund assets or temporary shortfalls in liquidity
may not, on their own, be sufficient justification for suspension.
67. The insurer should immediately notify the Authority if the dealing in units is
suspended, stating the reasons for the suspension.
68. The suspension should cease as soon as practicable when the exceptional
circumstances cease to exist, and in any event, within 21 days of the
commencement of the suspension. The period of suspension may be extended
if the insurer is satisfied that it is in the best interest of policyholders for the
dealing in units to remain suspended. Such extension should be subject to
weekly review by the insurer.
Resumption of Dealings
69. The insurer should notify the Authority when dealing in units is resumed.
Valuation of assets of an ILP sub-fund
70. The value of the assets of an ILP sub-fund, in the case of quoted investments,
should be based on:
(a) the official closing price or the last known transacted price on the
organised market on which the investment is quoted; or
(b) the transacted price on the organised market on which the investment is
quoted at a cut-off time specified in the product summary and applied
consistently by the manager;
16

unless such price is not representative or not available to participants of the
organized over-the-counter market. The manager of an ILP sub-fund should be
responsible for determining, with due care and in good faith, whether the price
should be considered representative.
71. The value of the ILP sub-fund’s assets, in the case of unquoted investments
and quoted investments where the transacted prices are not representative or
not available to the market, should be based on the fair value. The fair value
should be the price that the sub-fund would reasonably expect to receive upon
the current sale of the investment. Fair value should be determined with due
care and in good faith, and the basis for determining the fair value of the
investment should be documented.
72. Except for quoted investments, all the investments of an ILP sub-fund should
be valued by a person approved by the insurer as qualified to value such assets.
73. When the market value or fair value, as the case may be, of a material portion
of the ILP sub-fund’s assets cannot be determined, the insurer or manager
should suspend valuation and dealing in the units in the ILP sub-fund.
Calculation of NAV using basis other than market quotations
74. The NAV of an ILP sub-funds may be determined using methods other than
those specified in paragraphs 70 to 73 above, provided that the insurer agrees
with the alternative method. Such a valuation may be performed by a person
approved by the insurer as qualified to value the ILP sub-fund’s investments.
Frequency of valuation
75. The insurer should ensure that the units of an ILP sub-fund are valued every
business day.
Where the ILP sub-fund:
(a) does not offer dealing every business day, it should be valued every
regular dealing day, but in any event, at least once a month;
(b) is a property ILP sub-fund which complies with Appendix 6 (Property

Funds) of the Code, it should have a full valuation at least once yearly.
76. The insurer should, subject to paragraph 75 of this Notice, ensure that the
value of a unit of the ILP sub-fund is published at least once every dealing day.
Rounding differences
77. When calculating the price at which the units in an ILP sub-fund may be issued,
redeemed or repurchased, it may be necessary to round up or down the
resultant figure in order to obtain a finite dollar value. (Please see illustration
1.) When calculating the number of units to be issued to a policyholder, it may
also be necessary to round up or down the resultant figure in order to obtain a
finite number of units. Rounding differences arising from calculating the price
of units
17

in an ILP sub-fund or arising from calculating the number of units to be issued
should be credited to the ILP sub-fund.
Example: Crediting of Rounding Differences
Price per unit = NAV / Number of units outstanding

= $122.4 million / 100 million
= $1.224
Assuming a policyholder with 10,000 units redeems all his units at $1.22 per unit,
the ILP sub-fund should then be credited with a rounding difference of:
$(1.224 -1.22) x 10,000 =$0.004 x 10,000 =$40.
Illustration 1: Crediting of Rounding Differences
Valuation errors and compensation
78. When the insurer or manager becomes aware of an error in the calculation of
an ILP sub-fund’s NAV per unit, the insurer or manager should notify the
Authority of the error, using the template set out in Illustration 2, as soon as
practicable. A revised valuation should be performed by the person responsible
for the valuation, for each valuation date during the period of the error to
ascertain the size of the error.
79. When a valuation error represents 0.5% or more of the ILP sub-fund’s NAV per
unit after adjustment for the error, the insurer or manager should:
(a) compensate affected policyholders and notify them of the

compensation made; and
(b) compensate the ILP sub-fund for any losses incurred as a result of the
valuation error.
The requirement to compensate policyholders does not apply if the amount of

compensation due to any single policyholder does not exceed $20. For
avoidance of doubt, the requirement to compensate the ILP sub-fund for any
losses incurred would apply in all circumstances where the valuation error
represents 0.5% or more of the ILP sub-fund’s NAV per unit.
80. When a valuation error represents less than 0.5% of the ILP sub-fund’s NAV
per unit, there is no requirement for the insurer or manager to compensate
policyholders or the ILP sub-fund for any losses incurred by them as a result of
the valuation error. However, if the insurer or manager chooses to compensate
one or more policyholders, then the insurer or manager should compensate all
other policyholders in the ILP sub-fund on the same basis.
81. The insurer or manager should not pay or cause to be paid from the ILP sub-
fund any expenses incurred as a result of effecting compensation for a
valuation error.
82. The insurer should notify the Authority when such compensation has been
completed in compliance with paragraphs 79 to 81.
18

VALUATION ERROR REPORT TEMPLATE
The valuation error report should be made using the insurer’s company letterhead and
sent via electronic means. The report should contain the following information:
1. State the name of the ILP sub-fund and class(es) of units affected by valuation
error.
2. Describe the nature of the error (e.g. overvalued or undervalued) and state the
magnitude of error as a percentage of the ILP sub-fund’s Net Asset Value
(NAV).
3. Attach a calculation of the valuation error.
4. State when and how the valuation error was discovered.
5. Provide detailed reasons for the valuation error.
6. Name the entities responsible for the valuation error.
7. State the time period over which the valuation error occurred.
If compensation (i.e. valuation error represents 0.5% or more of the ILP sub-funds
NAV per unit) is required:
8. State the number of affected Singapore policyholders (as recorded in the sub-
fund register) who (a) subscribed; and (b) redeemed, during the time period
over which the valuation occurred, if any.
9. State the amount of compensation to be paid to (a) policyholders; and (b) the
ILP sub-fund, if any.
10. State the name of the entity that pays for the compensation.
11. Attach a calculation of the total compensation to be made.
12. Describe the measures taken, or to be taken, to improve internal controls and
prevent the occurrence of similar incidents.
Illustration 2: Valuation Error Report Template
Delegation
83. An ILP sub-fund may be managed in part or in whole by a fund manager(s)

other than the insurer (such management referred to herein as “sub-managed”
and such ILP sub-fund referred to herein as “a sub-managed ILP sub-fund”).
Where an ILP sub-fund is sub-managed, the insurer should ensure that ILP sub-
fund is invested in accordance with this Notice and there are:
19

(a) adequate procedures in place to monitor the conduct of its delegate and
to ensure that the function delegated or outsourced is performed in a
proper and efficient manner; and
(b) controls in place to ensure compliance with this Notice.
84. Where more than 10% of the assets of the ILP sub-fund is sub-managed
abroad, the insurer should, together with its related corporations, be already
managing at least S$500 million of discretionary funds, including insurance
funds, in Singapore.
85. Where more than 10% of the assets of the ILP sub-fund is sub-managed abroad
by another manager, the Authority will consider whether the sub-manager is
reputable and supervised by an acceptable financial supervisory authority.
Investment of 100% of the assets of the ILP sub-fund in Collective Investment

Scheme
86. An ILP sub-fund may also be invested in one or more collective investment
schemes (such ILP sub-fund referred to herein as “feeder ILP sub-fund”). For a
feeder ILP sub-fund where 100% of the assets of the ILP sub-fund will be
invested in an authorised or registered collective investment scheme, the
collective investment scheme invested in by the feeder ILP sub-fund should
follow substantially the core investment guidelines and borrowing limits and
other requirements for ILP sub-funds, as the case may be, as set out in the
relevant appendix of the Code.
Investment of more than 10% of the assets in foreign Collective Investment Schemes
87. Where more than 10% of the ILP sub-fund’s assets are in collective investment
schemes, which are constituted in a foreign jurisdiction, the insurer should,
together with its related corporations, already be managing at least S$500
million of discretionary funds, including insurance funds, in Singapore.
Performance Fees
88. (a) Performance fees payable by the ILP sub-fund should meet the following
requirements:
(i) the calculation of performance fees payable should be equitable to all

policyholders;
(ii) the performance fee should be calculated and paid after

consideration of all other payments;
(iii) the period over which the performance fee accrues and the frequency
with which it crystallises should be appropriate. Crystallisation of
performance fee should be no more frequent than once a year;
Calculation method
(iv) the performance fee should be calculated based on:
20

(A) a fulcrum fee arrangement; or
(B) a high water mark arrangement.
(v) where paragraph 88 (a)(iv)(A) applies, the fulcrum fee should

increase or decrease proportionately with the investment
performance of the ILP sub-fund as compared to the specified
benchmark and be limited to between zero and 200% of the base
fee.
Guidance
The fulcrum fee, as a percentage of the NAV per unit of the ILP sub-
fund, should be applied in a symmetric manner. For example, where
the base fee is 1.5%, the fulcrum fee should range from 0 to 3.0%.
(vi) where paragraph 88(a)(iv)(B) applies, the high water mark should be
reset to the NAV of the ILP sub-fund only when the NAV of the ILP
sub-fund reaches a new historical high at the end of each performance
period; and
Guidance
The high water mark should be reset to the ILP sub-fund’s NAV
whenever a historical high is reached at the point of performance fee
calculation. Therefore, the high water mark of an ILP subfund with
performance fee that is calculated yearly should be reset to the ILP
sub-fund’s NAV at the year end when the performance fee is
calculated, regardless of whether a performance fee accrues or
crystallizes.
(vii) the performance fee should be calculated based on an appropriate

benchmark such as an index, a defined positive rate of return which
may be fixed or variable or any other factor given the ILP sub-fund’s
investment objectives and consistently applied.
(b) The insurer should consult the Authority if it intends to use a performance fee
calculation method other than those specified in paragraph 88 (a)(iv).
Disclosure requirements
(c) Where performance fees are payable by the ILP sub-fund, the product summary
should disclose:
(i) that a performance fee is payable and to whom it is payable;
(ii) if applicable, that a performance fee can be levied even if the return of the
ILP sub-fund is negative;
21

(iii) the maximum amount or percentage of the ILP sub-fund’s NAV that the
performance fee might represent in an annual accounting period; and
(iv) whether the ILP sub-fund:
(A) achieves equalisation of performance fees; or
(B) where it does not achieve equalisation of performance fees, to state

the fact and how the absence of equalisation may affect the amount
of performance fees borne by the policyholder; and
provide illustrations, such as numerical examples, of how the performance fee

is calculated.
22

Illustration 3: Fulcrum Fee Agreement
23

Illustration 4: High Water Mark Arrangement
Prohibited Activities
89. An ILP sub-fund should not engage in:
(a) direct lending of monies;
24

(b) the granting of guarantees;
(c) underwriting; or
(d) short selling except where this arises from financial derivatives which are
invested in accordance with sections 4 and 5 of Appendix 1 of the Code.
Rectification of breaches
90. The insurer or manager should take all necessary action to rectify any breach
of this Notice as soon as practicable. The insurer or manager should not enter
into any transaction that would increase the extent of the breach.
Notification of breaches
91. The insurer should inform the Authority, within 3 business days after the
insurer becomes aware, of any breach of the requirements and standards set
out in this Notice.
92. Notwithstanding paragraph 91, any breach as a result of any:
(a) appreciation or depreciation in the value of the ILP sub-fund’s underlying

investments;
(b) redemption of units or payments from the ILP sub-fund;
(c) change in the capital of a company;
Guidance
Examples of changes in the capital include changes in the total outstanding
shares of a company arising from the issuance of (pro-rata) rights or bonuses.
(d) reduction in the weight of a constituent in the benchmark being tracked

by an ILP sub-fund; or
(e) downgrade in or cessation of a credit rating,
need not be reported to the Authority as long as such breach is rectified in

accordance with paragraph 90, but in any case no later than three months from
the date of the breach unless otherwise specified in the appendices in the
Code. This period may be extended if the insurer is satisfied that it is in the
best interest of the policyholders. Such extension should be subject to monthly
review by the insurer.
Guidance on naming of ILP sub-funds
93. (a) The ILP sub-fund’s name should:
(i) be appropriate;
(ii) not be undesirable; and
25

(iii) not be misleading.
(b) In assessing whether a name is undesirable or misleading, the Authority will

consider factors including whether the name:
(i) is substantially similar to the name of another ILP sub-fund;
(ii) implies that the ILP sub-fund has merits which are not, or might not be,
justified;
(iii) implies that the manager of the ILP sub-fund has particular qualities,
which may not be justified;
(iv) is inconsistent with the ILP sub-fund's investment objective or approach;
(v) implies that the ILP sub-fund is not an ILP (for example, describing the
ILP sub-fund as a "plan" or "account"); and
(vi) might mislead prospective policyholders into thinking that persons other
than the manager are responsible for the ILP sub-fund.
For the avoidance of doubt, the use of acronyms in names is permissible provided
that they are appropriate.
Guidance 1
The name of an ILP sub-fund is appropriate if it reflects the ILP sub-fund’s
geographical focus, asset type and sector focus and is in line with the ILP sub-
fund’s investment objective, approach and investment universe. The use of
acronyms which reflect an index provider, a credit rating agency or geographical
region (e.g. “MSCI”, “S&P” or “BRIC”) may be acceptable if it is consistent with
the ILP sub-fund's investment objectives or approach.
Guidance 2
In assessing whether it is appropriate to include the term ‘fund-of-funds’ in the
name of an ILP sub-fund, the Authority would consider it acceptable if the ILP
sub-fund’s primary investment approach is to invest all or substantially all of its
assets into five or more underlying funds via the fund-of-funds investment
approach.
Guidance 3
In the case where the ILP sub-fund’s name includes or uses a term (e.g. “capital
guaranteed”) which belongs to any category of ILP sub-funds that is prescribed
in the Appendices, the ILP sub-fund should comply with those relevant guidelines.
Conversely, if an ILP sub-fund’s name uses a term which is prescribed in the
Appendices but does not comply with those guidelines, the name would be
deemed inappropriate.
(c) The name of an ILP sub-fund’s class of unit should not be undesirable or
misleading.
26

(d) The use of the following terms, or any other derivative or form of such terms,
in an ILP sub-fund’s name and description is prohibited:
(i) “capital protected”; and

(ii) “principal protected”.
Effective Date
94. This Notice shall take effect on 8 October 2018.
27

3.3 List Of Appendices Under Notice No: MAS 307

(1) Appendix A – Information To Be Disclosed In The Product Summary
(2) Appendix B – Information To Be Disclosed In The Policy
(3) Appendix C – Information To Be Disclosed In The Statement To
Policyholders
(4) Appendix D – Information To Be Disclosed In The Semi-Annual Report And
Relevant Audit Report To Policyholders (In Respect Of ILP
Sub-Funds Other Than Property ILP Sub-Funds)
(5) Appendix E – Information To Be Disclosed In the Relevant Audit Report To
Policyholders (In Respect Of Property ILP Sub-funds)
(6) Appendix F – Information To Be Disclosed in Advertisements And
Publications
(7) Appendix G – Information On The Investment-linked Policy (“ILP”) Sub-Fund
(8) Appendix H – Product Highlights Sheet
Note:
We have enclosed the following Appendices and Annexes under Notice No: MAS
307:
Annex Ad – Additional Disclosure Requirements for Index ILP Sub-Funds
Appendix F – Information To Be Disclosed in Advertisements And
Publications
Appendix H – Product Highlights Sheet

________________________________________________________________________________
Annex Ad
Additional Disclosure Requirements for Index ILP Sub-Funds
The insurer shall disclose the following in the product summary of an index ILP sub-
fund:
(a) the market or sector which the index aims to represent;
(b) the index methodology or the means by which policyholders may obtain such
information (for example, by providing the website address of the index provider);
Guidance
The index methodology should include but not be limited to information on the
criteria used for selecting and allocating weights to constituents, and information
on the index rebalancing process.
(c) the characteristics and composition of the index;
(d) the names and weightings of the top 10 largest constituents of the index as of
a date within a month of the date of the product summary;
(e) the constituents of a commodity index which are highly correlated and therefore
treated as giving exposure to the same commodity for the purpose of paragraph
4(e) of Appendix 5 of the Code, and how such correlation is determined;
(f) the means by which policyholders may obtain the latest information on the index;
(g) the strategies used by the index ILP sub-fund to track the index and provide a
description of the strategies used;
Guidance
The strategies should include a diagrammatic illustration if appropriate.
(h) a statement that there is no assurance that the index ILP sub-fund will be able to
fully track the performance of the index, a description of the circumstances that
may lead to tracking errors, and the methods used in minimising such errors;
(i) whether the index provider and the manager are related to each other and if so,
the means by which potential conflicts of interests are managed;
(j) the circumstances that may affect the accuracy and completeness in the
calculation of the index;

(k) where applicable, that the investments of the index ILP sub-fund may be
concentrated in a particular market or sector;
(l) a warning that the index composition may change;
(m) a warning that the manager may lack the discretion to adapt to market changes
and that a fall in the index may result in a corresponding fall in the ILP sub-fund’s
NAV;
(n) a warning that any material licensing condition in relation to the use of the index
may prevent the index ILP sub-fund from achieving its objective; and
(o) the contingency plan in the event that the index is no longer available for use by
the ILP sub-fund.

Appendix F
Information To Be Disclosed in Advertisements And Publications
Advertisement shall not be False or Misleading
1. No insurer shall provide any information in any advertisement or a publication that

is false or misleading, or that cannot be justified on the facts known to the person
responsible for the advertisement or publication, at the time the advertisement or
publication is advertised or published.
2. No insurer shall, whether by the prominence given to specific information or

otherwise, create in any advertisement or publication in relation to an ILP or ILP sub-
fund a false or misleading impression as to the ILP or ILP sub-fund in question.
Contents of Advertisement
3. Where an offer or invitation in respect of units in an ILP sub-fund is being made at

the time an advertisement or publication in relation to the ILP sub-fund is advertised
or published, the insurer shall not advertise or publish the advertisement or
publication unless such advertisement or publication —
(a) states —
(i) that a product summary and a PHS in relation to the ILP sub-fund is
available;
(ii) how a copy of the product summary and the PHS may be obtained;
(iii) at a potential investor should read the product summary and the PHS before
deciding whether to subscribe for units in the ILP sub- fund; and
(iv) that the value of the units in the ILP sub-fund and the income accruing to
the units, if any, may fall or rise;
(b) states the name of the insurer of the ILP and the manager of the ILP sub- fund
if the advertisement or publication does not otherwise clearly identify the insurer
or manager;
(c) where the name of the ILP sub-fund is not indicative of the ILP sub-fund’s
investment objectives and focus, states the ILP sub-fund’s investment
objectives and focus;
(d) where the advertisement or publication includes a quotation expressing acclaim

or approval for or recommending the ILP sub-fund or the manager for the ILP
sub-fund, states the source of such quotation;
(e) where there is no guarantee or warranty given as to —

(i) the protection of the principal sum a policyholder invests in the ILP sub-fund

(whether including or excluding the subscription fee); or
(ii) the rate of return on the ILP sub-fund, does not contain words such as
“guarantee”, “warranty” or any other expression suggesting that the
principal sum invested in or rate of return on the ILP sub-fund is guaranteed,
or that a policyholder cannot lose money;
(f) where the ILP sub-fund is represented as a guaranteed ILP sub-fund, states the
name of the guarantor;
(g) where the ILP sub-fund is a hedge fund or other high risk fund, indicates that
an investment in the ILP sub-fund involves a high degree of risk, and that
investment in such an ILP sub-fund is only appropriate for a person able and
willing to take such a risk; and
(h) where the units of the ILP sub-fund are listed or where an application has been
or shall be made for such units to be listed for quotation on the official list of
any approved exchange, and all or most investors may only deal in the units
through the approved exchange, includes —
(i) a statement that investors cannot redeem the units with the manager for
the ILP sub-fund or that investors may only redeem units with the manager
for the ILP sub-fund under certain specified conditions; and
(ii) a statement that the listing of the units does not guarantee a liquid market
for the units.
Past Performance of ILP Sub-Fund
4. No insurer shall order the publication of an advertisement or publication in relation

to an ILP sub-fund that includes information on the past performance of the ILP sub-
fund unless the advertisement or publication —
(a) includes a prominent statement that the past performance of the ILP sub- fund
is not necessarily indicative of the future performance of the ILP sub- fund;
(b) states the return on the ILP sub-fund and include a statement on the basis of
calculation of the return;
(c) where dividends have been declared or distributions have been made by the ILP
sub-fund, states the return on the ILP sub-fund, calculated on the assumption
that all dividends and distributions are reinvested, taking into account all charges
which would have been payable upon such reinvestment, and includes a
statement that the return is calculated on this basis;
(d) presents the return on the ILP sub-fund in relation to a period of not less than
one year, except that in the case of an ILP sub-fund that has been constituted

for less than 12 months, presents the return on the ILP sub- fund in relation to
a period commencing from the inception of the ILP sub- fund;
(e) where the total return on the ILP sub-fund is presented for a period exceeding
one year, states the average annual compounded return on the ILP sub-fund
over the same period; and
(f) indicates the period to which the return on the ILP sub-fund relates, of which —
(i) the last day of the period shall not be earlier than 3 months prior to the day
on which the advertisement or publication is advertised or published; and
(ii) the first day and last day of the period shall be determined on either of the
following bases:
(A) the first business day or last business day of a month; or
(B) the first dealing day or last dealing day of the ILP sub- fund in a month.
5. For the purposes of paragraph 4 of this Appendix F, where an ILP sub-fund which
has been constituted for less than 12 months invests at least 90% of its funds in
another collective investment scheme (“the underlying fund”), information on the
past performance of the underlying fund may be included in the advertisement or
publication, but not otherwise.
6. No insurer shall include any information on the past performance of an underlying

fund in an advertisement or publication in relation to an ILP sub-fund unless the
advertisement or publication —
(a) includes an appropriate warning regarding the limitations of using information

of past performance of the underlying fund as a proxy for the past performance
of the ILP sub-fund; and
(b) complies with paragraph 4 of this Appendix F as though the information on the
past performance of the underlying fund were information on the past
performance of the ILP sub-fund.
7. Where any past performance of an ILP sub-fund included in an advertisement or

publication in relation to that ILP sub-fund is due to exceptional circumstances that
may not be sustainable, the insurer shall include in the advertisement or publication
a prominent warning statement to that effect.
8. For the purposes of paragraph 7 of this Appendix F, “exceptional circumstances”

include, but is not limited to —
(a) an investment in an initial public offer of securities which has a large impact on
the return on the ILP sub-fund but where such return is unlikely to be sustained;
and

(b) a high annual return for a particular year where the ILP sub-fund has, or
collective investment schemes or ILP sub-funds with a similar investment focus
have, yielded a much lower historical long term average annual compounded
return.
9. No insurer shall include in an advertisement or publication in relation to an ILP sub-

fund any information on past performance based on simulated results of a
hypothetical collective investment scheme or ILP sub-fund.
Comparison of Past Performance of ILP Sub-Fund with that of another Collective

Investment Scheme or ILP Sub-Fund or an Index
10. No insurer shall order for publication an advertisement or a publication in relation to

an ILP sub-fund with a comparison of the past performance of the ILP sub- fund
with that of another collective investment scheme or ILP sub-fund unless —
(a) such other collective investment scheme or ILP sub-fund has investment
objectives and an investment focus which are similar to those of the ILP sub-
fund to which the advertisement or publication relates; and
(b) the advertisement or publication states the basis of calculation of past

performance and where applicable, that fees and charges payable through
deduction of premium or cancellation of units are excluded from this calculation.
11. No insurer shall order for publication an advertisement or a publication in relation to

an ILP sub-fund that includes a comparison of the past performance of the ILP sub-
fund with that of an index unless —
(a) such index is the benchmark chosen pursuant to paragraph 58 of Appendix A

for the ILP sub-fund or an index which reflects the investment focus of the ILP
sub-fund; and
(b) the advertisement or publication states the basis of calculation of past

12. No insurer shall make any comparison of the past performance of an ILP subfund
with that of another collective investment scheme or ILP sub-fund or with an index
unless such comparison uses a common currency and where the currencies of the
entities being compared are different, such comparison must base the conversion
to the common currency on prevailing exchange rates at the relevant time.
13. Any person making a comparison of past performance of an ILP sub-fund with that
of another collective investment scheme or ILP sub-fund or an index shall also
comply with the requirements set out in paragraphs 4 to 9 of this Appendix F.

Comparison of Past Performance of ILP Sub-Fund with that of another form of Investment
14. No insurer shall, in an advertisement or publication in relation to an ILP sub-fund,

include a comparison of the past performance of the ILP sub-fund with that of
another form of investment unless —
(a) such other form of investment has a risk profile which is similar to that of the
ILP sub-fund; and
(b) such advertisement or publication states the basis of calculation of past

15. Any person making a comparison of past performance of an ILP sub-fund with that
of another form of investment shall also comply with the requirements set out in
paragraphs 4 to 9 of this Appendix F.
Performance of Manager or Sub-Manager
16. No insurer shall include any information on the past or present performance, skills
or techniques of the manager for the ILP sub-fund or a person managing the assets
of the ILP sub-fund on behalf of the manager (referred to in this Appendix as a sub-
manager) in any advertisement or publication in relation to an ILP sub- fund, unless
the advertisement or publication —
(a) states the source of such information;
(b) indicates the period to which such information relates; and
(c) includes a prominent statement that the past performance of the manager or
sub-manager is not necessarily indicative of its future performance.
17. No insurer shall, in any advertisement or publication in relation to an ILP sub- fund,
present any information on the past or present performance, skills or techniques of
the manager or sub-manager for the ILP sub-fund, or the past or present performance
of any other collective investment scheme or ILP sub-fund under the management
of the manager or sub-manager, in a selective or biased way, such that any particular
success is exaggerated or lack of success is disguised
Future Performance of ILP Sub-Fund
18. Subject to paragraph 20 of this Appendix F, no insurer shall, in an advertisement or

publication in relation to an ILP sub-fund –
(a) include any prediction or forecast as to the future or likely performance of the
ILP sub-fund; or
(b) use words such as “targeted”, “expected” or any similar words or description
in relation to a rate of return.

19. No insurer shall include any prediction, projection or forecast on the economy, stock
market, bond market or the economic trends of the markets which are targeted by
the ILP sub-fund in any advertisement or publication unless such advertisement or
publication is accompanied by a prominent statement to the effect that the
prediction, projection or forecast is not necessarily indicative of the future or likely
performance of the ILP sub-fund.
20. The Authority may by notice in writing allow, in an advertisement or publication in

relation to an ILP sub-fund, inclusion of a prediction, projection or forecast on any
matter other than that referred to in paragraph 19 of this Appendix F.
21. No insurer shall include in an advertisement or publication in relation to an ILP sub-

fund a prediction, projection or forecast on any matter under paragraph 20 of this
Appendix F unless —
(a) the person making the prediction, projection or forecast has reasonable grounds
for making it; and
(b) the advertisement or publication discloses such assumptions, warning

statements and other information as may be required by the Authority.
22. Where the return on an ILP sub-fund is guaranteed, the insurer shall present any
guaranteed return on an average annual compounded basis.
23. A person presenting any prediction, projection or forecast allowed by the Authority
under paragraph 20 of this Appendix F, shall present such prediction, projection or
forecast on an average annual compounded basis.
Legibility and Audibility
24. Where an advertisement or publication in relation to an ILP sub-fund is in a visual

form, the insurer shall cause the publication of such advertisement or publication
containing the information required under paragraphs 3 to 23 of this Appendix F —
(a) to be clearly legible; and
(b) in the case of an advertisement or publication appearing in any document,

including a newspaper, periodical, magazine or letter, electronic mail or website,
to be in a font size of at least 10-point Times New Roman.
25. Where an advertisement or publication in relation to an ILP sub-fund in a visual form

contains a footnote, the insurer shall cause the footnote —
(a) to be in a font size which is at least half the font size of the word or statement
to which it relates; and
(b) in the case of an advertisement or publication appearing in any document,

including a newspaper, periodical, magazine or letter, electronic mail or website,
to be in a font size which is at least 10-point Times New Roman but need not

be larger than 14-point Times New Roman.
26. Where an advertisement or publication in relation to an ILP sub-fund is shown or

broadcast over the radio, television, cinema or other similar means, the insurer
ordering the publication of such advertisement or publication shall cause the
information required under paragraph 3(a)(iii) of this Appendix F to be contained in
the advertisement or publication to be audible, unless the advertisement or
publication is only in visual form, in which case such person shall cause such
information to be visually displayed in a legible size for at least 5 seconds.

Appendix H
Product Highlights Sheet
1. The PHS is to highlight key features and risks of the ILP sub-fund, to which it relates,
to potential investors. The PHS shall:
(a) clearly disclose required information in the format as set out in this Appendix H;
(b) not contain any information that is not included in the product summary; and
(c) not contain any information that is false or misleading.
Requirements in relation to preparation of the PHS
2. Annex Ha sets out the templates for the PHS. The templates serve as minimum
requirements. An insurer shall adhere to the format (including the tabular structure
and the yellow strip on the right edge of the document) and headings and
subheadings set out in the templates for their respective investment products.
Additional sub-headings may be added if these are useful to enumerate points in a
long section. An insurer shall include any additional key information that is important
for investors to understand the product.
3. Notes to guide an insurer in preparing its PHS are presented as italicised statements
in the square brackets in the templates. Some examples are presented for
illustration. These notes and examples are not meant to be exclusive or prescriptive.
An insurer shall consider and decide on the information to be disclosed in the PHS
so as to highlight key features and risks of the ILP sub-fund to the potential
investors. In deciding on the information to be disclosed in the PHS, an insurer shall
consider whether omitting the information would lead to the PHS containing false
or misleading information.
4. An insurer shall answer the questions prescribed in the templates in clear and simple
language that potential investors can easily understand. An insurer shall avoid using
technical jargon in the PHS. Where technical terms are unavoidable, an insurer shall
attach a glossary to the PHS to explain these technical terms.
5. An insurer may include references to websites or to corresponding sections of the

prospectus which set out additional information for potential investors in the right
hand column of the PHS. Every insurer is encouraged to include links to online copies
of disclosure documents, educational resources or explanatory material. However,
key information shall be clearly disclosed in the PHS and the insurer shall not merely
make reference to information in other sources, such as the product summary.
6. The use of diagrams such as graphs, charts, flowcharts, tables or numerical

explanations to explain structures or payoffs of the investment products to investors
is encouraged.
7. The PHS shall not be longer than four pages. If diagrams and a glossary are included,
these pages would not be considered as part of the four-page limit. However, the
PHS including diagrams and the glossary should not exceed eight pages. Diagrams

may be inserted within the main body of the PHS if appropriate. The insurer’s
corporate logo or trade mark may also be inserted.
8. Information in the PHS (including footnotes and references) shall be in a font size of
at least 10-points Times New Roman.
9. An insurer shall refrain from including disclaimers in a PHS.
10. Unless required by law or the listing rules of an approved exchange, an insurer shall
avoid producing marketing material which resembles or may otherwise be confused
with a PHS.


Prepared on:
This Product Highlights Sheet is an important document.
• It highlights the key terms and risks of the ILP sub-fund and complements
the Product Summary.
• It is important to read the Product Summary before deciding whether to
purchase the ILP sub-fund. If you do not have a copy, please contact us to
ask for one.
• You should not invest in the ILP sub-fund if you do not understand it or are
not comfortable with the accompanying risks.
PRODUCT HIGHLIGHTS SHEET

NAME OF ILP SUB-FUND
Product Type ILP Sub-Fund4 Launch Date [●]

(To indicate if the
units in the ILP sub-
fund are Excluded
Investment Products)3
Manager [●] Custodian [●]
Capital Guaranteed [Yes/No] Dealing Frequency Every Business

Day/Every
Monday etc.
Name of Guarantor [●] Expense Ratio for [●]
[Previous Financial
Year]
WHO IS THE SUB-FUND SUITABLE FOR?

• The Sub-Fund is only suitable for investors who: Further Information
o [State return objectives (eg. capital growth/income/
capital preservation) which the product will be suitable Refer to the “[Relevant
for] Section]” on Pg XX of
o [State if the principal will be at risk] the Product Summary
o [State how long policyholders should be prepared to for further information
hold the investment for products which have lock-in on suitability of the
periods] Sub-Fund
3
In order for units in the ILP sub-fund to be classified as Excluded Investment Products, the investment
objectives and investment focus of the ILP sub-fund, and investment approach of the manager have to be
stated in the product summary:
(a) to invest only in deposits or other Excluded Investment Products; and
(b) not to engage in securities lending or repurchase transactions for the ILP sub-fund.
The definition of “Excluded Investment Product” can be found in Annex 1 to the Notice on
Recommendations on Investment Products [Notice No. FAA-N16] at
http://www.mas.gov.sg/Regulations-and-Financial-Stability/Regulations-Guidance-and-
Licensing/Financial-Advisers/Notices.aspx.
4
For ILP sub-fund that feeds 100% into an underlying CIS fund, some of the information provided below
could be similar to the underlying CIS fund.

o [State other key characteristics of the ILP sub-fund,

e.g. to indicate if the units in the ILP sub-fund are
Excluded Investment Products, which will help
policyholders determine whether the sub-fund is
suitable for them]
Example:
• The Sub-Fund is only suitable for investors who:
o seek capital growth over a period of 3 years or longer;
o also seek regular income through yearly distributions;
and
o are comfortable with the greater volatility and risks of
an equity fund.

KEY FEATURES OF THE SUB-FUND
WHAT ARE YOU INVESTING IN? Refer to the

[State key features of the sub-fund, such as the legal “[Relevant
classification of the sub-fund, the broad investment objective of Section]” on Pg
the sub-fund, whether it intends to offer regular dividends and XX of the
when those are paid. If the sub-fund is structured to give specific Product
payoffs due to certain trigger events or scenarios, describe those Summary for
scenarios and provide scenario analysis and numerical examples. further
Where the index has unique features of its construction or its information on
payoff, describe these features, with the assistance of tables and features of the
diagrams if necessary.] Sub-Fund.
Example:
• You are investing in an ILP sub-fund that feeds 100% into
a unit trust that is constituted in [Place of constitution],
that aims to provide you with returns through long term
capital growth by investing in companies set up in the Asia
Pacific region.
• You may receive yearly distributions on or around 31

December. The Manager will decide whether a distribution
is to be made based on [factors].
Investment Strategy
[Describe how the sub-fund intends to achieve its objective. For Refer to the
instance, describe the eligible assets it may invest in and the "[Relevant
management philosophy. Any processes and structures which Section]" on Pg
introduce significant risk should be included in the description. XX of the
Include diagrams of the structure of the sub-fund if the sub-fund Product
feeds into a structured fund, or pie charts of asset allocation as Summary for
at a date near the date of PHS to show sectoral/country/asset the full
type allocation, if applicable.] diagrams of the
structure of the
Sub-Fund.

Example:
• The ILP sub-fund will feed 100% into a unit trust that invest
primarily in shares of companies listed on stock exchanges in
the Asia Pacific region. The ILP sub-fund may hold cash or
invest in derivatives instruments for purposes of hedging,
reducing cost, reducing risk, or generating capital or income
for no or minimal increase in risk.
Parties Involved
Refer to the
WHO ARE YOU INVESTING WITH? “[Relevant
[State all parties involved in the structure of the product, such as Section]” on Pg XX

the name of the umbrella fund/fund company, manager and sub- of the Product
manager, swap counterparty, and the custodian, where Summary for
applicable.]. further information
on the role and
Example: responsibilities of
• The Manager is [●] these entities and
• The fund uses [●] as the counterparty for most of its what happens if
derivative transactions. they become
insolvent.
WHAT ARE THE KEY RISKS OF THIS INVESTMENT? Refer to the

[State key risks which are either commonly occurring events, or “[Relevant
which may cause significant losses if they occur, or both. While Section]” on Pg XX
the risks may overlap into multiple categories below, there is no of the Product
need to repeat the same risk in more than one section. Product- Summary for
specific market or liquidity risks should be included under the further information
market or liquidity risks section respectively.] on risks of the Sub-
Fund.
These risk factors may cause you to lose some or all of your
investment:
Market and Credit Risks
[State market risks (including currency risks) and counterparty risks

which may result in the loss of capital or affect the pay-off of the
investment and their consequences]
Example:
• You are exposed to the market risks in Asia Pacific markets.
o Your investments may go up or down due to changing
economic, political or market conditions that impact the
share price of the companies that the sub-fund invests in.

• You have greater exposure to market risks as this is an equity

fund.
o Historically, equities have greater volatility than bonds and
other fixed income securities. The sub-fund’s valuation
and the price at which you can exit may correspondingly
fluctuate more strongly on a day-to-day basis compared
to sub-funds investing in bonds and other fixed income
securities.
Liquidity Risks
[State any risks that a investors would face in trying to exit the
sub-fund, eg: limitations on redemption or factors that may delay
the payment of redemption proceeds.]

Example:
• The Sub-Fund is not listed and you can redeem only on
Dealing Days.
o There is no secondary market for the sub-fund. All
redemption requests should be made to the Manager.
Product-Specific Risks
[State fund-specific risks, which include structure-related risks,

investment objective related risks, potential legal risks, etc ]
Example:
• You are exposed to derivatives risks.
o The Manager may use derivative instruments, including
futures, options, warrants, forwards, swaps or swap
options, from time to time in managing the investments
of the sub-fund.
o The usage of derivatives may negatively impact the value
of the ILP sub-fund and the sub-fund may suffer greater
losses than if the sub-fund had not used derivatives
o At the worst case, you may lose all your sub-funds
invested if the sub-fund is fully exposed to derivative
positions that move against the Manager’s judgement.
FEES AND CHARGES
WHAT ARE THE FEES AND CHARGES OF THIS Refer to the

INVESTMENT? “[Relevant
[State all fees and charges payable. This includes management Section]” on Pg XX
fees, distribution fees, and any other substantial fees of more than of the Product
0.1% of NAV or of subscription value. Distinguish between fees Summary for
payable via the investors’ investments in the fund and fees payable further information
directly by the investors. Indicate if the fees are payable once-off on fees and
or on a per-annum basis. If fees may later be increased or new fees charges.
introduced, state so here.]

Example:
Payable directly by you
• You will need to pay the following fees and charges as a
percentage of your gross investment sum:
Sales Charge o Up to 5% for cash and

SRS investment
o Up to 3% for CPF
investment
Redemption Charge o Currently NIL (maximum
5%)
Switching Fee o Currently NIL (maximum
1%)
Payable by the sub-fund from invested proceeds

• The sub-fund will pay the following fees and charges to the

Manager and other parties:
Management Fee o 1.5% per annum

Accounting and o 0.025% per annum,
Valuation Fee subject to a minimum of
S$5,000
VALUATIONS AND EXITING FROM THIS INVESTMENT
HOW OFTEN ARE VALUATIONS AVAILABLE? Refer to the

[State how often and where valuations are published, eg: provide a web “[Relevant
address or the name of local newspapers where the valuation is Section]” on
published.] Pg XX of the
Product
HOW CAN YOU EXIT FROM THIS INVESTMENT AND WHAT ARE Summary for
further
THE RISKS AND COSTS IN DOING SO?
information
[State length of cooling off period and describe how investors can exit
on valuation
from the investment if they change their mind within the cooling off
and exiting
period and the relevant costs. If there is no cooling off period, state so
from the Sub-
clearly. Subsequent to cooling off period, describe how investors can exit
Fund.
from the investment and the relevant costs.]
Example:
• You can exit the sub-fund at any time by informing the insurer,
either directly or through the financial adviser from whom you
purchased the Fund. If you exit within the 14 days freelook of
the initial purchase of the ILP, you may do so without incurring
the sales charge and fees stated above. However, you will have
to take the risk for any price changes in the NAV of the Fund
since you purchased it and pay an administrative fee of $X.
• You will receive the sale proceeds within six business days from
the time the insurer receives your request to exit from the ILP
sub-fund.

• Your exit price is determined as follows:

o If you submit the redemption order before 5pm on
a business day, you will be paid a price based on
the net asset value of the ILP sub-fund at the

close of that business day.
o If you submit the redemption order after 5pm, you
will be paid a price based on the net asset value at
the close of the next business day.
• The sale proceeds that you will receive will be the exit price
multiplied by the number of units sold, less any charges. An
example is as follows:
Exit price X Number of units sold = Gross Sale Proceeds

S$1.250 X 1,000 = S$1,250
Gross Sale Proceeds - Realisation Charge = Net Sale Proceeds

S$1,250 - S$0.00 = S$1,250
CONTACT INFORMATION
HOW DO YOU CONTACT US?

[State contact details of insurers whom investors can contact if
they have enquiries. Include a website address and email address
if appropriate]
APPENDIX: GLOSSARY OF TERMS
*Notes on History of Amendments
1. MAS Notice 307 (Amendment) 2012 with effect from 11 December 2012 except
for paragraphs 2(j), 2(p) and 2(r) of MAS Notice 307 (Amendment) 2012 which shall
take effect on 1 January 2013. An insurer who offers ILP sub-funds which are in
existence immediately before 1 January 2013 need only comply with paragraph 2(j)
of MAS Notice 307 (Amendment) 2012 (paragraph 9A of MAS Notice 307) when
the ILP sub-funds are due to be updated for the purpose of paragraph 31 of MAS
Notice 307.
2. MAS Notice 307 (Amendment) 2018 with effect from 8 October 2018.


9. MAS Guidelines – Part I [Guideline Nos: FAA-G01; FSG-G01;
FAA-G04; FAA-G05; FAA-G06 & FAA-G07] And Circular No: CMI 01/2011
CHAPTER 9
MAS GUIDELINES – PART I [GUIDELINE NOS: FAA-G01; FSG-G01; FAA-G04; FAA-G05;
FAA-G06 & FAA-G07] AND CIRCULAR NO: CMI 01/2011
CHAPTER OUTLINE
1. Introduction
2. Guidelines On Criteria For The Grant Of A Financial Adviser’s Licence [Guideline No:
FAA-G01]
3. Guidelines On Fit And Proper Criteria [Guideline No: FSG-G01]
4. Circular On Due Diligence Checks And Documentation In Respect Of The Appointment
Of Appointed, Provisional And Temporary Representatives [Circular No: CMI
01/2011]
5. Guidelines On Standards Of Conduct For Financial Advisers And Representatives
6. Guidelines On The Use Of The Term “Independent” By Financial Advisers [Guideline
No: FAA-G05]
7. Guidelines On Applications For Approval Of Arrangements Under
Paragraph 11 Of The First Schedule To The FAA [Guideline No: FAA-G06]
8. Guidelines On Exemption For Specialised Units Serving High Net Worth Individuals
Under Section 100(2) Of The Financial Advisers Act [Guideline No: FAA-G07]
Appendix 9A – Illustrative List Of Proposed Assessment Of Applications For Approval Of
Arrangements Under Paragraph 11
Appendix 9B – Application For Approval Of Arrangements Under Paragraph 11 Of The
First Schedule To The Financial Advisers Act
Appendix 9C - Application For Approval Of Arrangements Under (i) Paragraph 9 Of The
Third Schedule To The Securities And Futures Act; and (ii) Paragraph 11
Of The First Schedule To The Financial Advisers Act
KEY LEARNING POINTS

 understand the requirements of the following Guidelines and Circular, as well as who
they apply to:
- Guidelines On Criteria For The Grant Of A Financial Adviser’s Licence [Guideline No:
FAA-G01]
- Guidelines On Fit And Proper Criteria [Guideline No: FSG-G01]
- Circular On Due Diligence Checks And Documentation In Respect Of The
Appointment Of Appointed, Provisional And Temporary Representatives [Circular
No: CMI 01/2011]
- Guidelines On Standards Of Conduct For Financial Advisers And Representatives
- Guidelines On The Use Of The Term “Independent” By Financial Advisers [Guideline
No: FAA-G05]
- Guidelines On Applications For Approval of Arrangements Under Paragraph 11 Of
The First Schedule To The Financial Advisers Act [Guideline No: FAA-G06]
- Guidelines On Exemption For Specialised Units Serving High Net Worth Individuals
Under Section 100(2) Of The Financial Advisers Act [Guideline No: FAA-G07]

1. INTRODUCTION
1.1 Guidelines are intended to provide general guidance and are meant to be for best
practices which would apply generally across the financial advisory industry.
Since guidelines set out general guidance for best practices, they do not create
any legally enforceable obligations or duties, unlike written directions.
1.2 The MAS has introduced the following Guidelines and Circular in relation to the
FAA:
(a) Guidelines On Criteria For The Grant Of A Financial Adviser’s Licence
[Guideline No: FAA-G01];
(b) Guidelines On Fit And Proper Criteria [Guideline No: FSG-G01];
(c) Guidelines On Standards Of Conduct For Financial Advisers And
Representatives [Guideline No: FAA-G04];
(d) Guidelines On The Use Of The Term “Independent” By Financial Advisers
[Guideline No: FAA-G05];
(e) Guidelines On Applications For Approval Of Arrangements Under Paragraph
11 Of The First Schedule To The Financial Advisers Act [Guideline No: FAA-
G06];
(f) Guidelines On Exemption For Specialised Units Serving High Net Worth
Individuals Under Section 100(2) Of The Financial Advisers Act [Guideline
No: FAA-G07];
(g) Guidelines On Conduct Of Business For Execution-Related Advice [Guideline
No: FAA-G08];
(h) Guidelines On Structured Deposits [Guideline No: FAA-G09];
(i) Guidelines On Switching Of Designated Investment Products [Guideline No:
FAA-G10];
(j) Guidelines On Fair Dealing – Board And Senior Management Responsibilities
For Delivering Fair Dealing Outcomes To Customers [Guideline No: FAA-G11]
(k) Guidelines On Licence Applications, Representative Notification And Payment
Of Fees [Guideline No: CMG-G01]; and
(l) Guidelines To MAS Notice FAA-N06 On Prevention Of Money Laundering
And Countering The Financing Of Terrorism
(m) Circular On Due Diligence Checks And Documentation In Respect Of The
Appointment Of Appointed, Provisional And Temporary Representatives
[Circular No: CMI 01/2011]
1.3 In this chapter, we will cover Guidelines listed above from (a) to (f), as well as
the Circular and the remaining guidelines will be covered in the following chapters.

2. GUIDELINES ON CRITERIA FOR THE GRANT OF A FINANCIAL ADVISER’S

LICENCE [GUIDELINE NO: FAA-G01]
2.1 Guideline No: FAA-G01 is issued pursuant to Section 64 of the FAA. It is intended
to provide guidance on the licensing admission criteria for persons applying for a
financial adviser’s licence under the FAA.
2.2 The following contents in regard to “Guidelines On Criteria For The Grant Of A
Financial Adviser’s Licence” has been entirely extracted from the MAS website:
Guideline No : FAA-G01
Issue Date : 1 October 2002 (Last revised on 28 January 2020)
GUIDELINES ON CRITERIA FOR THE GRANT OF A FINANCIAL ADVISER’S LICENCE
Purpose of the Guidelines on Criteria for the Grant of a Financial Adviser’s Licence
[“these Guidelines”]
1 These Guidelines are issued pursuant to section 64 of the Financial Advisers Act
(Cap. 110) [“the Act”]. They are intended to provide guidance on the licensing
admission criteria for persons applying for a financial adviser’s licence under the Act.
[Amended on 26 November 2010]
2 These Guidelines should be read in conjunction with the provisions of the Act,
subsidiary legislation made under the Act, as well as written directions, notices, codes
and other guidelines that the Monetary Authority of Singapore [“the Authority”] may
issue from time to time.
[Amended on 1 July 2005]
3 The Authority will update these Guidelines periodically to provide further guidance
to applicants.
Definitions
4 For the purposes of these Guidelines:
“appointed representative” has the same meaning as in section 2(1) of the Act;
“collective investment scheme” has the same meaning as in section 2(1) of the
Securities and Futures Act (Cap. 289);
“connected person” has the same meaning as section 2(1) of the Act;
“financial adviser’s licence” has the same meaning as in section 2(1) of the Act;
“financial advisory service” has the same meaning as in section 2(1) of the Act;
“foreign company” has the same meaning as in section 4(1) of the Companies Act
(Cap. 50);
“investment product” has the same meaning as in section 2(1) of the Act;

“net head office funds”, in relation to a foreign company, has the same meaning as in
regulation 2(1) of the Financial Advisers Regulations (Rg. 2);
“paid-up capital” means ordinary shares and non-redeemable preference shares that
have been fully paid for; and
“representative” has the same meaning as in section 2(1) of the Act.

4A The expressions used in these Guidelines, shall, except where expressly defined in
these Guidelines, or where the context otherwise requires, have the meanings as in
the Act. [Amended on 26 November 2009]
Who needs to apply for a financial adviser’s licence?
5 Corporations which carry on a business of providing any financial advisory service

are required to hold a financial adviser’s licence under the Act unless they are exempt
under section 23 of the Act. Individuals who are employed by or acting for a
corporation which is licensed or exempt under sections 23(1)(a) to (e) of the Act to
provide any financial advisory service are required to be an appointed or provisional
representative under the Act.
6 The financial advisory services specified in the Second Schedule to the Act are as
follows:
(a) Advising others, either directly or through publications or writings, whether in

electronic, print or other form, concerning any investment product, other than —
(i) in the manner set out in paragraph (b); or
(ii) advising on corporate finance within the meaning of the Securities and
Futures Act;
(b) Advising others by issuing or promulgating research analyses or research reports,

whether in electronic, print or other form, concerning any investment product; and

[Amended on 28 January 2020]
(c)
[Deleted on 28 January 2020]
(d) Arranging of any contract of insurance in respect of life policies, other than a
contract of reinsurance.
Criteria for grant of a financial adviser’s licence
7 A financial adviser’s licence will only be granted to a corporation. A corporation

applying for a financial adviser’s licence is required to establish a physical presence in

Singapore. In assessing an application for a financial adviser’s licence, the Authority

takes into consideration the following factors:
Chief Executive Officer, Directors and Representatives of the Applicant
(i) whether the applicant employs or appoints at least 2 full time individuals as
appointed representatives1 for the provision of financial advisory services which
the corporation is seeking to be licensed to provide.
[Amended on 9 June 2009]
(ii) whether the Chief Executive Officer [“CEO”]2 and all Executive Directors [“EDs”]
have a minimum of 5 years of relevant working experience in respect of the
financial advisory services that the corporation is seeking to be licensed, with at
least 3 years in a managerial capacity and whether such persons also have
acceptable academic qualifications or professional qualifications.
(iii) whether the applicant’s board of directors comprise a minimum of 2 members,
with at least one of whom is resident in Singapore.
(iv) whether the CEO of the applicant is resident in Singapore.
(v) whether the CEO or EDs are placed in a position of conflict of interest.
8 An applicant for a financial adviser’s licence must also meet the following
requirements:
8.1 Minimum financial requirements:
(a) Paid-up capital of $150,0003
In the case of an applicant which carries on a business of providing any or all of

the following financial advisory services:
(i) advising others in the manner specified in paragraph 6(a) concerning investment
products other than
(A) futures contracts,
(B) spot foreign exchange contracts, or
(C) over-the-counter derivatives contracts the value of which is determined by
reference to, is derived from, or varies by reference to (CA) the value or amount
of one or more currencies; or (CB) fluctuations in the values or amounts of one
or more currencies or currencies indices;
_________________________
1
An appointed representative has to satisfy has to satisfy the following minimum entry requirements:
(b) satisfy the minimum academic qualification and examination requirements as prescribed in the Notice
on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers
and Exempt Financial Advisers [Notice FAA-N13];
(c) satisfy the fit and proper criteria set out in the Guidelines on Fit and Proper Criteria issued
by the Authority [Guidelines FSG-G01];
and any other criteria stipulated by the Authority
2
As defined in section 56 of the FAA. The duties of the chief executive officer and directors are spelt
out in regulation 14 of the Financial Advisers Regulations. [Amended on 26 November 2010]
3
Net Head Office Funds of the same amount in the case of a foreign company.

(ii) advising others in the manner specified in paragraph 6(b) concerning investment
products, other than
(iii)
[Deleted on 28 January 2020]
(iv) arranging of contracts of insurance in respect of life policies, other than contracts
of reinsurance.
(b) Paid-up capital of $300,0004
In the case of an applicant which carries on a business of providing any or all of the
following financial advisory services:
(i) advising others in the manner specified in paragraph 6(a) concerning

(ii) advising others in the manner specified in paragraph 6(b) concerning

or more currencies or currencies indices.
(c) Paid-up capital of $300,0005
In the case of an applicant which carries on a business of providing a combination of

the financial advisory services referred to in sub-paragraphs (a) and (b) above.
The above financial requirements are spelt out in regulation 15 of the Financial
Advisers Regulations [“FAR”].
_________________________________
4
See footnote 3 above.
5
See footnote 3 above.

8.2 Professional Indemnity Insurance
An applicant must have in force a standalone non-hybrid professional indemnity

insurance policy [“PII”] under which the limit of indemnity covered should be an
amount of not less than $500,000 and under which the deductible allowed must not
be more than 20% of the applicant’s net asset value6 at the end of its immediately
preceding financial year. This requirement is stipulated in regulation 17 of the FAR.
MAS may also consider the following alternative forms of PII, as long as the applicant
has assessed that such a PII does not undermine the interest of investors, subject to
the fulfilment of conditions specified for each type of PII:
Type of PII Conditions to be Satisfied

Group PII ▪ Minimum coverage has to be at least five times the required
quantum under a stand-alone non-hybrid PII.
▪ If the deductible of the Group PII is greater than 20% of the
applicant’s net asset value / net head office funds at the end
of its immediately preceding financial year, an undertaking from
the applicant’s parent company to cover the excess in the
event of a claim will be required.
Hybrid PII7 ▪ Sub-limits have to be set for the non-PII sections of the hybrid
PII.
▪ Total coverage under the hybrid PII less the sub-limits for the
non-PII sections has to be at least equivalent to the required
quantum under a stand-alone non-hybrid PII.
Group ▪ Sub-limits have to be set for the non-PII sections of the Group
Hybrid PII hybrid PII.
▪ Total coverage of the Group hybrid PII less the sub-limits for
the non-PII sections has to be at least five times the required
quantum under a standalone non-hybrid PII.
▪ If the deductible of the Group hybrid PII is greater than 20% of
the applicant’s net asset value / net head office funds at the
end of its immediately preceding financial year, an undertaking
from the applicant’s parent company to cover the excess in the
event of a claim will be required.
[Amended on 24 August 2010]
8.3 Track Record
An applicant should have a minimum 3-year proven track record in the financial
advisory business.
8.4 Shareholding
In the case of an applicant which does not satisfy the 3-year track record requirement
stipulated in paragraph 8.3, the CEO should own not less than 20% shareholding of
the applicant. The CEO and EDs should in the aggregate own not less than 50%
shareholding of the applicant.
_______________________________
6
Net Head Office Funds in the case of a foreign company.
7
A hybrid PII is a PII policy which offers coverage on PII as well as other risks, such as crime and directors
and officers’ liability.

8.5 Supervision by Home Regulatory Authority
Where an applicant is a foreign company, it should be subject to proper supervision

by recognised home regulatory authorities and possess the requisite track record.
8.6 Systems and Processes
An applicant should have adequate internal compliance systems and processes

commensurate with the size and complexity of its business to ensure compliance with
the law, good practices and professional standards. This would include access to
research reports, financial planning tools and services, and investment capability.
8.7 Fit and Proper
An applicant as well as its officers, employees, representatives and substantial

shareholders must satisfy the fit and proper criteria set out in the Guidelines on Fit
and Proper Criteria issued by the Authority (Guideline No. FSG-G01).
8.8 Letter of Responsibility
Where appropriate, the Authority may require an applicant to procure a Letter of

Responsibility from its parent company or a related entity within the group.
9 Paragraphs 7 to 20 of FAA-G01 dated 1 October 2002 and last revised on 24

August 2010 are deleted on 26 November 2010.
3. GUIDELINES ON FIT AND PROPER CRITERIA [GUIDELINE NO: FSG-G01]
3.1 Guideline No: FSG-G01 sets out the fit and proper criteria applicable to all relevant
persons in relation to the carrying out of any activity regulated by the MAS under
any written law [“relevant legislation”].
3.2 The MAS expects a relevant person to be competent, honest, to have integrity
and to be of sound financial standing. This provides the MAS with the assurance
that the relevant person is willing and able to fulfil its or his obligations under any
written law. This also underpins the requirements that the relevant person
performs the activities regulated under the relevant legislation efficiently,
honestly, fairly and acts in the best interests of its or his stakeholders and
customers.
3.3 The onus is on each relevant person to establish that it or he is a fit and proper
person rather than for MAS to show otherwise. Where a relevant person is
required under the relevant legislation to ensure that another relevant person is
fit and proper, the onus is on the former to establish to the satisfaction of the
MAS that the latter is fit and proper. As different appointments and designations
entail different responsibilities, these Guidelines will be applied in a manner and

to the extent that is suitable to the circumstances. The MAS will consider the
nature of the responsibilities of the relevant person in determining the relative
emphasis and standard that should be expected of the relevant person.
3.4 When assessing an application for the appointment of a relevant person to senior
or critical functions, the MAS may, in addition to the fit and proper criteria as set
out in these Guidelines, consider other factors that may be relevant, such as
whether the relevant person has a good standing in the profession in respect of
which the application is submitted. If the relevant person fails to satisfy the MAS
that it or he is fit and proper, the MAS may refuse the person’s application, revoke
the person’s authorisation or exemption, or take other appropriate regulatory
action, as may be applicable and necessary.
3.5 These Guidelines provide general guidance, and are not intended to be
comprehensive nor replace or override any legislative provisions. They should be
read in conjunction with the provisions of the relevant legislations, the subsidiary
legislation made under the relevant legislation, as well as written directions,
notices, codes and other guidelines that MAS may issue from time to time
pursuant to the relevant legislation and subsidiary legislation.
A. Fit And Proper Test
3.6 The criteria for considering whether a relevant person is fit and proper include,
but are not limited to the following:
(a) honesty, integrity and reputation;
(b) competence and capability; and
(c) financial soundness.
3.7 The failure by a relevant person to meet any one of the criteria as set out in the
paragraph above may not lead to an automatic refusal of an application; refusal
to enter his name or any additional regulated activity or financial advisory services
in the public register of representatives; revocation of an authorisation; revocation
of the status of an appointed, provisional or temporary representative; or
withdrawal of an exemption or other regulatory action by the MAS. The
significance and relevance of a relevant person failing to satisfy the MAS that it
or he meets a specific criteria depends on:
(a) the seriousness of, and surrounding circumstances resulting in, the relevant
person not meeting the specific criteria;
(b) the relevance of the failure by the relevant person to meet the specific criteria
to the duties that are, or are to be, performed and the responsibilities that
are, or are to be, assumed by the relevant person; and
(c) the passage of time since the failure by the relevant person to meet the
specific criteria.
3.8 In the case where the relevant person is an institution, to establish that it is fit
and proper, an institution should satisfy MAS that:
(a) all of its substantial shareholders meet the fit and proper criteria of these
Guidelines;

(b) each of its directors and chief executive officer, or equivalent persons, meet
the fit and proper criteria of these Guidelines; and
(c) it has in place appropriate recruitment policies, adequate internal control
systems and procedures that will reasonably ensure that the persons that it
employs, authorises or appoints to act on its behalf, in relation to its conduct
of the activity regulated under the relevant legislation, meet the fit and proper
criteria of these Guidelines.
3.9 In the case where the relevant person is an exempt financial institution, to
establish that it is fit and proper, the exempt financial institution should have in
place appropriate recruitment policies, adequate internal control systems and
procedures that would reasonably ensure that the persons that it employs,
authorises or appoints to act on its behalf, in relation to its conduct of the activity
regulated under the relevant legislation, meet the fit and proper criteria of these
Guidelines.
3.10 In the case where the relevant person is an exempt entity or a fund management
company registered under paragraph 5(1)(i) of the Second Schedule to the
Securities and Futures (Licensing and Conduct of Business) Regulations, to
establish that it is fit and proper, an exempt entity or a registered fund
management company should satisfy MAS that:
(a) all of its substantial shareholders or equivalent persons and persons who:
(i) control, directly or indirectly, not less than 20% of the voting power or
such equivalent decision-making power in the exempt entity; or
(ii) acquire or hold, directly or indirectly, not less than 20% of the issued
shares or such equivalent share of ownership of the exempt entity;
meet the fit and proper criteria of these Guidelines;
(b) each of its key officers meet the fit and proper criteria of these Guidelines;
and
(c) it has in place appropriate recruitment policies, adequate internal control
systems and procedures that would reasonably ensure that the persons that
it employs, authorises or appoints to act on its behalf, in relation to its
conduct of the activity regulated under the relevant legislation, meet the
relevant fit and proper criteria of these Guidelines.
A1. Honesty, Integrity And Reputation
3.11 The factors as set out in the following paragraphs are relevant to the assessment
of the honesty, integrity and reputation of a relevant person. The factors include,
but are not limited to, whether the relevant person:
(a) has been refused the right or restricted in its or his right to carry on any trade,
business or profession for which a specific licence, registration or other
authorisation is required by law in any jurisdiction;
(b) has been issued a prohibition order under any Act administered by the MAS
or has been prohibited from operating in any jurisdiction by any financial
services regulatory authority;

(c) has been censured, disciplined, suspended or refused membership or

registration by the MAS, any other regulatory authority, an operator of a
market, trade repository or clearing facility, any professional body or
government agency, whether in Singapore or elsewhere;
(d) has been the subject of any complaint made reasonably, and in good faith,
relating to activities that are regulated by the MAS or under any law in any
jurisdiction;
(e) has been the subject of any proceedings of a disciplinary or criminal nature
or has been notified of any potential proceedings or of any investigation
which may lead to those proceedings, under any law in any jurisdiction;
(f) has been convicted of any offence, or is being subject to any pending
proceedings which may lead to such a conviction, under any law in any
jurisdiction;
(g) has had any judgment (in particular, that associated with a finding of fraud,
misrepresentation or dishonesty) entered against the relevant person in any
civil proceedings, or is a party to any pending proceedings which may lead
to such a judgement, under any law in any jurisdiction;
(h) has accepted civil liability for fraud or misrepresentation under any law in any
jurisdiction;
(i) has had any civil penalty enforcement action taken against it or him by the
MAS or any other regulatory authority under any law in any jurisdiction;
(j) has contravened or abetted another person in breach of any laws or
regulations, business rules or codes of conduct, whether in Singapore or
elsewhere;
(k) has been the subject of any investigations or disciplinary proceedings or been
issued a warning or reprimand by the MAS, any other regulatory authority,
an operator of a market or clearing facility, any professional body or
government agency, whether in Singapore or elsewhere;
(l) has been refused a fidelity or surety bond, whether in Singapore or elsewhere;
(m) has demonstrated an unwillingness to comply with any regulatory
requirement or to uphold any professional and ethical standards, whether in
Singapore or elsewhere;
(n) has been untruthful or provided false or misleading information to the MAS,
or has been uncooperative in any dealings with the MAS or any other
regulatory authority in any jurisdiction;
(o) in addition to sub-paragraphs (a) to (n) above, where the relevant person is
an individual:
(i) is or has been a director, partner, substantial shareholder or concerned
in the management of a business that has been censured, disciplined,
prosecuted or convicted of a criminal offence, or been the subject of any
disciplinary or criminal investigation or proceeding, in Singapore or
elsewhere, in relation to any matter that took place while the person was
a director, partner, substantial shareholder or concerned in the
management of the business;

(ii) is or has been a director, partner, substantial shareholder or concerned

in the management of a business that has been suspended or refused
membership or registration by the MAS, any other regulatory authority,
an operator of a market, trade repository or clearing facility, any
professional body or government agency, whether in Singapore or
elsewhere;
(iii) has been a director, partner, substantial shareholder or concerned in the
management of a business that has gone into insolvency, liquidation or
administration during the period when, or within a period of one year
after, the relevant person was a director, partner, substantial shareholder
or concerned in the management of the business, whether in Singapore
or elsewhere;
(iv) has been dismissed or asked to resign from:
 office;
 employment;
 a position of trust; or
 a fiduciary appointment or similar position,
(v) is or has been subject to disciplinary proceedings by his current or former
employer(s), whether in Singapore or elsewhere;
(vi) has been disqualified from acting as a director or disqualified from acting
in any managerial capacity, whether in Singapore or elsewhere; and
(vii) has been an officer found liable for an offence committed by a body
corporate as a result of the offence having proved to have been
committed with the consent or connivance of, or neglect attributable to,
the officer, whether in Singapore or elsewhere;
(p) in addition to points (a) to (o), where the relevant person is carrying on
business in, or is acting as a representative in respect of, providing credit
rating services, is or has been in observance of the Code of Conduct for
Credit Rating Agencies.
A2. Competence And Capability
3.12 The factors set out in the following paragraphs are relevant to the assessment of
the competence and capability of a relevant person. The factors include but are
not limited to:
(a) whether the relevant person has satisfactory past performance or expertise,
having regard to the nature of the relevant person’s business or duties, as
the case may be, whether in Singapore or elsewhere;
(b) where the relevant person is an individual who is assuming concurrent
responsibilities, whether such responsibilities would give rise to a conflict
of interest or otherwise impair his ability to discharge his duties in relation
to any activity regulated by MAS under the relevant legislation;
(c) in relation to a relevant person whose activity is regulated by MAS under
the FAA, the IA, the PS Act, the SFA or the TCA and where the relevant

person is an institution, exempt financial institution or exempt entity,

whether its directors or equivalent persons, chief executive officer or
equivalent person, the persons that it employs, authorises or appoints to
act on its behalf, in relation to its conduct of the activity regulated under
the relevant legislation, where applicable, have satisfactory educational
qualification or experience, whether in Singapore or elsewhere;
(d) in relation to a relevant person whose activity is regulated by MAS under
the FAA or the SFA, whether the representative of the relevant person has:
(i) satisfactory educational qualification or experience, relevant skills and
knowledge, whether in Singapore or elsewhere, having regard to the
nature of the duties they are required to perform; and
(ii) satisfied the requirements stipulated in the Notice on Minimum Entry and
Examination Requirements for Representatives of Holders of CMS
Licence and Exempt Financial Institutions [Notice No. SFA 04- N09] or
Notice on Minimum Entry and Examination Requirements for
Advisers [Notice No.FAA-N13], as the case may be and as may be
applicable to the representative;
(e) in relation to a relevant person whose activity is regulated by MAS under
the IA, whether the broking staff of the relevant person has:
(i) satisfactory qualification or experience, whether in Singapore or
elsewhere, having regard to the nature of the duties he is to perform;
and
(ii) satisfied the requirements stipulated in the Notice on Minimum
Standards and Continuing Professional Development Requirements for
Insurance Brokers and their Broking Staff [Notice No. MAS 502], as
may be applicable to the broking staff;
(f) in relation to an Appointed Actuary or a Certifying Actuary:
(i) whether the actuary has satisfactory past performance or expertise
indicating knowledge of the local life or general insurance market;
(ii) whether an Appointed Actuary is a Fellow of Singapore Actuarial Society
(SAS);
(iii) whether a Certifying Actuary is a member of the SAS and is a Fellow of
an association recognised by the International Actuarial Association.
A3. Financial Soundness
3.13 The factors as set out in the following paragraphs are relevant to the assessment
of the financial soundness of a relevant person. The factors include, but are not
limited to, whether the relevant person:
(a) is or has been unable to fulfil any of its or his financial obligations, whether
in Singapore or elsewhere;
(b) has entered into a compromise or scheme of arrangement with its or his
creditors or made an assignment for the benefit of its or his creditors, being

a compromise or scheme of arrangement that is still in operation, whether in

(c) is subject to a judgment debt which is unsatisfied, either in whole or in part,
(d) in addition to sub-paragraphs (a) to (c) above, in the case where the relevant
person is an individual:
(i) is or has been the subject of a bankruptcy petition, whether in Singapore
or elsewhere;
(ii) has been adjudicated a bankrupt and the bankruptcy is undischarged,
whether in Singapore or elsewhere; or
(iii) is or has been subject to any other process outside Singapore that is
similar to those referred to in sub-paragraph (i) and (ii) above; and
(e) in addition to sub-paragraphs (a) to (c) above, in the case where the relevant
person is a corporation:
(i) is or has been the subject of a winding-up petition, whether in Singapore
or elsewhere;
(ii) is in the course of being wound-up or otherwise dissolved, whether in
(iii) is or has been a corporation where a receiver, receiver and manager,
judicial manager, or such other person having the powers and duties of
a receiver, receiver and manager, or judicial manager, has been
appointed, in relation to, or in respect of any property of, the corporation,
whether in Singapore or elsewhere; or
(iv) is or has been subject to any other process outside Singapore that is
similar to those as referred to in sub-paragraphs (i) to (iii) above.
4. CIRCULAR ON DUE DILIGENCE CHECKS AND DOCUMENTATION IN RESPECT

OF THE APPOINTMENT OF APPOINTED, PROVISIONAL AND TEMPORARY
REPRESENTATIVES [CIRCULAR NO: CMI 01/2011]
4.1 The following contents in regard to the “Circular On Due Diligence Checks And
Documentation In Respect Of The Appointment Of Appointed, Provisional And
Temporary Representatives” are extracted from CIRCULAR NO: CMI
01/2011from MAS website:
MAS expects all financial institutions [FIs] to ensure that the persons whom they
employ or appoint to conduct regulated activities on their behalf under the Securities and
Futures Act [“SFA”] and the Financial Advisers Act [“FAA”] are fit and proper. MAS has
provided guidance on the fit and proper criteria applicable to the appointment of
appointed, provisional or temporary representatives under the Representative
Notification Framework [“RNF”] in MAS’ Guidelines on Fit and Proper Criteria (Guideline
No. FSG-G01)[“the Guidelines”]. FIs may have their own internal recruitment criteria,
which may impose specific or more stringent criteria than those stated in the /guidelines.
2. This circular provides guidance to assist FIs in their conduct of due diligence checks
and documentation relevant to the fit and proper certification of representatives

under the RNF. The guidance, which is based on a consolidation of the industry’s
good practices observed by MAS, sets out the MAS’ expectations of the due
diligence checks that should be conducted to the extent practicable, and is not
intended to be exhaustive.
Fit and Proper Declaration
3. The Board and Senior Management of a FI are responsible for putting in place clearly
defined and documented policies and procedures to ensure that it recruits and
retains only a fit and proper person as an appointed, provisional or temporary
representative. MAS’ expectations in respect of this are set out in Annex 1 of this
CIRCULAR NO: CMI 01/2011.
Due Diligence Checks
4. MAS expects FIs to conduct rigorous and independent checks on the fitness and
propriety of their representatives. The due diligence checks which a FI should
conduct are set out in Annex 2 of this CIRCULAR NO: CMI 01/2011.
Continuing Education
5. As set out in the Guidelines, competence and capability is one of several important
criteria for considering whether a person is fit and proper. MAS expects an
appointed, provisional or temporary representative to keep abreast of developments
in the industry and update skills and knowledge relevant to the activities they
conduct.
6. FIs must ensure that its representatives receive adequate training to have the
knowledge and skills to conduct the regulated activities under the SFA and/or
provide the financial advisory services under the FAA. For instance, FIs should
ensure that their representatives are trained on the features and risk-reward
characteristics of any investment product distributed by it, and that their
representatives understand the profile of the target customer segments of the
product, before they are allowed to advise on or sell the product to customers.
7. FIs should also provide quality, on-going training to its representatives. Training
programmes should be well structured and go beyond satisfying requirements on
training hours. Where the training is conducted by a product provider or any third-
party trainer, the FI must be satisfied that the training is adequate.
Conflicts Assessment
8. FIs should be cognisant of and ensure that there are no conflict(s) of interests in
their representative’s personal circumstances, relationship with connected persons,
other business interests (partnerships, sole proprietorships, directorships,
shareholdings, etc)1 or work arrangements within the corporation, that will impair
the representative’s ability to discharge the fair dealing responsibilities of a
representative of an appointed, provisional or temporary representative, as the case
may be.
9. Some regulated activities and financial advisory services may give rise to conflicts,
e.g. dealing in capital markets products that are securities (execution) and corporate
finance advisory. Potential conflicts with the representative’s proposed regulated
activities or financial advisory services can also arise as a result of his:
(i) shareholdings or business interests;

(ii) other roles within the company, eg. back-office operations; or

(iii) connected person’s occupation.
10. FIs should assess such conflict(s) and put in place mitigating measures to address
them. Where such measures are not plausible, without compromising the
representative’s ability to discharge his duties and responsibilities and comply with
regulatory requirements, the FI should not proceed to appoint the individual as an
appointed, provisional or temporary representative.
--------------------------------------
1
The individual should truthfully disclose his business interests in other entities in Singapore or overseas to
his principal, as this information is required to be provided to MAS for his appointment as an appointed,
provisional or temporary representative. Subsequent changes to such business interests would also have
to be notified to MAS.
4.2 The following contents in regard to “Annex 1 of CIRCULAR NO: CMI 01/2011”
are extracted from CIRCULAR NO: CMI 01/2011, Annex 1 from MAS website:
Annex 1
Fit And Proper Declaration
1 As set out in MAS’ Guidelines on Fit and Proper Criteria [“the Guidelines”], the
criteria for considering whether a person is fit and proper include but are not limited
to the following:
(a) honesty, integrity and reputation;
(b) competency and capability; and
(c) financial soundness.
2 A financial institution [“FI”] should obtain and maintain written self-declarations from
its proposed appointed, provisional or temporary representative that he has read
and understood the Guidelines and that he satisfies all the criteria. To draw attention
to the fit and proper criteria in the Guidelines, the FI is encouraged to include in the
declaration form, such relevant questions as are set out under the section of “Details
of Self-Declarations” at the end of this Annex.
3 In addition, the FI may wish to consider including in the written self-declaration, a

confirmation from the proposed representative that he is aware that under section
99O of the SFA and section 23L of the FAA, an individual who has provided a
statement that is false or misleading in a material particular to his principal and
which statement is subsequently lodged with MAS, or has omitted to give
information to his principal which causes the lodged document to be misleading in
a material respect, shall be guilty of an offence and shall be liable on conviction to
a fine not exceeding $50,000.
4 Where the proposed representative has indicated any adverse information in the self-
declaration, the FI should obtain details of the adverse information from him, and
assess if he would nevertheless be considered fit and proper to be an appointed,
provisional or temporary representative, as the case may be. The FI should maintain
written records of the reasons why it nonetheless assesses the individual to be fit
and proper. Where appropriate, the FI should put such individuals under close
monitoring or supervision for an appropriate period.

5 Self-declaration by a proposed representative constitutes a necessary but insufficient

measure in a FI’s due diligence on the individual’s fitness and propriety. In addition
to obtaining the written fit and proper declarations, the FI should endeavour to do
the following:
(a) verify relevant documents from the proposed representative in support of his fit
and proper declaration, e.g. educational and professional certificates (including
printed results of the applicable Capital Markets and Financial Advisory Services
Examinations), or relevant statement(s) from the Central Provident Fund
[“CPF”] Board evidencing that he is not in arrears of payment of contributions
on his own CPF accounts;
(b) conduct independent due diligence checks to ensure that the proposed
representative satisfies the fit and proper requirements2; and
(c) maintain adequate documentation evidencing that it had conducted the relevant
checks and assessment in relation to the provision of the fit and proper
certification.
6 Where –
(i) the proposed representative has indicated any adverse information in the self-
declaration; or
(ii) the FI has any adverse information on the individual (including any misconduct
committed by the individual which has been reported to MAS),
the FI should accordingly declare under the “Fit and Proper Certification” section of the
representative notification submitted to MAS that it is aware and has assessed the
individual’s adverse information.
Details of Self-Declarations
7 Below are some questions relevant to fit and proper criteria in the Guidelines which
FIs are encouraged to include in the self-declaration form.
Honesty, Integrity and Reputation

(i) Within the past 10 years, has the individual –
(a) been refused the right or restricted in his right to carry on any trade,
business or profession for which a specific license, registration or other
authorisation is required by law in any jurisdiction?
(b) been issued a prohibition order under any Act administered by the MAS or
been prohibited from operating in any jurisdiction by any financial services
regulatory authority?
(c) been censured, disciplined, suspended or refused membership or
registration by MAS, any other regulatory authority, an operator of a market
or clearing facility, any professional body or government agency, whether
in Singapore or elsewhere?
(d) been the subject of any complaint made reasonably and in good faith,
relating to activities that are regulated by MAS or under any law in any
jurisdiction?
(e) been the subject of any proceedings of a disciplinary or criminal nature or
been notified of any potential proceedings or of any investigation which
might lead to those proceedings, under any law in any jurisdiction?
_________________________________________
2
This should include checks to ascertain that the individual is neither suspected of nor involved in money
laundering or terrorist financing activities.

(f) been convicted of any offence, served any term of imprisonment or is being
subject to any pending proceedings which may lead to a conviction of any
offence, under any law in any jurisdiction?
(g) had any civil penalty enforcement action taken against him by MAS or any
other regulatory authority under any law in any jurisdiction?
(h) contravened or abetted another person in breach of any laws or regulations,
business rules or codes of conduct, whether in Singapore or elsewhere?
(i) been the subject of any investigations or disciplinary proceedings or been
issued a warning or reprimand by MAS, any other regulatory authority, an
operator of a market or clearing facility, any professional body or government
agency, whether in Singapore or elsewhere?
(j) been refused a fidelity or surety bond, whether in Singapore or elsewhere?
(k) been or is a director, partner, substantial shareholder or concerned in the
management of a business that has been censured, disciplined, prosecuted
or convicted of a criminal offence, or been the subject of any disciplinary or
criminal investigation or proceeding, in Singapore or elsewhere, in relation to
any matter that took place while he was a director, partner, substantial
shareholder or concerned in the management of the business?
(l) been or is a director, partner, substantial shareholder or concerned in the
management of a business that has been suspended or refused membership
or registration by MAS, any other regulatory authority, an operator of a
market or clearing facility, any professional body or government agency,
whether in Singapore or elsewhere?
(m) been a director, partner, substantial shareholder or concerned in the
management of a business that has gone into insolvency, liquidation or
administration during the period when, or within a period of one year after,
he was a director, partner, substantial shareholder or concerned in the
management of the business, whether in Singapore or elsewhere?
(n) been dismissed or asked to resign from office, employment, a position of
trust, or a fiduciary appointment or similar position, whether in Singapore or
elsewhere?
(o) been or is subject to disciplinary proceedings by his current or former
employer(s), whether in Singapore or elsewhere?
(p) been disqualified from acting as a director or disqualified from acting in any
managerial capacity, whether in Singapore or elsewhere?
(q) been an officer found liable for an offence committed by a body corporate
as a result of the offence having proved to have been committed with the
consent or connivance of, or neglect attributable to, the officer, whether in
Singapore or elsewhere?
(ii) Has the individual-

(a) had any judgement (in particular, that associated with a finding of fraud,
misrepresentation or dishonesty) entered against him in any civil
proceedings or is a party to any pending proceedings which may lead to
such a judgement, under any law in any jurisdiction?
(b) accepted civil liability for fraud, misrepresentation or dishonesty under any
law in any jurisdiction?
Financial Soundness
(iii) Within the past 10 years, has the individual-
(a) been or is unable to fulfill any of his financial obligations, whether in
Singapore or elsewhere?
(b) entered into a compromise or scheme of arrangement with its or his
creditors (including debt repayment scheme), or made an assignment for
the benefit of its or his creditors, being a compromise or scheme of

arrangement or assignment that is still in operation, whether in Singapore

or elsewhere?
(c) been or is subject to a judgement debt which is unsatisfied, either in whole
or in part, whether in Singapore or elsewhere?
(d) been or is the subject of a bankruptcy petition, whether in Singapore or
elsewhere?
(e) been adjudicated a bankrupt and the bankruptcy is undischarged, whether
in Singapore or elsewhere?
(f) been or is subject to any other process outside Singapore that is similar to
those referred to in (d) and (e)?
4.3 The following contents in regard to “Annex 2 of CIRCULAR NO: CMI 01/2011”
are extracted from CIRCULAR NO: CMI 01/2011, Annex 2 from MAS website:
Annex 2
Due Diligence Checks To Be Condcuted by Financial Institution
1. It is stated in MAS’ Guidelines on Fit and Proper Criteria (Guideline No. FSG-
G01)[“the Guidelines”], that the onus is on each relevant person to establish that it
or he is fit and proper person rather than for MAS to show otherwise. The Guidelines
also stated that where a relevant person is required under the relevant legislation to
ensure that another relevant person is fit and proper, the onus is on the former to
establish to the satisfaction of MAS that the latter is fit and proper.
Probity Checks On Representative’s Identity
2. When the FI submits a notification to appoint an individual as its representative

under RNF, it is required to provide the proposed representative’s:
(a) National Registration Identity Card [“NRIC”] number;
(b) Foreign Identification Number [“FIN”] if he is a foreigner with no NRIC; or
(c) passport number if he is a provisional representative or temporary
representative who has neither a NRIC nor FIN.
3. Prior to submitting the notification, the FI is expected to obtain a copy of the

proposed representative’s current identity documentation (e.g. NRIC, FIN or
passport) and verify his identity3. If the proposed representative is a foreigner, the
FI is expected to verify that he has the relevant employment pass or has sought
approval from the relevant authorities to work in Singapore.
_______________________________________
3
The FI is required to notify MAS of any change in a representative’s particulars within 14 days of the
change, using Form 16 of the Securities and Futures (Licensing and Conduct of Business) Regulations (Rg
10) and Form 18 of the Financial Advisers Regulations (Rg 2). This include changes to the representative’s
identification particulars (such as identification numbers and passport numbers), and other particulars
such as changes in residential address, particulars of the representative’s spouse, etc.

Probity Checks On Representative’s Past Records
4. The FI is expected to:

(a) conduct reference checks with the proposed representative’s previous
employer(s)4 to confirm that he has not been dismissed or asked to resign, and
to ask if he has any material adverse record (e.g. warning, reprimand, or other
disciplinary action for misconduct) taken by the previous employer(s);
(b) check the Public Register of Representatives on the MAS website to verify the
proposed representative’s past employment records as an appointed,
provisional or temporary representative in Singapore, including any past
regulatory action(s) taken against and/or prohibition order(s) [“PO”] issued on
him and published on the register; and
(c) conduct probity searches, including but not limited to publicly available registers
provided by enforcement and regulatory agencies, self-regulatory organisations,
and professional body or association, to verify the proposed representative’s
criminal or disciplinary records under any law or rule in any jurisdictions 5, past
records of regulatory status, and employment records.
5. The FI should note that, under Section 101B of the SFA and Section 60 of the FAA,
it is an offence to employ any person who has been issued a PO by the MAS when
the PO is still in effect.
6. The FI should ask the proposed representative to provide the reason(s) for any period
of time when he is unemployed, and document the reasons accordingly.
7. If, despite uncovering any adverse information on the proposed representative from
due diligence checks, the FI continues to assess the individual to be fit and proper,
the FI should justify and document the basis for that assessment.
Probity Checks On Representative’s Financial Status
8. The FI should ensure that the proposed representative is not the subject of a
bankruptcy petition or debt repayment scheme, or has been declared and remains
a bankrupt, whether in Singapore or elsewhere.
_________________________
4
The FI should conduct reference checks with relevant departments of the individual’s past employers, e.g.
the human resource / personnel departments. When conducting such checks, the FI should provide the
individual’s previous employer(s) with his NRIC number or FIN. This is to ensure that the individual’s
records can be properly traced by the previous employer(s) even if the individual uses a different name in
his employment with the current principal.
5
The FI should obtain the necessary declarations from the proposed representative, including whether he
has been convicted in a court of law regardless of whether his criminal record(s) has been spent. If the
proposed representative has criminal record(s), it may impact on his fitness and propriety.

9. At a minimum, the FI should obtain the proposed representative’s records from the
Ministry of Law’s Insolvency and Public Trustee’s Office Online Portal at
http://www.iptoonline.gov.sg, to ensure that he is not an undischarged bankrupt.
Where the proposed representative was previously self-employed, the principal
should obtain the individual’s records from the CPF Board to verify that he is not in
arrears of his contributions to the CPF Board as required under the CPF Act (Cap.
36). The FI should also conduct checks with credit agencies, including bankruptcy
status in overseas jurisdictions, where possible. The FI should consider requesting
the proposed representative to conduct a search of his credit status with the Credit
Bureau (Singapore) Pte Ltd and forward the result of the search to it.
False Or Misleading Document Or Information
10. The proposed representative should provide truthful information and declarations to
its principal and disclose to its principal any information material and relevant to his
fitness and propriety. The FI should ensure that the information obtained from its
independent checks does not contradict the proposed representative’s self-
declarations. The FI should highlight to the proposed representative the
consequences of false declaration, and disclose to the MAS any information material
to the assessment of his fitness and propriety.
11. Under Section 99M(1)(n) of the SFA and Section 23J(1)(n) of the FAA, if the MAS
has reason to believe that any information or document that is furnished by the
proposed representative or the FI to the MAS is false or misleading, the MAS may:
(a) refuse to enter the name of an individual in the public register of
representatives,
(b) refuse to enter an additional type of regulated activity or type of financial
advisory service for an appointed representative in that register, or
(c) revoke the status of an individual as an appointed, provisional or temporary
representative.
12. MAS will not hesitate to take regulatory action against any individual for omissions
or misrepresentations in relation to the fit and proper declarations, and any FI for
not conducting reasonable due diligence checks before providing the fit and proper
certificate for any individual to the MAS. FIs are reminded that, under Section 99O
of the SFA and Section 23L of the FAA, any one of the following constitutes an
offence:
(a) a principal who, in connection with the lodgment of any document under
Section 99H of the SFA and Section 23F of the FAA, makes a false or
misleading statement in a material particular, or omits from any document
lodged with the MAS any information thereby rendering the document
misleading in a material respect; and
(b) an individual who has provided a false or misleading statement in a material
particular to his principal which is subsequently lodged with the MAS, or to
omit giving information to his principal which causes the lodged document to
be misleading in a material respect.

Periodic Declarations And Checks
13. The principal should obtain on a periodic basis (for example, annually), written self-
declarations from its representatives as that mentioned in Annex 1. The principal
should determine, on the facts of each case, whether the frequency of self-
declaration should be increased. MAS expects the FIs to conduct the same due
diligence checks as set out in paragraphs 4 (where relevant), 8, 9 and 10 on a
periodic basis on existing representatives. The frequency of such periodic checks
should be determined by the FI, taking into account factors such as the
representative’s background and compliance track record. The FI should similarly
document the periodic self-declarations, checks and its assessment in respect of
the representatives’ fitness and propriety.
5. GUIDELINES ON STANDARDS OF CONDUCT FOR FINANCIAL ADVISERS AND

REPRESENTATIVES [GUIDELINE NO: FAA-G04]
5.1 Guideline No: FAA-G04 is issued pursuant to Section 64 of the FAA. It sets out
conduct requirements for persons acting as financial advisers under the FAA,
including, where appropriate, conduct requirements for representatives who
perform any financial advisory service on behalf of financial advisers.
A. Purpose Of The Guidelines
5.2 These Guidelines set out the standards of conduct expected of financial advisers
and their representatives. They provide general guidance and are not intended to
replace or override any legislative provisions or written directions issued under
the FAA, in respect of conduct requirements specifically applicable to financial
advisers and their representatives.
5.3 The MAS expects all financial advisers and their representatives to have regard
to these Guidelines, so as to help foster professional standards and enhance
confidence in the financial services industry.
5.4 The MAS is cognizant of the fact that specific situations may require appropriate
modifications to these Guidelines. Given the differences among financial advisers,
each financial adviser may need to adapt these Guidelines to its particular
circumstances.
5.5 These Guidelines should be read in conjunction with the provisions of the FAA,
subsidiary legislation made under the FAA, as well as written directions, notices,
codes and other guidelines that the MAS may issue from time to time. The MAS
will be guided by these Guidelines in considering whether a financial adviser or
any of its representatives satisfies the business conduct requirements that are
set out in the FAA or any of its subsidiary instruments, or is a fit and proper
person to conduct financial advisory services in Singapore.

B. Integrity
5.6 A financial adviser should conduct its business with honesty, fairness, integrity
and professionalism, in order to maintain good faith and to preserve public trust
in the financial services industry.
5.7 A financial adviser should not engage in any conduct involving fraud or
dishonesty, or commit any act that reflects adversely on its honesty, or
trustworthiness, or compromises its integrity.
C. Objectivity
5.8 A financial adviser should exercise reasonable care and judgement to achieve and
maintain objectivity in conducting its business.
5.9 A financial adviser should avoid situations that could impair its ability to make
objective recommendations.
D. Confidentiality
5.10 A financial adviser should implement and maintain proper procedures to preserve
confidentiality of information it receives from a client or which relates to a client.
5.11 A financial adviser should not disclose to any person any information that given
by a client, unless:
(a) the information obtained from the client is given to the MAS or any other
government agencies in accordance with any relevant law; or
(b) the client has given his consent to the financial adviser to disclose the
information.
E. Competence
5.12 A financial adviser should act with competence and strive to maintain the
necessary knowledge and expertise in its business activities.
5.13 A financial adviser should provide advice only in those areas in which it has the
necessary competence and skills. Where the financial adviser is not professionally
competent in a specific area, it should consult other qualified professionals, or
advise clients to seek the advice of other qualified professionals.
5.14 A financial adviser should ensure that any person whom it employs or appoints
to conduct business for or with clients is suitably qualified and competent, and
that the person possesses the relevant professional training or experience to act
in the capacity so employed or appointed.
5.15 A financial adviser should provide its representatives with relevant training, so as
to enhance their competence, knowledge and skills.

5.16 A representative of a financial adviser should keep himself abreast of advances

in the financial services industry and participate in continuing education
throughout his professional career, in order to maintain the necessary
competence, knowledge and skills in all the business activities in which he is
engaged.
5.17 Where a financial adviser operates a multi-tier structure, it should put in place
arrangements to enable it to properly supervise its representatives at every tier.
F. Due Care And Diligence
5.18 A financial adviser should act with due care and diligence in conducting its
business activities.
F1. Prompt And Best Execution
5.19 A financial adviser should take all reasonable steps to process client orders
promptly, in accordance with the instructions of clients and on the best available
terms.
5.20 A financial adviser should provide its clients with prompt written confirmation or
documentation that the clients’ orders have been executed.
F2. Supervision Of Representatives
5.21 A financial adviser should have adequate systems and processes in place to
ensure proper supervision of its representatives and their activities.
F3. Cessation Of Business
5.22 Before the cessation of its business of providing financial advisory services, a
financial adviser should ensure that its liabilities and obligations to all clients have
been fully discharged or provided for, and that proper arrangements have been
put in place to ensure that its clients continue to be serviced by another financial
adviser.
G. Disclosure To Client
G1. General Information About The Financial Adviser
5.23 A financial adviser should provide clients with adequate information about its
business, including its business address and contact details. It should also
disclose the types of financial advisory service that it is authorised to provide,
including the type of investment products that it is allowed to give advice on or
market to clients.
5.24 In the case where a financial adviser is part of a financial services group and its
representative also acts for one or more related companies, the representative
should inform the client of the capacity in which he is acting.

G2. Key Features Of Products
5.25 When making a recommendation on an investment product, a financial adviser

should make adequate disclosure of all material facts relating to the key features
of the product, including:
(a) the nature of the investment, including the underlying financial instruments
and how these instruments work, if applicable;
(b) the benefits of investing in the product;
(c) the risks involved1;
(d) the salient terms and conditions of the product;
(e) the fees and charges the client will have to pay, including any recurring
charges or fees, if applicable;
(f) early termination clauses, including, in the case of funds deposited by a client
with a deposit-taking institution, the procedures, charges and restrictions on
early withdrawal by the client, or early redemption by the deposit-taking
institution, as well as any other material information associated with early
withdrawal or redemption;
(g) any pecuniary or other disadvantages that the client will or may suffer
(temporarily or otherwise) as a result of switching from the original product
to the replacement product, if applicable.
G3. Warnings, Exclusions And Disclaimers
5.26 A financial adviser should draw the client’s attention to the warnings, exclusions
and disclaimers in all documents, advertising materials and literature relating to
an investment product it is recommending to the client.
G4. Clear, Adequate And Not False Or Misleading
5.27 A financial adviser should ensure at all times that any representation made and
information provided to the client is clear, adequate and not false or misleading.
G5. Fact And Opinion
5.28 A financial adviser should distinguish between facts and opinion in its
presentation of recommendations to the client.
G6. Remuneration
5.29 A financial adviser should disclose, in writing, to its client all remuneration,
including any commission, fee and other benefit that it has received or will receive
for making any recommendation in respect of an investment product, or executing
1
In the case of futures contracts, contracts or arrangement for the purpose of foreign exchange trading,
contracts or arrangements for the purpose of leveraged foreign exchange and other complex product
transactions, the financial adviser should assure itself that the client understands the risks related to
investing in such products, and that the client has sufficient financial resources to assume the risks and
bear the potential loss of investing in such products.

a purchase or sale contract relating to an investment product on the client’s

behalf.
5.30 If a financial adviser is charging a fee, it should disclose to the client the details
of the charges at the outset.
5.31 If a financial adviser receives commissions from a product provider on investment

products sold on behalf of the product provider, it should disclose to the client
the amount of commissions that it receives on the investment products it
recommends.
5.32 Where a financial adviser receives trailer commissions, soft commissions or such
other benefits from a product provider, it should disclose to the client the amount
of such commissions and benefits.
5.33 Where the amount of remuneration, commission, fee or benefit is not quantifiable,
a financial adviser should furnish its client with a description of how it will be
remunerated.
5.34 If the precise rate of remuneration or value of commission is not known in

advance, the financial adviser should estimate the rate likely to apply in such
description.
5.35 In the case of a life policy, a financial adviser should disclose to its client the
“distribution cost” item in the Benefit Illustration, and will not be required to
disclose the amount and type of remuneration as stated above.
H. Know Your Client
H1. General
5.36 When making a recommendation on an investment product to a client, a financial

adviser should take all reasonable steps to determine the client’s financial
objectives, risk tolerance, financial situation, investment experience and particular
needs.
H2. Reasonable Basis
5.37 A financial adviser should ensure that its recommendations are suitable for the
client, taking into account the information it has obtained from the client. It should
ensure that its recommendations are based on thorough analysis and take into
account alternative investment options.
5.38 A financial adviser should explain to the client the basis for its recommendation
and why the investment product that it is recommending is suitable for the client.

5.39 A financial adviser should not use any rebate of commissions as the basis for its
recommendation.
H3. Record-Keeping
5.40 A financial adviser should keep records of all information it has obtained from its
client, the recommendation made to the client and the basis of its
recommendation.
5.41 Management should regularly review these records to evaluate the suitability of
the recommendations made by their representatives.
H4. Prevention Of Money Laundering
5.42 A financial adviser should take all reasonable steps to establish the true and full
identity of its clients, and should ensure that it complies with the “Know Your
Client” due process as outlined in the “Notice To Financial Advisers On Prevention
Of Money Laundering And Countering The Financing Of Terrorism” [Notice No:
FAA-N06] issued by the MAS.
I. Conflicts Of Interest
5.43 A financial adviser should act in the best interests of its clients when providing
financial advisory services to its clients. It should disclose in writing to the client
any actual or potential conflicts of interest arising from any connection to or
association with any product provider, including any material information or facts
that could compromise its objectivity or independence in the carrying out the
5.44 In assigning duties, a financial adviser should not place its staff members in
situations where conflicts of interest may arise. The financial adviser should
ensure that there is proper segregation of duties to minimise any possible conflicts
of interest.
J. Complaints Handling
5.45 A financial adviser should have in place adequate procedures and processes for
handling complaints relating to its financial advisory business.
5.46 It should ensure that:

(a) complaints are handled in a fair, timely and appropriate manner;
(b) complaints are promptly investigated and responded to; and
(c) an officer is designated to handle all complaints.
5.47 A financial adviser should maintain a register of complaints, containing details of

complaints received and how they have been dealt with. Management should
review the register regularly.

K. Compliance With Laws
5.48 A financial adviser should maintain adequate knowledge of and comply with all
applicable laws, rules and regulations relevant to its business activity, including
these Guidelines.
5.49 A financial adviser should take all reasonable steps, including the establishment
of internal procedures, to ensure that any person whom it employs or appoints to
conduct business for or with its clients is conversant and comply with all
applicable laws, rules and regulations relevant to its business activity.
6. GUIDELINES ON THE USE OF THE TERM “INDEPENDENT” BY FINANCIAL

ADVISERS [GUIDELINE NO: FAA-G05]
6.1 Guideline No: FAA-G05 is issued pursuant to Section 64 of the FAA. It sets out
the circumstances under which a financial adviser may use the term
“independent”.
6.2 These Guidelines are meant to give provide general guidance, and are not
intended to replace or override any legislative provisions under the Act. They
should be read in conjunction with the provisions of the Act, subsidiary legislation
made under the Act, as well as written directions, notices, codes and other
guidelines that the Monetary Authority of Singapore [“the Authority”] may issue
from time to time.
6.3 The purpose of Guideline No: FAA-G05 is to give guidance to financial advisers
on the circumstances that they may use the term “independent” in the name,
description or title under which they carry on business in Singapore, promote or
advertise their services, or use the term in respect of their provision of any
financial advisory service.
6.4 These Guidelines set out that:

(a) only financial advisers which can clearly demonstrate that they do not have
financial or commercial links with product providers that are capable of
influencing their recommendations should use the term “independent”; and
(b) before using the term “independent”, financial advisers should be satisfied in
light of their own particular circumstances that they are in compliances with
Regulation 21 of the FAR.
6.5 Given the diversity of business and financial arrangements and the fact that the
financial advisory market is still at an early stage of development, the MAS
expects only a small number of financial advisers in Singapore to be able to use
the term “independent”. These Guidelines adopt a principle-based approach,
rather than a detailed prescriptive approach, in determining whether a financial
adviser can use the term “independent”.

A. Background Information
6.6 Payment and ownership structures between financial advisers and product
providers have become increasingly complex and diverse. Investors are often not
fully aware of the existence, nature or implications of these payment or
ownership structures. Commercial arrangements between financial advisers and
product providers may also give rise to issues relating to the independence of
financial advisers.
6.7 Some financial advisers may wish to use the word “independent” in their business
names or in respect of their provision of any financial advisory service. They may
also wish to promote or advertise their services as being “independent”.
However, the use of the word ”independent” by a financial adviser has strong
connotation for the investing public. It suggests to the investor that the financial
adviser operates with objectivity and impartiality, and does not have any potential
conflict of interest when recommending an investment product, as a result of
commercial or financial links with a product provider. In the light of such public
expectations, the Financial Advisers Regulation (FAR) limits the use of the word
”independent” by financial advisers.
B. Conditions To Be Met
B1. Regulation 21 Of The FAR – Use Of The Term “Independent”
6.8 Regulation 21(1) of the FAR states that no licensed financial adviser or exempt
financial adviser shall use the word “independent” or any of its derivatives in any
language, or any other word or expression in any language that is of like import
to “independent”:
(a) in the name, description or title under which it carries on business in
Singapore;
(b) to promote or advertise its services; or
(c) in respect of its provision of any financial advisory service, unless:
(i) it does not receive any commission or other benefit from a product
provider which may create product bias, and does not pay any
commission to or confer other benefit upon its representatives which
may create product bias;
(ii) it operates free from any direct or indirect restriction relating to any
investment product which is recommended; and
(iii) it operates without any conflict of interest created by any connection to
or association with any product provider.
6.9 Regulation 21(2) of the FAR states that where a licensed financial adviser or an
exempt financial adviser is:
(a) prohibited from using the word “independent” under Regulation 21(1) of the
FAR; or

(b) not prohibited from using the word “independent” under Regulation 21(1) of
the FAR but decides not to do so,
it shall ensure that its representatives do not use the word “independent” or any
of its derivatives in any language, or any other word or expression in any language
that is of like import to “independent” in the manner as specified in Regulation
21(1)(a), (b) or (c) of the FAR.
6.10 Regulation 21(3) of the FAR states that no representative of a licensed financial
adviser or an exempt financial adviser shall use the word “independent” or any
of its derivatives in any language, or any other word or expression in any language
that is of like import to “independent”, in acting as a representative of the
financial adviser if the financial adviser has informed him that it may not do so.
B2. Basic Test Of Independence
6.11 The basic test for independence is whether a reasonable investor, knowing all the
relevant facts and circumstances will perceive the financial adviser as having
conflicting interests with the investor and for the advice or recommendation not
to be objective and impartial. In considering whether a financial adviser is
independent, the MAS will consider all relevant facts and circumstances.
6.12 The MAS is of the view that to assist investors to have confidence in the advice
that they receive, the term “independent” should only be used by financial
advisers who can clearly demonstrate that they do not have financial or
commercial links with product providers which are capable of influencing their
recommendation, or these are relatively insignificant.
6.13 The MAS considers that a financial adviser can use the word ”independent” if:
(a) it does not receive any of the following:
(i) any commission (apart from commission that is rebated in full to the
financial adviser’s clients);
(ii) any form of remuneration calculated at a rate or on a basis that varies
having regard to all or any of the following:
 the number of transactions so arranged or effected; or
 the value of each transaction or of all transactions (for life policies,
based on amount of premiums paid or payable or the amount of sum
insured. For unit trusts, based on subscriptions paid or payable); and
(iii) any gift or other benefit from any product provider which may reasonably
be expected to influence the financial adviser.
(b) it operates free from any direct or indirect restriction relating to the
investment products that it provides financial advisory services on; and
(c) it operates without any conflict of interest that may:
(i) arise from its association or relationship with product providers; and

(ii) reasonably be expected to influence it in carrying on the business of

providing financial advisory services.
6.14 The MAS considers that in the circumstances as set out above, the requirements
of Regulation 21 of the FAR will normally be met. A financial adviser that does
not meet the tests as specified above is not necessarily precluded from using the
term ”independent” in accordance with Regulation 21 of the FAR. Sections 6C.
to 6E. (Paragraphs 6.15 to 6.29) below of this chapter provide guidance on other
circumstances where a financial adviser may not be restricted from using the
term “independent”.
C. Commissions And Other Benefits
6.15 A financial adviser may be compensated by product providers in various ways.

These include commissions, trailer fees or soft dollar arrangements.
6.16 If a financial adviser receives any commission or other benefit of the kind as
referred to in Paragraph 6.13(a) above of this chapter, which may tend to
influence its advice or recommendation in favour of a particular investment
product or product provider, it should not use the word “independent”.
6.17 The mere fact that a financial adviser receives commissions or other benefits from
a product provider does not preclude it from calling itself “independent”. The key
issue is whether such commission or other benefit is likely to create a bias in
favour of a particular investment product, class of investment product or product
provider. This is a question of fact. Below are some general guidelines designed
to assist financial advisers in making this assessment.
C1. Insignificant Commissions Or Other Benefits
6.18 In cases where the financial adviser’s remuneration consists of commissions or

other benefits, the financial adviser may not be restricted from using the word
“independent” if the commissions or other benefits that it receives are
insignificant relative to its total revenue. This is because such commissions or
benefits may not tend to create a product bias or be capable of influencing the
recommendations of the financial adviser. Clearly, low value financial benefits,
such as a business lunch or a free seminar, would not generally give rise to a
concern.
C2. Same Level Of Commission
6.19 A financial adviser is likely to be biased in favour of a particular investment

product, unless it receives a broadly similar level of commission for similar
products or classes of products that it recommends. This can also be the case if
the level of commission received is similar, but the financial adviser receives
significant other additional benefits, such as free research or training for
recommending a particular product. If there are any significant differences in the
rate of commission payable for different classes of products, such differences

may create a bias in favour of the class of products that pay the higher
commission.
C3. Commission Sharing Arrangement
6.20 A financial adviser may remunerate its representatives through a commission

sharing arrangement, where the representatives are entitled to a certain
percentage of the commissions paid by the product providers. Significant
differences in the commission sharing arrangement for different investment
products may tend to create a bias in favour of certain products when
representatives give advice on, or recommend those products. This may be the
case even if the overall commission paid by product providers to the financial
adviser may be similar. In such a situation, the representatives may be induced
to promote an investment product that entitles them to a higher commission.
C4. Significant Commissions or Benefits
6.21 For the purpose of Sections C1. to C3. (Paragraphs 6.18 to 6.20) above of this
chapter, the MAS will, as a general rule of thumb, consider commissions or
benefits to be significant, if they constitute more than 20% of the financial
adviser’s total revenue. Differences in the rate of commission amounting to more
than 20% will generally be regarded as significant.
D. Product Restriction
6.22 A financial adviser’s independence may be impaired by any form of product

restriction, whether direct or indirect. A direct restriction can be in the form of a
contractual agreement between a financial adviser and a product provider,
whereby the financial adviser is confined to selling that product provider’s
investment products, or a range of investment products as selected by the
product provider. For instance, a financial adviser that enters into an agreement
with a life insurance company to only give advice on or distribute that life insurer’s
life policies or both will not be regarded as being independent.
6.23 It is possible for a financial adviser to enter into a contract with a product
provider, where the financial adviser is required to meet specified sales targets.
The MAS considers such an arrangement as a form of indirect product restriction,
which is likely to create a product bias in favour of the product provider with
whom the financial adviser has entered into such agreement.
6.24 Notwithstanding the absence of a contractual agreement, the MAS will not
normally regard a financial adviser as being independent if it represents less than
four product providers for each class of investment product.
6.25 The MAS takes the view that a financial adviser which is subject to any type of
direct or indirect product restriction in relation to which advice or
recommendation is provided should not use the word ”independent”.

E. Relationship With A Product Provider
6.26 A financial adviser may be a product provider itself, such as a bank, fund
management company or life insurance company. Under such circumstances, the
financial adviser should not promote its services as being “independent”.
6.27 A financial adviser may also be related to a product provider. For instance, it may
be a subsidiary of a product provider, the advisory arm of a financial services
conglomerate that owns a fund management, life insurance or banking outfit, or
a sister company of a product provider. In considering whether these ownership
links create a product bias, the MAS will take into account:
(a) the ownership structure of the financial adviser;
(b) its relationship with the product provider; and
(c) the products on which advice or recommendation is given.
6.28 For example, a financial adviser may be a wholly-owned subsidiary of a fund

management company. If that financial adviser gives advice on the products of
the fund management company, then there is likely to be a product bias in favour
of the products of the parent company.
6.29 In instances, where the ownership links result in a product provider having
complete control or significant influence over the financial adviser, the financial
adviser is likely to be biased in favour of the product provider’s investment
products. For the purposes of these Guidelines, a product provider has significant
influence if it has the power to participate in the financial and operating policy
decisions of the financial adviser.
F. Penalty For Breach Of Regulation 21 Of The FAR
6.30 Any financial adviser which contravenes Regulation 21(1) or (2) of the FAR shall
be guilty of an offence. Similarly, a representative who contravenes Regulation
21(3) of the FAR shall also be guilty of an offence.
G. Application Of The Guidelines
6.31 Although the MAS has issued these Guidelines, the question of independence
depends on the exact circumstances in each case. Therefore, mere compliance
with these Guidelines does not necessarily ensure that a financial adviser can use
the term ”independent”. Financial advisers and their representatives should
carefully consider their own particular circumstances before using the term
“independent” in the name, description or title under which they carry on business
in Singapore, to promote and advertise their services, or in respect of their
provision of any financial advisory service. It is a matter for the financial adviser
to be clearly satisfied and be able to demonstrate that it is in compliance with
Regulation 21 of the FAR before using the term “independent”.

7. GUIDELINES ON APPLICATIONS FOR APPROVAL OF ARRANGEMENTS UNDER

PARAGRAPH 11 OF THE FIRST SCHEDULE TO THE FINANCIAL ADVISERS ACT
[GUIDELINE NO: FAA-G06]
7.1 Guideline No: FAA-G06 is issued pursuant to Section 64 of the FAA to provide
guidance on approval of arrangements under Paragraph 11 of the First Schedule
to the FAA. These Guidelines set out the MAS’s assessment criteria and the
application procedures for approval of arrangements under Paragraph 11.
A. Applications Of Paragraph 11
7.2 Section 6(1) of the FAA provides that no person shall act as a financial adviser
in Singapore in respect of any financial advisory service, unless he is authorised
to do so by a financial adviser's licence or is an exempt financial adviser.
7.3 In particular, Paragraph 11 allows a foreign company [within the meaning of

Section 4(1) of the Companies Act (Cap. 50)] whose provision of any financial
advisory service is effected under an arrangement between the foreign company
(on the one hand) and its related corporation which is licensed under the FAA or
exempt under Section 23 of the FAA (other than subsections 1(e)(a) and (1)(f))
(on the other hand), where such arrangement is approved by the MAS. Individuals
providing any financial advisory service for the foreign related corporation under
an arrangement as approved by the MAS are not representatives as defined in
the FAA and are therefore not required to be an appointed or provisional
representative under the FAA.
B. Assessment Criteria
7.4 The MAS will take a facilitative approach to the approval of arrangements
between an entity that is licensed under the FAA or exempt under Section 23 of
the FAA [other than subsections (1)(e)(a) and (1)(f)] (Singapore entity) and its
foreign related corporation(s). While the MAS recognises that many such
arrangements form a part of legitimate business activities, it is not the intention
of the MAS that an approval granted under Paragraph 11 be regarded as
encouraging the establishment of entities in Singapore that are no more than shell
companies, or facilitate business practices or market conduct that can undermine
regulatory integrity, or pose a risk to financial stability and market confidence.
7.5 In making an application for approval of the arrangement under Paragraph 11, the
Singapore Entity should ensure that its foreign related corporation(s) meets the
following criteria:
(a) it possesses competence in the specific area of business that it is proposing
to effect under the arrangement;
(b) it discharges its functions in an efficient, honest and fair manner; and
(c) it is subject to proper supervision by its home regulatory authority.

7.6 In assessing an application, the MAS will take into consideration:

(a) the nature of the financial advisory services proposed to be effected under
the arrangement;
(b) the roles of the Singapore entity and its foreign related corporation(s) in
relation to the arrangement.
(c) the adequacy of controls and procedures2 and management oversight over
the proposed financial advisory services;
(d) the adequacy of record keeping and documentation systems to ensure proper
audit trial in relation to the arrangement; and
(e) the target clientele.
7.7 Since rules, regulations and market practices vary across jurisdictions, the MAS
may, for prudential reasons, give favourable consideration to arrangements where
certain key processes, such as Advisory3 and Client Servicing4, of the financial
advisory services provided are undertaken or controlled by the Singapore entity.
The MAS will take a holistic view when assessing the arrangement, which may
involve more than one foreign related corporation or more than one financial
advisory service as provided under the FAA or both.
7.8 Do refer to Appendix 9A5 for an illustrative list on how the MAS may view a
proposed arrangement for a financial advisory service under the different
scenarios, where some parts of the process are undertaken in Singapore and other
parts undertaken abroad. References to the term "Local" in Appendix 9A
connotes that the process is undertaken by the Singapore entity, while "Foreign"
means that the process is undertaken by its foreign related corporation(s).
7.9 Using Table 1 in Appendix 9A for illustration purposes, the provision of financial
advice is segregated into two main processes, namely Prospecting6 and Advisory.
For the purpose of determining whether to grant an approval under Paragraph 11,
the MAS will view a proposed arrangement favourably if the key process of
Advisory is undertaken by the Singapore entity. Although the Advisory process
can be further broken down into the individual processes of “know your client”,
needs analysis and product recommendation, the MAS considers that there would
be practical difficulties if these individual processes are separately provided by
the Singapore entity and its foreign related corporation(s).
2
These include mechanisms for resolving disputes and handling complaints and investor recourse.
3
“Advisory” process includes “know your client”, needs analysis and product recommendation.
4
“Client Servicing” process includes sales, marketing, solicitation, and other pre-contract and pre-
transaction activities. Owing to the wide range of activities encompassed within the definition of client
servicing, applicants are required to furnish detailed information of such activities to be provided by the
Singapore entity.
5
Approval is required for all arrangements involving the provision of any financial advisory services under
the FAA; some of which may not be illustrated in the examples given in Appendix 9A.
6
Prospecting refers to the process of searching for clients.

C. Target Clientele
7.10 Generally, the Authority only permits arrangements that are limited to serving
accredited investors, expert investors or institutional investors due to their ability
to safeguard their own interests. This applies to arrangements involving
investment vehicles which fall within the definition of “accredited investor” in
Regulation 2(1) of the FAR.
7.11 For arrangements involving investment vehicles which do not fall within the
definition of “accredited investor” in Regulation 2(1) of the FAR, applicants
should apply a “look-through” method to ascertain whether the end-beneficiaries
of such investment vehicles satisfy the definition of “accredited investor”,
“expert investor” or “institutional investor” in Regulation 2(1) of the FAR, as the
case may be. Where all end-beneficiaries of the investment vehicle satisfy the
applicable definition of “accredited investor”, “expert investor” or “institutional
investor”, the MAS would have fewer regulatory concerns when evaluating an
application for approval under Paragraph 11.
D. Applications
7.12 An application for approval under Paragraph 11 must be submitted using the
format specified in Appendix 9B. The application should include key information
that seeks to address the assessment criteria in Sections 7B and 7C of this
chapter. In approving an application, the MAS would expect the roles,
responsibilities and service standards of the various parties in the proposed
arrangement to be clearly formalised in a service level agreement or an equivalent
document.
7.13 An applicant may submit one application for an arrangement that entails approval
under both Paragraph 11 and Paragraph 9 of the Third Schedule to the Securities
and Futures Act (Cap. 289) [“Paragraph 9”]. Where an using the format specified
in Appendix 9C. This will allow the MAS to assess the arrangement in its entirety.
7.14 In addition, the applicant should ensure that there is proper documentation of the
arrangement for audit trail purposes. The MAS may, where necessary, request
for such documentation from the Singapore entity.
7.15 In granting the approval under Paragraph 11 or Paragraph 9 or both, the MAS
reserves the right to review the approval of any arrangement as the MAS deems
fit, including where there is a material change in the circumstances of the
arrangement. A material change refers to a change in the substance of the
arrangement rather than one of form. Such change may be in relation to the type
of financial advisory service provided, the target clientele or the role of the
Singapore entity. Changes in organisational structure or names of entities, and
similar organisational changes which do not affect the substance of the
arrangement, would not normally be considered material. The approval email will
set out the specific circumstances when a new approval or notification may be
required.

8. GUIDELINES ON EXEMPTION FOR SPECIALISED UNITS SERVING HIGH NET

WORTH INDIVIDUALS UNDER SECTION 100(2) OF THE FINANCIAL ADVISERS
ACT [GUIDELINE NO: FAA-G07]
8.1 Guideline No: FAA-G07 is issued pursuant to Section 64 of the FAA. They are
intended to provide general guidance on the criteria that the MAS will consider in
assessing applications for case-by-case exemption under Section 100(2) of the
FAA in respect of any financial advisory service provided by a separate and
distinct department, division, section or unit [“the Unit”] of the applicant serving
high net worth individuals. They do not have the force of law.
8.2 The MAS may grant exemption, upon application, from Sections 25, 27, 28 and
36 of the FAA, as well as from certain written directions issued pursuant to
Section 58 of the FAA in respect of any financial advisory service provided by
the Unit of the applicant that serves high net worth individuals. The applicant
may either be a licensed financial adviser or an exempt financial adviser7.
8.3 These Guidelines elaborate on:

(a) the criteria that the MAS will consider in assessing applications for
exemption;
(b) the types of clients that may be served by the Unit; and
(c) the general conditions that will be imposed by the MAS.
8.4 The expressions used in these Guidelines shall, except where expressly defined
by these Guidelines and where the context otherwise requires, have the same
respective meanings as in the FAA and in the Securities and Futures Act (Cap.
289).
A. Definition Of “High Net Worth Individual”
8.5 For the purpose of these Guidelines, “high net worth individual” is an individual:
(a) who has a minimum of S$1 million of assets, or the equivalent in foreign
currencies, in any or all of the following forms:
(i) bank deposits, including structured deposits;
(ii) capital markets products;
(iii) life policies;
(iv) other investment products as may be prescribed by the MAS;
7
The MAS is aware that many persons which would apply for the exemption may, in addition to providing
financial advisory services through their Units, also engage in other activities regulated under the Banking
Act (Cap. 19) (BA), the Insurance Act (Cap. 142) (IA) and the SFA (e.g. fund management is regulated
under the SFA). This exemption to be granted under Section 100(2) of the FAA applies only in respect of
the provision of any financial advisory service as specified in the Second Schedule to the FAA. It does not
extend to other activities as regulated under the BA, IA and SFA. As such, applicants are permitted to
engage in these other regulated activities only if they are licensed (or exempted from licensing) under the
BA, IA or SFA to do so. In addition, this exemption does not override the requirements and standards as
prescribed under the BA, IA or SFA for these other regulated activities.

(b) whose total net personal assets exceed S$2 million in value or the equivalent
in foreign currencies;
(c) whose annual income is not less than S$300,000 or the equivalent in foreign
currencies; or
(d) who is assessed by the applicant to have the potential to become a person
as described in (a) above within a period of two years.
B. Extent Of The Unit Being Separate And Distinct
8.6 The purpose of the Unit should be to target and serve prospective high net worth
individuals. Therefore, the Unit should have its own marketing or client service
staff (i.e. individuals who provide financial advisory services to clients) who
should not serve persons, other than the high net worth individuals served by the
Unit.
C. Criteria Used By The MAS In Assessing The Applications
8.7 In assessing applications for exemption, the MAS will generally take into
consideration the following:
(a) whether the clients served by the Unit are considered high net worth
individuals for the purpose of these Guidelines;
(b) the track record and reputation of the applicant and its parent institution or
major shareholders in providing services to high net worth individuals;
(c) the policies and procedures on client acceptance and risk profiling that the
Unit has in place;
(d) the range of products and services offered by the Unit; and
(e) any other factor that the MAS may consider relevant during the assessment.
D. Conditions That May Be Imposed With The Granting Of The Exemptions
8.8 The granting of the exemptions may be subject to the following conditions:
(a) the Unit discloses to each client the exempt status of the financial adviser
with respect to the financial advisory services provided by the Unit; and
(b) any other specific conditions which may be imposed by the MAS.

Appendix 9A
ILLUSTRATIVE LIST OF PROPOSED ASSESSMENT OF APPLICATIONS FOR APPROVAL OF

ARRANGEMENTS UNDER PARAGRAPH 11
Table 1 - Advising Others Concerning Any Investment Product, Other Than Advising Others By
Issuing or Promulgating Research Analyses Or Research Reports Concerning Any
Investment Product
Type of Process Chain Assessment

Arrangement Prospecting Advisory
(searching (know your client,
for clients) needs analysis and
product
recommendation)
(1) (2)
1 Foreign Local To Approve
2 Local Foreign The application would be viewed
3 Local Partly Local and positively if:
▪ the foreign related corporation has the
Partly Foreign8
necessary expertise to undertake the
Advisory process; and
▪ clients of proposed arrangement are
restricted to accredited investors,
expert investors or institutional
investors.
4 Foreign Foreign No Approval
Table 2 - Advising Others By Issuing Or Promulgating Research Analyses Or Research Reports

Concerning Any Investment Product
Type Of Process Chain Assessment

Arrangement Producing Distributing
Research Research
Report Report
(1) (2)
1 Local Foreign Not applicable for Paragraph 11 application.
2 Foreign Local The application would be viewed positively
if the Singapore entity bears responsibility
for the research analyses or research
reports.
3 Foreign Foreign The application would be viewed positively
if the foreign related corporation has the
necessary expertise9 to produce the
research analyses or research reports.
8
This means the Advisory process is undertaken by the Singapore entity with assistance from foreign
related corporation, and vice versa.
9
The MAS will adopt a broad view in assessing whether the foreign related corporation has the necessary
expertise. For instance, a foreign related corporation domiciled in country A is presumed to have the
necessary expertise to provide research on country A securities.

Table 3 - Arranging Of Any Contract Of Insurance In respect Of Life Policies, Other Than A
Contract Of Insurance
Type of Process Chain Assessment

Arrangement Completing Place Order Client
Proposal Insurance Co10 Servicing
Form (e.g. Admin,
(Liaising With (2) Queries)
Client)
(1) (3)
1 Local Local Foreign The application would be
viewed positively if clients of
2 Foreign Local Local
the proposed arrangement are
3 Local Foreign Local restricted to accredited
investors, expert investors or
4 Local Foreign Foreign institutional investors.
5 Foreign Foreign Local
6 Foreign Local Foreign The application would be
viewed positively if:
▪ clients of the proposed
arrangement are restricted
to accredited investors,
expert investors or
institutional investors; and
▪ the foreign related
corporation does not
undertake the Advisory
process under Table 1 in
respect of any client who
enters into a contract of
insurance in respect of life
policies.
7 Foreign Foreign Foreign No Approval
10
This refers to the process where the Singapore entity or foreign related corporation places the order with
an insurance company. Prior approval would have been obtained from the MAS for placement with
unregistered insurers under Section 33(4) of the Insurance Act.

Appendix 9B
APPLICATION FOR APPROVAL OF ARRANGEMENTS UNDER PARAGRAPH 11 OF THE

FIRST SCHEDULE TO THE FINANCIAL ADVISERS ACT
Explanatory Notes
1. Please provide the information required in the format below.
2. All information required must be provided Should there be insufficient space for
your answers, please submit an attachment with the additional responses, and
label clearly the relevant questions each additional response is for.
3. Please check (X) in the relevant boxes where appropriate.
4. Applications are to be made by the Singapore Entity and should cover all pertinent
facts, in particular, to focus on the nature of the regulated activity(ies) proposed
to be effected under the arrangement as well as the roles of the Singapore Entity
and its foreign related corporation(s), in relation to the arrangement. If necessary,
descriptions on the flow of transactions should be depicted in a flow chart.
5. For applicants using the MS Word document, please use the “+” function in the
tables to add rows where relevant. The “+” function can be viewed by clicking
on a row in the table to be filled.
6. If there are any changes in the information furnished in the application prior to
the Authority’s approval, the Authority should be notified immediately.
7. This application should be accompanied by a scanned copy of the applicant’s
declaration in Section G.
8. For applicants applying for a licence concurrently, this application, together with
all other supporting documents and/or attachments should be submitted with the
licence application to webmaster@mas.gov.sg:
(a) in a machine-readable format (e.g. MS Word); and
(b) in a single password-protected zip file. The file extension must be “.zip”,
using 7zip or WinZip.
9. For existing licensees and exempt financial advisers, this application, together
with all other supporting documents and/or attachments, should be submitted to
your MAS officer-in-charge:
(b) in a single password-protected zip file. The file extension must be “.zip”,
using 7zip or WinZip.
A. Information on the Singapore Entity
1. Name of the Singapore Entity that is relevant to this application. Please state
whether the Singapore Entity is licensed under the FAA or exempted under
section 23 (other than subsections (1)(ea) and (1)(f)) of the FAA. Please insert
a new row for each Singapore Entity.

Name of Singapore Entity Regulatory Status
B. Information on Proposed Arrangement(s)
2. Please provide information on the proposed arrangement(s) in the format

below. Please insert a new row for each arrangement.
Name of Arrangement/ Business Name of Foreign Regulated Activities Involved

Unit Conducting the Proposed Related Corporation(s) Under the Proposed
Arrangement Arrangement(s)
C. Information on the Foreign Related Corporation (“FRC”) and its Representatives
3. The FRC(s) and its/ their representatives are:

licensed or authorised in their own jurisdiction in respect of the activity(ies)
under the arrangement;
from a jurisdiction that is supervised for compliance with anti-money
laundering and countering the financing of terrorism requirements
consistent with standards set by the Financial Action Task Force (“FATF”);
and
from a jurisdiction that is not subjected to United Nations Security Council
sanctions.
Please elaborate if any of the boxes above are not checked:
4. Please provide information on the FRC(s) in the format below. Please insert a
new row for each FRC.
Status Regulated
Name of
Name (Licensed/ Date Activities the FRC
Country of Nature of Regulatory
of Registered/ of is Allowed to
Incorporation Business Authority/
FRC Approved/ Status Conduct in Own
Exchange
Others) Jurisdiction
D. Shareholding Structure
5. Please attach the group shareholding structure, including all entities related to
the Singapore Entity.

E. Details of Proposed Arrangement(s)
6. Reason(s) for the arrangement(s) between the Singapore Entity and the FRC(s)
under this application.
7. Please provide the following information on the process chains for each
arrangement.
(i) Indicate whether the process is performed by the Singapore Entity; the
FRC; or both the Singapore Entity and the FRC.
(ii) Elaborate on the role of the Singapore Entity and the FRC(s) at each stage
of the process chain, to show that the Singapore Entity plays a substantive
role in the proposed arrangement.
[For the regulated activity of advising on investment products under the

FAA.]
Process Chain Description

• Prospecting Performed by:
Local Foreign Both Local and Foreign
Elaborate on role of Singapore Entity and FRC:
• Advisory Performed by:
[For the regulated activity of arranging of contracts of insurance in respect of

life insurance under the FAA.]

• Completing Proposal Performed by:
Form
• Placing Orders with Performed by:

Insurance Company
• Client Servicing Performed by:

8. Please provide the type of customers for each FRC. Please state whether the
customers are accredited investors, expert investors or institutional investors
and elaborate on the profile of the investors (e.g. high network individuals,
financial institutions, pension funds).
Investor Type Profile of Investors

Accredited Investors
Institutional Investors
Expert Investors
9. Highlight any potential conflict of interests that may arise as a result of the
arrangement and explain how such conflicts will be resolved or mitigated.
F. Other Information
10. Any other information that is relevant to the application. Please provide
supporting documents where applicable.
G. Declaration
11. We declare that:
The Singapore Entity(ies) will implement relevant policies and procedures

to ensure oversight of the regulated activity(ies) performed by the FRC(s)
and its/ their representatives under the arrangement(s). These policies
and procedures will include, at a minimum:
Account opening and KYC due diligence in accordance with the
relevant MAS Notice on Prevention of Money Laundering and
Countering the Financing of Terrorism that is applicable to the
Singapore Entity(ies);
Record keeping relating to the business arrangement(s) with the
FRC(s) that is consistent with Regulation 25 of the Financial Advisers
Regulations, as applicable;
Maintenance of and access to all records kept or maintained overseas
by the FRC(s) in connection with the proposed arrangement(s)

(including KYC documents, if any), and providing MAS with access

to these records (in the English language) on request; and
Complaints handling.
We are fully aware that sections 86(1), (3) and (4) of the FAA provide
as follows:
"(1) ANY PERSON WHO FURNISHES THE AUTHORITY WITH ANY INFORMATION
UNDER OR FOR THE PURPOSES OF ANY PROVISION OF THE ACT SHALL USE
DUE CARE TO ENSURE THAT THE INFORMATION IS NOT FALSE OR
MISLEADING IN ANY MATERIAL PARTICULAR.
(3) ANY PERSON WHO -

(a) SIGNS ANY DOCUMENT LODGED WITH THE AUTHORITY; OR
(b) LODGES WITH THE AUTHORITY ANY DOCUMENT BY ELECTRONIC
MEANS USING ANY IDENTIFICATION OR IDENTIFYING CODE, PASSWORD
OR OTHER AUTHENTICATION METHOD OR PROCEDURE ASSIGNED TO
HIM BY THE AUTHORITY,
SHALL USE DUE CARE TO ENSURE THAT THE DOCUMENT IS NOT FALSE OR
(4) ANY PERSON WHO CONTRAVENES SUBSECTION (1) OR (3) SHALL BE GUILTY
OF AN OFFENCE AND SHALL BE LIABLE ON CONVICTION TO A FINE NOT
EXCEEDING $50,000 OR TO IMPRISONMENT FOR A TERM NOT EXCEEDING 2
YEARS OR TO BOTH.”
We declare that all information provided in this application and in the

attached annexes (if any) is true and correct.
Signature :
Name :
Designation :
Date :

Appendix 9C
APPLICATION FOR APPROVAL OF ARRANGEMENTS UNDER

(i) PARAGRAPH 9 OF THE THIRD SCHEDULE TO THE SECURITIES AND FUTURES
ACT; AND
(ii) PARAGRAPH 11 OF THE FIRST SCHEDULE TO THE FINANCIAL ADVISERS ACT
Explanatory Notes
1. Please provide the information required in the format below.
2. All information required must be provided. Should there be insufficient space for your
answers, please submit an attachment with the additional responses, and label clearly
the relevant questions each additional response is for.
3. Please check ( ) in the relevant boxes where appropriate.
4. Applications are to be made by the Singapore Entity and should cover all pertinent
facts, in particular, to focus on the nature of the regulated activity(ies) proposed to
be effected under the arrangement as well as the roles of the Singapore Entity and
its foreign related corporation(s), in relation to the arrangement. If necessary,
descriptions on the flow of transactions should be depicted in a flow chart.
5. For applicants using the MS Word document, please use the “+” function in the
tables to add rows where relevant. The “+” function can be viewed by clicking on a
row in the table to be filled.
6. If there are any changes in the information furnished in the application prior to the
Authority’s approval, the Authority should be notified immediately.
7. This application should be accompanied by a scanned copy of the applicant’s
declaration in Section G.
8. For applicants applying for a licence concurrently, this application, together with all
other supporting documents and/or attachments should be submitted with the licence
application to webmaster@mas.gov.sg:
(b) in a single password-protected zip file. The file extension must be “.zip”, using
7zip or WinZip.
9. For existing licensees, exempt capital markets services entities and exempt financial
advisers, this application, together with all other supporting documents and/or
attachments, should be submitted to your MAS officer-in-charge:
(b) in a single password-protected zip file. The file extension must be “.zip”, using
7zip or WinZip.
A. Information on the Singapore Entity
1. Name of the Singapore Entity that is relevant to this application. Please state
whether the Singapore Entity is (i) licensed under the SFA, (ii) licensed under
the FAA, (iii) exempted under section 99(1)(a), (b), (c) or (d) of the SFA, and/or
(iv) exempted under section 23 (other than subsections (1)(ea) and (f)) of the
FAA. Please insert a new row for each Singapore Entity.

Name of Singapore Entity Regulatory Status
B. Information on Proposed Arrangement(s)
2. Please provide information on the proposed arrangement(s) in the format

below. Please insert a new row for each arrangement.
Name of Arrangement/ Name of Foreign Related Regulated Activities

Business Unit Corporation(s) Involved Under the
Conducting the Proposed Proposed Arrangement(s)
Arrangement
C. Information on the Foreign Related Corporation (“FRC”) and its Representatives
3. The FRC(s) and its/ their representatives are:

□ licensed or authorised in their own jurisdiction in respect of the activity(ies)
under the arrangement;
□ from a jurisdiction that is supervised for compliance with anti-money
laundering and countering the financing of terrorism requirements
consistent with standards set by the Financial Action Task Force
(“FATF”); and
□ from a jurisdiction that is not subjected to United Nations Security Council
sanctions.
Please elaborate if any of the boxes above are not checked:
4. Please provide information on the FRC(s) in the format below. Please insert a
new row for each FRC.
Regulated
Status Activities
Name of
(Licensed/ the FRC is
Name of Country of Nature of Regulatory Date of
Registered/ Allowed to
FRC Incorporation Business Authority/ Status
Approved/ Conduct in
Exchange
Others) Own
Jurisdiction

D. Shareholding Structure
5. Please attach the group shareholding structure, including all entities related to
the Singapore Entity.
E. Details of Proposed Arrangement(s)
6. Reason(s) for the arrangement(s) between the Singapore Entity and the
FRC(s) under this application.
7. Please provide the following information on the process chains for each
arrangement.
(i) Indicate whether the process is performed by the Singapore Entity; the FRC;
or both the Singapore Entity and the FRC.
(ii) Elaborate on the role of the Singapore Entity and the FRC(s) at each stage
of the process chain, to show that the Singapore Entity plays a substantive
role in the proposed arrangement.
[For the regulated activities of dealing in capital markets products, product

financing and providing custodial services under the SFA.]

• Account Opening Performed by:
• Order Placement Performed by:
• Trade Execution Performed by:

• Trade Confirmation Performed by:
• Trade Settlement Performed by:
• Marketing/ Client Performed by:

Servicing
• Product Financing Performed by:
• Custodial Services Performed by:
[For regulated activity of fund management under the SFA.]

• Signing of Mandate Performed by:
• Management of Funds Performed by:
• Marketing/ Client Performed by:

Servicing
• Custodial Services Performed by:

[For the regulated activity of advising on investment products under the FAA.]

• Prospecting Performed by:
• Advisory Performed by:
[For the regulated activity of arranging of contracts of insurance in respect of

life insurance under the FAA.]

• Completing Proposal Performed by:
Form
• Placing Orders with Performed by:

Insurance Company
• Client Servicing Performed by:
8. Please provide the type of customers for each FRC. Please state whether
the customers are accredited investors, expert investors or institutional
investors and elaborate on the profile of the investors (e.g. high net worth
individuals, financial institutions, pension funds).
Investor Type Profile of Investors

□ Accredited Investors
□ Institutional Investors
□ Expert Investors

9. Highlight any potential conflict of interests that may arise as a result of the
arrangement and explain how such conflicts will be resolved or mitigated.
F. Other Information
10. Any other information that is relevant to the application. Please provide
supporting documents where applicable.
G. Declaration
11. We declare that:
The Singapore Entity(ies) will implement relevant policies and procedures

to ensure oversight of the regulated activity(ies) performed by the FRC(s)
and its/ their representatives under the arrangement(s). These policies
and procedures will include, at a minimum:
Account opening and KYC due diligence in accordance with the
relevant MAS Notice on Prevention of Money Laundering and
Countering the Financing of Terrorism that is applicable to the
Singapore Entity(ies);
Record keeping relating to the business arrangement(s) with the
FRC(s) that is consistent with Regulation 39 of the Securities and
Futures (Licensing and Conduct of Business) Regulations and
Regulation 25 of the Financial Advisers Regulations, as applicable;
Maintenance of and access to all records kept or maintained overseas
by the FRC(s) in connection with the proposed arrangement(s)
(including KYC documents, if any), and providing MAS with access
to these records (in the English language) on request; and
Complaints handling.
We are fully aware that sections 329(3) and (4) of the SFA provide as
follows:
"(3) ANY PERSON WHO -

(b) LODGES WITH THE AUTHORITY ANY DOCUMENT BY ELECTRONIC MEANS
USING ANY IDENTIFICATION OR IDENTIFYING CODE, PASSWORD OR

OTHER AUTHENTICATION METHOD OR PROCEDURE ASSIGNED TO HIM

BY THE AUTHORITY,
We are fully aware that sections 86(1), (3) and (4) of the FAA provide
as follows:
"(1) ANY PERSON WHO FURNISHES THE AUTHORITY WITH ANY INFORMATION
UNDER OR FOR THE PURPOSES OF ANY PROVISION OF THE ACT SHALL USE
DUE CARE TO ENSURE THAT THE INFORMATION IS NOT FALSE OR
(3) ANY PERSON WHO -

(b) LODGES WITH THE AUTHORITY ANY DOCUMENT BY ELECTRONIC MEANS
USING ANY IDENTIFICATION OR IDENTIFYING CODE, PASSWORD OR
OTHER AUTHENTICATION METHOD OR PROCEDURE ASSIGNED TO HIM
BY THE AUTHORITY,
We declare that all information provided in this application and in the

attached annexes (if any) is true and correct.
Signature :
Name :
Designation :
Date :

10. MAS Guidelines – Part II [Guideline Nos: FAA-G08; FAA-G09; FAA-G10; FAA-G11 & FAA-G14]
CHAPTER 10
MAS GUIDELINES – PART II [GUIDELINE NOS: FAA-G08; FAA-G09; FAA-G10; FAA-G11
& FAA-G14]
CHAPTER OUTLINE
1. Introduction
2. Guidelines On Conduct Of Business For Execution-Related Advice [Guideline No: FAA-
G08]
3. Guidelines On Structured Deposits [Guideline No: FAA-G09]
4. Guidelines On Switching Of Designated Investment Products [Guideline No: FAA-G10]
5. Guidelines On Fair Dealing - Board And Senior Management Responsibilities For
Delivering Fair Dealing Outcomes To Customers [Guideline No: FAA-G11]
6. Guidelines On The Remuneration Framework For Representatives And Supervisors
(“Balanced Scorecard Framework”), Reference Checks And Pre-Transaction Checks
Annexes
KEY LEARNING POINTS

▪ understand the requirements of the following Guidelines, as well as who they apply to:
- Guidelines On Conduct Of Business For Execution-Related Advice [Guideline No:
FAA-G08]
- Guidelines On Structured Deposits [Guideline No: FAA-G09]
- Guidelines On Switching Of Designated Investment Products [Guideline No: FAA-
G10]
- Guidelines On Fair Dealing - Board And Senior Management Responsibilities For
Delivering Fair Dealing Outcomes To Customers [Guideline No: FAA-G11]
- Guidelines On The Remuneration Framework For Representatives And Supervisors
(“Balanced Scorecard Framework”), Reference Checks And Pre-Transaction Checks

1. INTRODUCTION
1.1 In this chapter, we will continue with the remaining MAS Guidelines relating to
the FAA.
2. GUIDELINES ON CONDUCT OF BUSINESS FOR EXECUTION-RELATED ADVICE

2.1 Guideline No: FAA-G08 is issued pursuant to Section 64 of the FAA. They set
out standards to be maintained by dealers1 and their trading representatives when
they provide “execution-related advice”. They do not apply:
(i) in circumstances where a dealer or its trading representative merely carries
out instructions by a client to buy or sell a specific capital markets product,
without the dealer or trading representative making any recommendation or
giving any advice in relation to that specific capital markets product; and
(ii) to a dealer who is exempted from complying with Section 27 of the FAA
under Regulation 33A of the FAR and a trading representative of the dealer.
2.2 These standards are consistent with the business conduct requirements imposed
on financial advisers which provide stand-alone investment advice. However,
taking into account the business model and modus operandi of dealers which
provide execution-related advice, the MAS has adopted a principle-based
approach rather than a detailed prescriptive approach in these Guidelines. The
MAS expects dealers to adhere to these standards and introduce other practices,
processes and procedures, where appropriate, to safeguard the interests of their
clients.
A. Definition Of “Execution-Related Advice”
2.3 “execution-related advice”, as defined in Regulation 34A(2) of the FAR, means

advice provided which is solely incidental to the execution activities of a dealer
with no discrete fee charged by the dealer for the advice rendered.
2.4 “execution activities” means either or both of the following activities as defined
in Regulation 34A(2) of the FAR:
(a) dealing in capital markets products that are specified products which have
received approval in-principle for listing and quotation on, or are listed for
quotation or quoted on, any approved exchange or overseas exchange;
(b) dealing in capital markets products that are futures contracts.
B. Recommendations On Capital Markets Products
2.5 Section 27 of the FAA requires a financial adviser to have a reasonable basis for
any recommendation made with respect to any investment product to a person
who may reasonably be expected to rely on the recommendation. In particular, a
financial adviser should give due consideration to the person’s investment
objectives, financial situation and particular needs.

2.6 A dealer should put in place adequate systems and processes that commensurate
with the size and complexity of its business to ensure compliance with the
requirements as stipulated under Section 27 of the FAA.
2.7 A dealer is expected to have sufficient knowledge of the client’s investment

objectives, financial situation and needs, before he advises on sales or purchases
of capital markets products suitable for the client. Thus, it is normally not possible
for a dealer to offer such advice to a new client before the relevant information
is obtained.
2.8 Obtaining relevant information about the client is usually done at the time when
relationship is first established with the client. Where execution-related advice is
provided on an ongoing basis, a dealer should update the client profile and
conduct a needs analysis at a reasonable interval, at least once a year. This is
consistent with good business practice of reviewing customers’ profiles and
needs on a regular basis.
2.9 Where a client does not want to provide any of the information requested, a
dealer may proceed with the client’s request. However, the dealer should
document the decision of the client and give a warning to the client that any
recommendation made or advice given will not take into account his particular
investment objectives, financial situation and particular needs, and that it is the
client’s responsibility to ensure the suitability of the product recommended.
2.10 Where products are traded on a margin basis, a dealer should highlight the risk
of such products to the clients.
C. Documentation And Record Keeping
2.11 A dealer is expected to maintain proper records to be able to demonstrate the

basis of the recommendation made to the client and warnings provided either in
the form of a file note or tapes of the telephone conversation. The keeping of
these details is also sensible protection for the dealer and part and parcel of
maintaining good customer relations.
2.12 The nature of the records to be kept is best determined by the dealer, taking into
account the nature of its business and the likelihood of a particular client
subsequently disputing that advice was rendered without due consideration of
his investment objectives, financial situation and needs. As a best practice, a
dealer should keep such records for at least six years.
D. Disclosure Of Conflicts Of Interest
2.13 With regard to the disclosure of conflicts of interest, a dealer should disclose to
its clients any actual or potential conflict of interest either orally or in writing or
both, before or at the time that the advice is rendered.

2.14 A dealer is not required to repeat such disclosure of conflict of interest each time
that an execution-related advice is rendered under the following circumstances:
(a) the previous disclosure remains up-to-date, comprehensive and accurate; and
(b) it can reasonably expect the client to be fully aware of the previous
disclosure. A dealer should take into account the following when considering
whether a client may reasonably be expected to be fully aware of a previous
disclosure:
(i) whether or not there is a long lapse of time between the previous
disclosure and the current recommendation or advice; and
(ii) whether the client is reasonably likely to draw an inference that the
previous disclosure no longer applies in the context of the current
recommendation or advice.
E. Disclaimer
2.15 Some dealers include formal disclaimers in documents to their clients to the effect
that they are in the business of providing “execution only” services, or they do
not provide advice to clients. If such disclaimers are made, the dealers should put
in place appropriate systems, procedures, and training to ensure that they do not
provide any advice to clients.
2.16 Notwithstanding any formal disclaimers to the contrary, the dealers will be
subject to statutory provisions if they provide advice to clients. In addition, any
disclaimers to the effect that advice given by dealers should not be assumed to
have taken into account the investment objectives, financial situation and needs
of the clients, or that clients should independently assess whether the advice is
appropriate for them, will not absolve dealers of the statutory obligations and
liabilities imposed under the FAA. The MAS will enforce the provisions of the
FAA to ensure that clients enjoy the protection accorded to them under the FAA.
3. GUIDELINES ON STRUCTURED DEPOSITS [GUIDELINE NO: FAA-G09]
3.1 Guideline No: FAA-G09 is issued pursuant to Section 64 of the FAA. These
Guidelines apply to any licensed or exempt financial adviser or its representative,
who advises on any structured deposit, except:
(a) where advice is given to an accredited investor, expert investor or
institutional investor, as defined in Regulation 2(1) of the FAR;
(b) where advice is given to a high net worth individual as defined in the
“Guidelines On Exemption For Specialised Units Serving High Net Worth
Individuals” Under Section 100(2) of the FAA [Guideline No: FAA-G07], by a
separate and distinct department, division, section or unit [“the Unit“] of the
licensed or exempt financial adviser, as the case may be, and the licensed or
exempt financial adviser has been exempted from certain provisions in Part
III of the FAA, and certain written directions issued pursuant to Section 58
of the FAA in relation to the provision of financial advisory services by the
Unit; or

(c) where advice is given to any person outside Singapore who is:
(i) an individual and:
 not a citizen of Singapore;
 not a permanent resident of Singapore; and
 not wholly or partly dependent on a citizen or permanent resident of
Singapore; or
(ii) in any other case, a person with no commercial or physical presence in
Singapore.
3.2 These Guidelines set out the standards of conduct expected of licensed and
exempt financial advisers and their representatives when advising on structured
deposits. They provide general guidance and are not intended to replace or
override any legislative provisions or written directions issued under the FAA, in
respect of conduct requirements specifically applicable to licensed or exempt
financial advisers and their representatives.
3.3 As a matter of good business practice, licensed and exempt financial advisers
and their representatives are encouraged to apply these Guidelines when advising
on any other deposits which are linked to complex financial instruments which
do not fall within the definition of a structured deposit under the FAA, including
those with returns linked to a commodity price.
B. Use Of The Term “Structured Deposit”
3.4 A structured deposit is a type of deposit and not a unique class of financial
instruments. “Deposit” is defined in the Banking Act (Cap. 19), and has a
generally understood meaning. Labelling a product as a structured deposit in any
marketing material or product disclosure document, when it does not bear the
characteristics of a deposit, is tantamount to misleading conduct, as investors
may misconstrue that the product has the characteristics of a deposit when in
fact, it does not.
3.5 Hence, a financial adviser, or its representative, should not use the title or
description “deposit” or “structured deposit” to describe an investment product
unless the product, being offered falls within the definition of a deposit or a
structured deposit.
3.6 However, the above requirements do not apply in relation to a structured deposit
that is a dual currency investment1.
1
The FAA Notice On Dual Currency Investments [Notice No: FAA-N11] shall apply in respect of dual
currency investments.

C. Product Information Disclosure
3.7 Although a structured deposit is a relatively safe instrument, returns on such

products are variable and often contingent on the performance of complex
financial instruments that the average retail investor may not fully understand.
Furthermore, investing in a structured deposit entails certain risks, including
potential loss of the principal sum invested, if the investment is not held to
maturity. These risks should be clearly disclosed to every investor to ensure that
he is able to make an informed investment decision.
3.8 In general, a financial adviser or its representative advising on structured deposits

should ensure that product information disclosure for all publications used by the
financial adviser or its representative, including marketing materials, is clear,
adequate and not false or misleading. In considering whether product disclosure
is clear, adequate and not false or misleading, due regard should be given to the
“Notice On Information To Clients And Product Information Disclosure [Notice
No: FAA–N03]”.
3.9 Every financial adviser is encouraged to review its documents regularly, to ensure
that its documents meet the above standards.
3.10 Every financial adviser and its representatives should provide every client with a
fair and adequate description of all material information, including:
(a) the nature of the investment, including the underlying financial instruments
and how these instruments work;
(b) details of the deposit-taking institution, if the financial adviser is not also the
deposit-taking institution;
(c) the benefits that are likely to be derived from the structured deposit, the
amount and timing for benefits and whether the benefits are guaranteed or
non-guaranteed. Benefits payable in the case of early redemption by the
deposit-taking institution should be clearly disclosed. Illustrations of benefits
in the best and worst case scenarios should be provided. Benefits shown in
headline rates should be realistic and achievable, and not based on an
unreasonably optimistic view of events;
(d) all risk factors that may result in the client being paid benefits which are less
than the illustrated values;
(e) all fees or charges that may be imposed in respect of the structured deposit;
(f) early termination clauses, including procedures, charges and restrictions on
early withdrawal by the client, or early redemption by the deposit-taking
institution, as well as any other material information associated with
termination prior to maturity. A financial adviser and its representatives
should ensure that every client is fully aware of the tenor of the structured
deposit, and the fact that the principal sum on the structured deposit is only
guaranteed if held to maturity. The possibility of losses on the principal sum
due to early withdrawal by the client and the factors affecting the amount
recoverable by a client should be clearly disclosed to every client;
(g) any warning, exclusion or disclaimer in relation to the structured deposit; and

(h) information that the structured deposit is not an insured deposit for the
purpose of the Deposit Insurance And Policy Owners’ Protection Schemes
Act 2011.
C1. Past And Future Performance
3.11 Where any illustration of past or future performance of a structured deposit, or

that of its underlying financial instruments is provided, a financial adviser or its
representative should:
(a) when using any forecast on the economy, stock market, bond market and
economic trends of the markets, state that such forecast is not necessarily
indicative of the future or likely performance of the structured deposit; and
(b) when using past performance of the structured deposit, or that of its
underlying financial instruments, to illustrate possible returns of that
structured deposit, state that past performance is not necessarily indicative
of future performance.
D. Recommendations On Structured Deposits
D1. Reasonable Basis For Recommendation
3.12 Where any financial adviser or its representative offers any recommendation on
a structured deposit, the financial adviser or its representative should have a
reasonable basis for any recommendation that is made. In considering whether
there is reasonable basis for any recommendation, due regard should be given to
the provisions in the “Notice On Recommendations On Investment Products
[Notice No: FAA–N16]”.
D2. Warnings
3.13 Some clients may not require any recommendation from a financial adviser or its
representatives on their selection of a structured deposit.
3.14 A financial adviser and its representative may dispense with the usual fact-finding
and needs-based analysis process when dealing with such clients. However,
appropriate warnings should be made to such clients highlighting that they may
wish to seek advice from a financial adviser before making a commitment. At the
minimum, the warning should convey the following message:
(a) Unlike traditional deposits, structured deposits have an investment element
and returns may vary. You may wish to seek advice from a licensed or an
exempt financial adviser before making a commitment to purchase this
product.
(b) In the event that you choose not to seek advice from a licensed or an exempt
financial adviser, you should carefully consider whether this product is
suitable for you.

3.15 These warnings should be in writing and should be prominent and clear. A
financial adviser and its representative should document that these warnings have
been duly read and understood by the client, and that the client wishes to proceed
after having understood the features of the product.
3.16 The above requirements do not apply in relation to a structured deposit that is a
dual currency investment2.
D3. Screening
3.17 A financial adviser and its representative should screen every client seeking to
invest in any structured deposit. Any client who indicates that he may need to
withdraw his funds prior to the maturity of the structured deposit to meet certain
needs (such as an elderly person), should be encouraged to seek advice from a
financial adviser. This is because early termination may result in a loss of the
principal sum, and such clients may only be able to recover the value of the
underlying financial instruments. It is therefore important for such clients to have
a good understanding of how the relevant financial instruments work before they
invest in the structured deposit.
E. Training And Competency
3.18 Structured deposits often involve underlying financial instruments that are
complex and difficult to understand. As such, any advice regarding a structured
deposit should be made by a person who is equipped with the necessary expertise
to offer reasonable advice. As a general rule, the more complex a structured
deposit, the better trained the representative of a financial adviser would need to
be.
3.19 In this regard, the representative of a financial adviser who meets the training
and competency requirements as set out in the “Notice On Minimum Entry And
Examination Requirements For Representatives Of Licensed Financial Advisers
And Exempt Financial Advisers [Notice No: FAA-N13]” will be considered as one
who is equipped with the necessary expertise. All representatives of a financial
adviser advising on structured deposits should pass Module 5 (Rules and
Regulations for Financial Advisory Services) of the Capital Markets and Financial
Advisory Services Examination (CMFAS Examination). In addition, financial
advisers should either ensure that all representatives advising on structured
deposits pass Module 8 (Collective Investment Schemes) of the CMFAS
Examination, or develop their own specific training programmes on structured
deposits, to equip their representatives with the necessary expertise.
F. Fit And Proper Criteria
3.20 Even where a financial adviser or its representatives are not required to and do
not make any recommendation, the financial adviser or its representatives should
2
The FAA Notice On Dual Currency Investments [Notice No: FAA-N11] applies in respect of dual currency
investments.

still meet the fit and proper criteria as described in the “Guidelines On Fit And
Proper Criteria [Guideline No: FSG–G01]”, and the standards of conduct as
described in the “Guidelines On Standards Of Conduct For Financial Advisers And
Representatives [Guideline No: FAA–G04]”.
G. Segregation Of Activities
3.21 Structured deposits should be distinguished from traditional fixed deposits to

ensure that clients are not misled into believing that the returns and risks on
structured deposits are similar to traditional fixed deposits.
3.22 To achieve this distinction, any financial adviser that is also a deposit-taking
institution, when advising on any structured deposit, should ensure that the
marketing and advisory process for such structured deposit is distinct from the
process through which a client’s funds are accepted. Employees in the deposit-
taking area who are not qualified to provide advice on investment products, such
as bank tellers, should not be involved in the marketing or offering of any
recommendation in relation to any structured deposit.
H. Requirements Under The Banking Act (Cap.19)
3.23 As it is possible for the provision of financial advisory service in respect of

structured deposits to lead to the acceptance of a deposit by a financial adviser
or its representative on behalf of a deposit-taking institution, every financial
adviser and its representatives are reminded to be aware of the requirements
under the Banking Act (Cap. 19), in particular:
(a) the restrictions on deposit-taking business and soliciting of deposits; and
(b) (in relation to banks) the restrictions on the opening of a new place of
business by a bank.
3.24 In relation to Section H. Paragraph 3.23(b) above of this chapter, a booth or road
show location where applications for structured deposits are received will be
considered a new place of business or a bank branch, for which the relevant bank
will have to seek the prior approval of the MAS under Section 12 of the Banking
Act (Cap. 19).
4. GUIDELINES ON SWITCHING OF DESIGNATED INVESTMENT PRODUCTS

4.1 Guideline No: FAA-G10 is issued pursuant to Section 64 of the FAA. The aim of
these Guidelines is to provide guidance on the controls, processes and procedures
that the MAS expects licensed financial advisers and exempt financial advisers
to implement, in order to monitor switching and ensure that their representatives
do not advise clients to switch from one designated investment product (referred
to as “original product”) to another designated investment product (referred to as
“replacement product”) in a manner that would be detrimental to the clients.

4.2 These Guidelines do not apply to persons (including licenced and exempt financial
advisers and their representatives) who are exempted from the requirements in
the “Notice On Recommendations On Investment Products [Notice No: FAA-
N16]”.
4.3 These Guidelines are not intended to replace or override any legislative provisions
under the Act. They should be read in conjunction with the provisions of the Act,
subsidiary legislation made under the Act, as well as written directions, notices,
codes and other guidelines that the Authority may issue from time to time.
4.4 For the purpose of these Guidelines, “switching” includes a situation where a
client disposes of, or reduces his interest in, all or part of an investment product
to acquire, or increase his interest in, all or part of another investment product,
and “switch” shall be construed accordingly.
A. General Obligations
4.5 Notice No: FAA-N16 stipulates that a financial adviser and its representatives
shall not make a recommendation to a client to switch from an original product
to a replacement product in a manner that would be detrimental to the client.
Notice No: FAA-N16 also provides that the financial adviser and its
representatives making the switching recommendation shall:
(a) comply with the “Know Your Client”, needs analysis, and documentation and
record-keeping requirements set out in Notice No: FAA-N16; and
(b) disclose to the client any fee or charge that the client will have to bear to
switch from an original product to a replacement product.
4.6 A financial adviser should ensure that its representatives are conversant with their
responsibilities, and comply with all applicable laws, rules and regulations relevant
to switching.
B. Disclosure Requirements
4.7 The following disclosure guidelines are intended to apply when a financial adviser
or its representatives make a recommendation to a client to switch from an
original product to a replacement product.
4.8 A financial adviser and its representatives should disclose to a client in writing
and draw the attention of the client to any fee or charge that the client would
have to bear if the client were to switch from an original product to a replacement
product. This is to ensure that the client is able to make an informed decision on
the switching recommendation. Fees and charges to be disclosed include any fee
associated with the disposal of, or reduction in interest in, all or part of the original
product, and any fee incurred for the acquisition of, or increase in interest in, all
or part of the replacement product.

4.9 A financial adviser should disclose to a client in writing the following:

(a) any pecuniary or other disadvantages that the client will or may suffer
(temporarily or otherwise) as a result of switching from the original product
to the replacement product; and
(b) a prominent warning containing words to the following effect:
“You may incur fees and charges as a result of (i) the disposal of, or reduction
in interest in, an existing investment product; and (ii) the acquisition of, or
increase in interest in, a new investment product. Before switching from one
investment product to another, you should find out whether you are entitled
to free switching and consider carefully whether any fees, charges or
disadvantages that may arise from a switch would outweigh any potential
benefits. Some of the disadvantages associated with switching include the
following:
(i) you may incur transaction costs without gaining any real benefit from
the switch;
(ii) the new investment product may offer a lower level of benefit at a higher
cost or same cost, or offer the same level of benefit at a higher cost;
(iii) you may incur penalties for terminating the existing investment product;
and
(iv) the new investment product may be less suitable for you.
You should seek the advice of your financial adviser when in doubt or if you
require further clarification.”
C. Monitoring Of Switching Of Designated Investment Products
C1. Front-End Monitoring Procedures
4.10 To facilitate the monitoring of switching that may be detrimental to a client’s

interests, a financial adviser should require the client to declare in writing whether
he has been advised by a representative of the financial adviser to dispose of, or
reduce his interest in, all or part of an original product to acquire, or increase his
interest in, all or part of a replacement product. The financial adviser should also
ensure that the client’s declaration includes circumstances where the original
product is:
(a) a different type of designated investment product from the replacement
product; and
(b) purchased from other financial advisers.
4.11 If the client declares that he has been advised by a representative of the financial
adviser to switch, the financial adviser should require the following additional
declarations to be made in writing:
(a) the client should declare:
(i) whether the representative has drawn his attention to the costs and
possible disadvantages associated with the switch; and

(ii) whether he wishes to proceed with the switch despite the fees, charges
or disadvantages that may arise from the switch could outweigh any
potential benefits.
(b) the representative should declare whether the client is entitled to any free
switching, so that the client is fully informed of all free switching options.
4.12 Notice No: FAA-N16 stipulates that a representative shall explain to his client the
basis for his recommendation. The basis on which the representative is making
the recommendation to the client should be documented.
4.13 Where the client declares that the representative has recommended a switch, the
financial adviser should require the supervisor3 of the representative to review the
switching recommendation, and indicate in writing, whether he agrees with the
recommendation made and if not, the actions that have been taken to rectify the
situation. In considering whether a switch is appropriate, the supervisor should
take into account the following factors as stated in paragraph 42 of Notice No:
FAA-N16:
(a) whether the client suffers any penalty for terminating the original product;
(b) whether the client will incur any transaction cost without gaining any real
benefit from the switch;
(c) whether the replacement product confers a lower level of benefit at a higher
cost or same cost to the client, or the same level of benefit at a higher cost;
and
(d) whether the replacement product is less suitable for the client.
C2. Back-End Monitoring Procedures
4.14 A financial adviser should institute controls, processes and procedures to

effectively monitor and track the switching of designated investment products,
such as4:
(a) checking the past transactions and records of a client for each new purchase
made, so as to detect switches that are not declared by the client;
(b) tracking the volume of switches, so as to identify representatives with an
unusually high volume of switching transactions;
(c) putting in place procedures to ensure that each switch recommended by a
representative is reviewed by a supervisor for appropriateness; and
(d) implementing any other procedures and controls to identify any unusual
trends in switching transactions.
4.15 Where a financial adviser detects a switch that is not declared by a client, the
financial adviser should require the supervisor of the representative to review the
switch and indicate in writing whether he agrees with the recommendation made
3
“Supervisor” refers to a person who is responsible for the conduct of a representative and equipped to
assess whether a switch is appropriate.
4
One way to implement the procedures as set out in Section C2, Paragraph 4.14(a) to (d) of this chapter
is to establish and maintain a register.

(if any) and, if not, the actions that have been taken to rectify the situation. In
considering whether a recommended switch is appropriate, the supervisor
should take into account the factors as stated in Section C1, Paragraphs 4.10
to 4.13 of this chapter.
4.16 The back-end controls, processes and procedures implemented should

commensurate with the financial adviser’s nature of business and risks.
D. Remuneration Structure
4.17 Any remuneration structure based solely on the sales volume generated by
representatives may encourage product pushing and undesirable switching. A
financial adviser should structure the remuneration package of its representatives
to uphold their responsibility to provide good quality professional advice.
5. GUIDELINES ON FAIR DEALING - BOARD AND SENIOR MANAGEMENT

RESPONSIBILITIES FOR DELIVERING FAIR DEALING OUTCOMES TO
CUSTOMERS [GUIDELINE NO: FAA-G11]
5.1 The MAS has issued Guideline No: FAA-G11 to promote fair dealing by financial
institutions when they conduct business with their customers.
5.2 The Guidelines incorporate public comments, lessons from the 2007-2008
financial crisis and the MAS’ draft proposals from the Consultation Paper on
Review of the Regulatory Regime Governing the Sale and Marketing of Unlisted
Investment Products issued on 12 March 2009.
5.3 The Guidelines focus on Board and Senior Management responsibilities for
delivering fair dealing outcomes to customers. The Guidelines apply to the
selection, marketing and distribution of investment products and the provision of
advice for these products. The Guidelines also cover responsibilities for after-
sales services and complaints handling. While the Guidelines have been written
with retail customers and investment products in mind, financial institutions are
strongly encouraged to apply the principles in the Guidelines to other customers
and products.
5.4 The Guidelines set out five fair dealing outcomes and explain why each outcome
is important. They also list key issues, provide illustrations of good and poor
practices, and set out self-assessment questions for the Board and Senior
Management.
5.5 The five fair dealing outcomes are:

(a) Outcome One: Customers have confidence that they deal with financial
institutions where fair dealing is central to the corporate culture.
(b) Outcome Two: Financial institutions offer products and services that are
suitable for their target customer segments.

(c) Outcome Three: Financial institutions have competent representatives who

provide customers with quality advice and appropriate recommendations.
(d) Outcome Four: Customers receive clear, relevant and timely information to
make informed financial decisions.
(e) Outcome Five: Financial institutions handle customer complaints in an
independent, effective and prompt manner.
5.6 The Board is responsible for charting the corporate policy and strategy to deliver
the fair dealing outcomes to customers. The Board oversees Senior Management
in implementing the corporate policy and strategy approved by the Board. The
Board and Senior Management are accountable for setting the culture and
direction of the financial institution to align business practices with the fair dealing
outcomes. This involves influencing attitudes and behaviour of staff at all levels
of the financial institution, and requires concerted and wide ranging measures, in
particular:
(a) demonstrated commitment by the Board and Senior Management to the fair
dealing outcomes;
(b) a management information framework to measure and monitor achievement
of the fair dealing outcomes;
(c) training for staff and representatives so that they have the skills and
competencies to deal with customers fairly; and
(d) a performance evaluation and remuneration system to incentivize fair dealing
conduct.
5.7 The Board and Senior Management of a financial institution should review the
overall business model of the financial institution to ensure that it is consistent
with dealing fairly with its customers. In particular, the financial institution should
review any business model that relies primarily on commissions and short-term
product sales targets. The Board and Senior Management should pay attention to
potential conflicts between the interests of the financial institution and those of
its customers, especially where the financial institution is engaged in multiple
business activities.
5.8 The emphasis on outcomes is deliberate. Customers are concerned about their
experiences when dealing with financial institutions, and whether the investment
products and services they buy provide real value. The five outcomes provide
clear benchmarks for MAS and the industry to assess the performance and
success of financial institutions in promoting good market conduct practices.
5.9 The Guidelines should be read with the Financial Advisers Act, its subsidiary
legislation, written directions, notices, codes and other guidelines. Each financial
institution needs to consider how best to apply the Guidelines to suit its business
model and customer base. The Board and Senior Management of each financial
institution should be able to demonstrate that its strategy, policies, systems and
processes support the fair dealing outcomes.

5.10 MAS will take into account a financial institution’s ability or failure to observe the
Guidelines in assessing whether it continues to be fit and proper to conduct
regulated activities. Where the failings relate to obligations under the relevant
legislation, MAS will take supervisory or enforcement action. MAS will use
inspections and visits to financial institutions, interviews with the Board and
Senior Management, surveys of financial institutions, customer surveys and
mystery shopping exercises to assess whether financial institutions are observing
the Guidelines.
5.11 Industry and consumer associations play a key role in promoting the fair dealing
outcomes. They can do so in several ways, including:
(a) developing case studies and examples of best practices;
(b) conducting mystery shopping exercises, customer surveys and other studies
to identify areas of market conduct practices for improvement;
(c) aligning their codes of practice with the fair dealing outcomes;
(d) conducting training for industry representatives; and
(e) educating consumers to help them understand the fair dealing initiative and
what they can expect from financial institutions.
5.12 Consumers should also equip themselves to make informed financial decisions.
MAS will continue to issue consumer guides and support activities under the
MoneySENSE financial education programme.
5.13 MAS will update the Guidelines, where appropriate, to incorporate feedback and
comments received on the Consultation Paper on Review of the Regulatory
Regime Governing the Sale and Marketing of Unlisted Investment Products, as
well as industry developments in Singapore and other jurisdictions.
5.14 The details of each of the Fair Dealing Outcomes are listed in Sections 5A. to 5E.
below of this chapter.
A. Fair Dealing Outcome One
Customers have confidence that they deal with financial institutions where fair
dealing is central to the corporate culture.
A1. Rationale
5.15 Financial institutions play an important role in influencing customers’ financial

decisions. Customers rely on financial institutions for relevant information, quality
advice and appropriate recommendations.
5.16 As the Board and Senior Management provide leadership and set the culture of
the financial institution, they should be the champions and stewards of an
organisational culture of fair dealing.

5.17 To develop an organisational culture of fair dealing, the Board and Senior
Management should address the following key areas:
(a) devise a clear strategy to achieve the fair dealing outcomes;
(b) align organisational policies and practices to the fair dealing outcomes;
(c) communicate to internal and external stakeholders that fair dealing is a
priority for the financial institution; and
(d) monitor the effectiveness of the strategy and policies to achieve the fair
dealing outcomes.
A2. Devising A Clear Strategy To Achieve The Fair Dealing Outcomes
5.18 The Board and Senior Management should be able to demonstrate that they have
devised a strategy and implemented plans to achieve the fair dealing outcomes.
These plans should include:
(a) allocation of executive responsibilities;
(b) implementation of a set of measurable targets; and
(c) development of a remuneration structure for senior executives which is linked
to key performance indicators for achieving the fair dealing outcomes.
Illustration 10.1A
The Board of a financial institution assigns its Chief Executive Officer to
spearhead a Fair Dealing Taskforce. The Taskforce is responsible for conducting
a review of the financial institution’s advisory and sales process to identify areas
where it falls short. Based on the findings, the Taskforce formulates a strategy
which includes defining a set of principles to drive cultural change, as well as
training and supervising staff members and representatives on dealing with
customers fairly. This strategy is endorsed by the Board, which is updated on
the progress of implementing the strategy on a quarterly basis.
Comment: The Board and Senior Management should assign responsibilities to

specific executives for carrying out initiatives to promote fair dealing practices
within the financial institution. The formation of a taskforce dedicated to
achieving the fair dealing outcomes, as well as support for the initiatives at the
Board and Senior Management levels, are some ways to demonstrate the
financial institution’s commitment to dealing with customers fairly.
A3. Aligning Organisational Policies And Practices To The Fair Dealing Outcomes
5.19 The Board and Senior Management should review the financial institution’s
policies, systems and processes to ensure that its market and business conduct
practices achieve the fair dealing outcomes for customers. These include having:
(a) robust due diligence procedures for selecting investment products and
services that are suitable for its customers;
(b) formalised recruitment practices and training to ensure its staff members and
representatives are competent, fit and proper, and ethical;
(c) strong and effective systems and controls to ensure proper ongoing
supervision of its staff members and representatives;

(d) procedures for whistle-blowers to report on misconduct;

(e) effective performance evaluation and remuneration systems to encourage the
right behaviour to achieve the fair dealing outcomes; and
(f) proper assessments and clear service standards for partnerships with other
financial institutions or introducers in its distribution business.
5.20 The financial institution should address any issues that potentially compromise
the interests of customers. The Board and Senior Management should design a
remuneration structure for its staff members and representatives that encourages
the achievement of the fair dealing outcomes. The financial institution should not
incentivise inappropriate practices such as product pushing or improper switching
of investment products.
5.21 For a financial institution which conducts both financial advisory and non-financial
advisory businesses at the same physical location, the financial institution should
ensure that its staff members do not solicit financial advisory business from
customers of the non-financial advisory business. This is particularly relevant for
banks and finance companies that accept deposits from customers. Such
segregation will minimise the risk of customers confusing an investment product
with a deposit.
Illustration 10.1B
The Board of a financial institution sets up a project team to align its policies
and practices with the fair dealing outcomes. The Board instructs that special
attention be paid to remuneration structures, disclosure standards and product
selection process, as these areas have greater impact on customers. One of the
initiatives by this project team is to establish formal customer feedback
procedures, including quarterly customer forums. The objective of such forums
is to gather customer feedback on their experiences when receiving financial
advisory services, on the quality of marketing materials and on recent launches
of investment products and services. Following each forum, the project team
produces a report for discussion and endorsement at the quarterly Board
meetings. This report summarises customer feedback and suggests corrective
actions and measures where weaknesses are identified.
Comment: The Board and Senior Management should view customer feedback
as essential to achieving the fair dealing outcomes. This enables the financial
institution to take into account customer opinions when aligning its policies and
practices of key business areas to the fair dealing outcomes for customers. This
is a strong display of how the Board and Senior Management can integrate good
market conduct practices into the financial institution’s business strategy and
conduct.
A4. Communicating The Fair Dealing Outcomes As A Priority For The Financial
Institution
5.22 The Board and Senior Management should communicate a clear and consistent
message to internal and external stakeholders that delivering the fair dealing
outcomes to customers is an important organisational priority.

Illustration 10.1C
To cultivate an organisation-wide fair dealing culture, a financial institution
launches an online training module as part of an institution-wide communications
plan. Senior Management show their commitment by being actively involved in
the communications plan. In addition, they request that the Compliance
Department surveys the staff members and representatives to gauge the
success of the plan.
Comment: Developing a fair dealing culture requires a mindset change. Senior

Management should play an active role in communicating the importance of this
shift in mindset to reflect their commitment to the fair dealing initiative.
A5. Monitoring Implementation Of The Fair Dealing Strategy
5.23 The Board and Senior Management should ensure that the financial institution
establishes a management information framework to measure and monitor
achievement of the fair dealing outcomes. This could include:
(a) monitoring complaints trends;
(b) conducting customer surveys;
(c) conducting mystery shopping exercises; and
(d) preparing compliance reports.
Illustration 10.1D
A financial institution prepares quarterly management information reports which
cover compliance issues, complaints trends, customer feedback and other
relevant indicators. These reports are reviewed at the quarterly management
meetings to identify shortcomings and possible enhancements to its fair dealing
initiative. In addition, the financial institution conducts customer surveys and
mystery shopping exercises on an annual basis to track the effectiveness and
progress of its initiative.
Comment: A good management information framework encompasses the

collation of all relevant information and proper review of this information by
appropriate levels of management.
A6. Key Issues For Self-Assessment
5.24 How do the Board and Senior Management lead the financial institution in
delivering the fair dealing outcomes to its customers? Are executive
responsibilities clearly assigned?
5.25 Have the Board and Senior Management reviewed the financial institution’s
business model to ensure that it supports fair dealing with its customers? How is
the achievement of the fair dealing outcomes incorporated into the financial
institution’s policies and practices?

5.26 How do the Board and Senior Management clearly communicate to internal and
external stakeholders the message that delivering the fair dealing outcomes is a
priority for the financial institution?
5.27 How do the Board and Senior Management measure and monitor the achievement
of the fair dealing outcomes? What measures have the Board and Senior
Management drawn up to address areas where the financial institution has fallen
short of delivering the fair dealing outcomes?
B. Fair Dealing Outcome Two
Financial institutions offer products and services that are suitable for their target
customer segments.
B1. Rationale
5.28 Financial institutions should carefully assess the suitability of every investment
product before marketing the product to customers. Making financial decisions
can be a complex process that has a significant impact on the livelihood of
customers. Some customers find it difficult to make the most appropriate financial
decision when faced with the wide variety of investment products available in
the market. For customers with limited knowledge of investment products, they
often focus too much on the short-term or headline returns, while not fully
understanding the risk-reward characteristics of the product.
B2. Conducting Product Due Diligence
5.29 The financial institution should undertake formal due diligence on any investment
product it intends to distribute, in order to:
(a) assess and fully understand the features and risk-reward characteristics of
the product; and
(b) identify customer segments for which the product is suitable, and customer
segments for which the product is clearly not suitable.
5.30 The product due diligence process should include a thorough review by the
financial institution of the prospectus, pricing statement, Product Highlights
Sheet5, factsheet, marketing materials and other representations from the product
provider.
5
The Product Highlights Sheet is a separate simplified document to supplement the prospectus. It is
proposed under the Consultation Paper on Review of Regulatory Regime Governing the Sale and Marketing
of Unlisted Investment Products issued on 12 March 2009 that issuers are required to develop this
document, and it must be given together with the prospectus to customers before they make investment
decisions.

5.31 In deciding whether to distribute a new investment product, the financial

institution should consider, among other matters:
(a) whether the financial institution’s target customer segments are able to
understand the product, given its risk-reward characteristics and level of
complexity;
(b) whether the product’s investment objectives, risk-reward characteristics and
associated cost and fees are suitable for the financial institution’s target
customer segments;
(c) the proposed marketing channel for the product, for example, through
representatives, the internet or direct marketing;
(d) the competency of its representatives and their ability to understand the
product features and risk-reward characteristics; and
(e) whether its systems and processes, including fact-find forms, risk profiling
questionnaires and other documents, are able to support the sale of the
product.
5.32 If the financial institution disagrees with the disclosures made or customer
segments recommended by the product provider, the financial institution should
not market and sell the product to these customers.
5.33 In performing product due diligence, the financial institution should involve legal,
compliance and operational personnel, as well as financial advisory and frontline
supervisory staff members familiar with the needs and profile of its customers.
The financial institution should maintain proper documentation of the due
diligence performed. Formal management approval to distribute the investment
product to target customer segments should be obtained and properly
documented. The documentation should include determination of the product risk
assessment and identified customer segments for which the product is or is not
suitable.
Illustration 10.2A
A financial institution has recently been offered distribution rights for a complex
investment product, which is recommended by the product provider as suitable
for distribution to retail customers. Upon evaluation of the product’s complexity
and risks, the financial institution assessed that the product may not be easily
understood by its target customer segments which are retail customers. The
financial institution decided not to take up the distribution rights for that product.
Comment: In deciding whether to distribute a new investment product, a

financial institution should conduct proper due diligence to assess the features
and risk-reward characteristics of the product, and determine if it is suitable for
its target customer segments. The financial institution should form an
independent conclusion, rather than rely solely on the assessment of the product
provider. This will ensure that the financial institution only offers products that
suit the profile of its target customer segments.

B3. Marketing To Target Customer Segments
5.34 The financial institution should tailor its marketing approach to the profiles,
financial objectives, and general financial literacy of its target customer segments.
5.35 The financial institution should clearly communicate to its staff members,
especially its representatives, the target customer segments and key features and
risk-reward characteristics of each investment product and service it offers. The
financial institution should also educate representatives on how to classify the
product, in particular, whether the product falls under a distinct asset class. This
allows representatives to provide quality advice and make appropriate
recommendations on products and asset allocation to customers.
5.36 The financial institution should pay special attention when marketing investment
products to certain customer segments, in particular, those with limited
knowledge of investment products. It should encourage such customers to opt
for a full fact-find, to ensure that the advice and recommendation made by
representatives suit their financial objectives and personal circumstances. The
financial institution should also ensure that these customers are provided with
relevant information, in a manner easily understood by them.
5.37 In marketing a complex investment product, the financial institution should make
clear to customers that the product cannot generally be sold to them without
advice. In addition, the financial institution should ensure that its representatives
are properly trained on the features and risk-reward characteristics of such
products, before they are allowed to market and advise on such products to
customers. This includes passing any prescribed regulatory examinations. When
representatives sell complex investment products to customers with limited
knowledge of investment products, the financial institution should require its
representatives to obtain higher level approval before the transaction can be
executed.
5.38 The financial institution should not assume that an investment product is suitable
for all customers within a target customer segment. The financial institution
should take steps to identify any customer profiles and circumstances within the
target customer segment for which the product is not suitable, and have robust
controls to prevent inappropriate sales of the product to these customers.
Illustration 10.2B
At a training session before the launch of a regular premium investment-linked
policy, a financial institution communicated its marketing strategy to its
representatives. The strategy identified the target customer segment as young
executives who have worked for at least a year and who are in search of savings.
The financial institution further informed its representatives that, while the target
customer segment has been identified, they should note that the product is not
suitable for customers who are seeking pure insurance protection, given the
product’s high investment element.

Comment: In identifying a target customer segment for distribution of an

investment product, a financial institution should be mindful that the product
may not suit all customers within the target customer segment, and should put
in place controls to ensure appropriate sales of the product to its customers.
B4. Key Issues For Self-Assessment
5.39 What policies and procedures has the financial institution put in place to conduct
product due diligence, before offering a new investment product to its customers?
5.40 How does the financial institution ensure that its products and services are only
marketed to customer segments for which they are suitable?
5.41 What controls has the financial institution put in place to identify the customer
profiles and circumstances within the target customer segment for which the
investment product is not suitable?
C. Fair Dealing Outcome Three
Financial institutions have competent representatives who provide customers

with quality advice and appropriate recommendations.
C1. Rationale
5.42 There is a wide variety of investment products that cater to customers’ different
investment preferences and risk profiles. Customers often rely on representatives
of financial institutions to explain these products and recommend products that
are suitable for them. This requires fully trained and competent representatives.
5.43 The conduct of representatives is influenced by pay, rewards and other

incentives. Financial institutions should implement remuneration structures that
align representatives’ interests with those of their customers.
C2. Ensuring Competency Of Representatives
5.44 Besides meeting the minimum entry and examination requirements under the
Financial Advisers Act, the financial institution should ensure that all
representatives have the knowledge and skills to provide quality advice to
customers by:
(a) undergoing a structured training programme covering the advisory and sales
process, regulatory requirements, market developments, and other relevant
topics;
(b) receiving continuous professional training; and
(c) being fully trained on the features and risk-reward characteristics of any
investment product distributed by the financial institution, and on the profile
of the target customer segments of the product, before they are allowed to
advise on and sell the product to customers.

5.45 The financial institution should provide quality, ongoing training to its
representatives. Training programmes should be well structured and go beyond
satisfying requirements on training hours. The financial institution should ensure
that its training materials contain accurate and clear information on each
investment product, consistent with the product due diligence performed by the
financial institution and information furnished by the product provider. Where
training is conducted by the product provider or any third-party trainer, it is the
responsibility of the financial institution to be satisfied that the training is
adequate.
5.46 A financial institution should set limits on the supervisory span of control of its
supervisors, so that they can effectively coach, monitor and supervise the
representatives under their charge. To underscore the importance of supervisory
oversight, the financial institution should ensure that supervisors are primarily
focused on performing supervisory duties and are not distracted by their own
sales function.
5.47 Supervisors should conduct quality coaching sessions for their representatives.
They should also thoroughly review the sales conducted by the representatives,
including:
(a) verifying that the representatives’ recommendations meet the needs of
customers;
(b) ensuring that representatives seek higher level approval for sales of complex
investment products to customers with limited knowledge of investment
products;
(c) monitoring representatives’ sales activities to ensure they only conduct
activities which they are qualified and authorised to perform; and
(d) monitoring representatives to ensure that they follow the financial
institution’s prescribed advisory and sales process, including proper collection
of information from customers and documentation of the basis of
recommendation. The financial institution should have a zero tolerance policy
for failures by representatives to follow its prescribed advisory and sales
process.
Illustration 10.3A
A financial institution requires new representatives to be placed under the
guidance of supervisors. The supervisor observes the representatives in the
advisory and sales process to see how they conduct fact-finds, needs analysis
and make recommendations. During the observation period, the supervisor
identifies areas of weaknesses and arranges for additional training and coaching
for these representatives. The representatives are allowed to deal with customers
independently only when the supervisor is satisfied that they are competent and
ready to provide financial advisory services to customers.
Comment: A financial institution should develop a robust training and

competency programme to ensure that its representatives are equipped with the
necessary skills and knowledge to provide quality advice to customers. A

supervisor should not allow representatives to perform financial advisory services

independently, unless he is satisfied that they are competent to do so.
Illustration 10.3B
A financial institution wants to offer a new investment product to its customers.
The financial institution arranges for the product provider to explain the product
to its representatives. However, the financial institution does not review the
adequacy of the product provider’s training materials. The financial institution
allows its representatives to provide advice on the product, even if they have not
attended the product training or demonstrated an understanding of the product
and its features. As a result, the representatives are not properly trained and are
unable to explain the features and risk-reward characteristics of the product to
their customers.
Comment: A financial institution should not allow its representatives to advise

on and sell a new investment product, unless they are fully trained on its features
and risk-reward characteristics, and are able to properly explain the product to
customers. For training conducted by product providers or third-party trainers,
the financial institution should not only rely on them, but should satisfy itself
that the training materials used by these product providers or third-party trainers
are adequate.
C3. Providing Quality Advice And Appropriate Recommendations
5.48 The quality of fact-find affects the needs analysis of customers and
recommendation of investment products to customers. The financial institution
should ensure that its fact-find form and risk profiling questionnaire adequately
and correctly capture all important information about the customer. In addition,
the financial institution should ensure that any scoring methodology used in the
advisory and sales process is soundly designed and correctly applied. The
financial institution should demonstrate that it has properly tested and validated
its scoring and risk profiling methodologies, including the extent to which it has
performed customer testing or obtained external expert review and evaluation.
5.49 The financial institution should make clear to its customers the scope of financial
advisory services that it provides. The financial institution should offer advice to
customers for investment products that it distributes, except in very limited
circumstances. These are either, where the customer contacts the financial
institution on his own initiative to purchase the product, for example, through
internet portals, or in respect of the limited activities for which an "execution
only" model is appropriate, such as active trading of securities quoted on an
exchange, futures contracts or foreign exchange. A financial institution that
provides "execution only" services must put in place appropriate systems,
procedures and training to ensure that it does not provide advice to customers.
If advice is in fact given to a customer despite the "execution only" model
adopted by the financial institution, it will be deemed to be providing advice and
will be subject to the provisions under the Financial Advisers Act. Where no
advice is provided on any investment product by a financial institution, it should
highlight to the customer in writing that it is not providing advice to the customer,

and what the implications are. For complex investment products, the financial
institution should make clear to customers that such products cannot generally
be sold to them without advice.
5.50 The financial institution should train its representatives to undertake a proper fact-
find and risk profiling analysis to provide each customer with quality advice and
appropriate recommendations. In particular, the financial institution should ensure
that its representatives:
(a) make reasonable enquiries and collect sufficient information to understand
and analyse the customer’s risk tolerance, financial situation, personal
circumstances, investment experience, investment priorities and ability to
bear potential losses arising from the proposed investment;
(b) present sufficient investment options to the customer, and provide advice
that suits his financial objectives, risk tolerance and personal circumstances;
(c) strongly encourage any customer with limited knowledge of investment
products to opt for a full fact-find, so that the representatives can conduct
meaningful needs analysis and make appropriate recommendations; and
(d) fully document the basis of recommendation, at a minimum, by stating the
customer’s objectives and needs, explaining why the investment product is
recommended, and highlighting any possible risks of the product. Besides
helping the customer to understand why the product is suitable for him and
to make an informed decision, this documentation serves as an important
record of the advisory and sales process.
5.51 The financial institution should not unduly influence the financial decisions of
customers by offering gifts or rebates. The financial institution should also ensure
that its representatives do not use aggressive sales tactics.
5.52 Where the financial institution has informed customers that it provides periodic
review of their profiles and portfolios as part of its after-sales services, it should
require its representatives to undertake such reviews. For such reviews, the
representatives should consider any change in circumstances and financial
objectives of the customers. They can then provide them with updated analysis
and recommendations, which customers can use to modify their investment
portfolios.
5.53 The financial institution should ensure that regular compliance checks and other
reviews of the advisory and sales process are performed by a function which is
not involved in the provision of financial advisory services. They include reviews
of completed fact-find forms and sales documents to monitor the quality of advice
and suitability of recommendations given by the representatives and adequacy of
documentation of the advisory process. The financial institution should pay
particular attention to ensure that any fact-find conducted by its representatives
is not a mere form-filling exercise.

Illustration 10.3C
The Compliance Department of a financial institution carries out monthly
compliance reviews of the Financial Needs Analysis forms to ensure that the
recommendations made by its representatives meet the needs of customers.
These forms are graded “pass”, “pass with improvements needed” and
“unsatisfactory”. The Compliance and Training Departments follow up with
representatives graded “pass with improvements needed” and “unsatisfactory”
and their supervisors to address shortcomings and weaknesses.
Comment: A financial institution should conduct regular and independent reviews

of the quality of advice provided by its representatives to ensure that the
investment products recommended meet customers’ financial objectives and
personal circumstances. Such reviews are also useful in highlighting areas where
representatives need further support and training.
Illustration 10.3D
A financial institution assigns its Compliance Department to conduct regular
mystery shopping exercises to assess the competency of representatives, in
providing adequate disclosures and recommending suitable investment products
according to the needs of customers. Results from the exercise are factored into
their remuneration and training.
Comment: Regular and independent reviews of the quality of financial advisory

services help to uphold the professional standards of representatives, thereby
safeguarding customers’ interests. Besides desktop reviews of documentation
made during the advisory and sales process, the financial institution should
consider conducting mystery shopping exercises to validate if its representatives
are competent to provide quality advice and appropriate recommendations to
customers. Such reviews are also useful in highlighting areas where
representatives need further training.
Illustration 10.3E
A representative advised his customers to switch their unit trusts within a short
period of the initial investment to lock in gains. However, the representative
failed to inform the customers that they were entitled to free switches to other
unit trusts managed by the same fund house. This resulted in the representative
pocketing extra commissions at the expense of his customers for every switch
transaction. The financial institution which he represented detected the improper
switches and refunded the customers all associated commissions and fees. In
addition, the financial institution clawed back the commissions earned by the
representative and took disciplinary action against him.
Comment: Representatives should not recommend customers to switch from one

investment product to another in a manner that would be detrimental to their
interests. To curb improper switching, the financial institution should ensure that
it has proper controls, processes and procedures in place to monitor switching
practices, as spelt out in MAS’ Guidelines on Switching of Designated
Investment Products.

Illustration 10.3F
At a road show, a representative pressured a customer into buying an investment
product. The representative emphasised that it was the last day of the promotion
period and the customer would receive a free digital camera if he purchased the
product on that day. The customer bought the product, but realised later that it
did not meet his needs.
Comment: The financial institution should not unduly influence the financial
decisions of customers by offering gifts or promotions, or by applying aggressive
sales tactics. It is important that the financial institution gives customers
sufficient time to understand the information provided and consider the
recommendations made by its representatives. Most investment products require
long-term financial commitment and the purchase of unsuitable products by
customers can be detrimental to their financial well-being.
C4. Aligning Remuneration Structures With Customers’ Interest
5.54 Remuneration structures that rely primarily on commissions or are biased towards
rewarding representatives for recommending certain investment products may
encourage poor market conduct practices, such as product pushing and improper
switching. Examples of problematic remuneration structures include those with
product quotas and highly differentiated commissions for the sale of different
products. The financial institution should ensure that its remuneration structure
encourages representatives to act in the best interests of customers in the course
of providing financial advisory services. The financial institution can consider
adopting a balanced scorecard approach incorporating indicators, such as number
of full fact-finds conducted, compliance records and competency assessments in
its remuneration structure for its representatives. Alternatively, the financial
institution can consider adopting a “fee for advice” model or pegging the
remuneration of representatives to other objective indicators, such as the
medium-term performance of assets under advice.
Illustration 10.3G
To align the interests of its representatives with customers, a financial institution
designs a remuneration package for its representatives such that a
representative’s remuneration is based on a fixed salary and a variable
component. The variable component is structured such that 40% is based on
sales volume, while the other 60% is based on qualitative factors, such as client
retention, assets under advice, complaints, compliance records, proportion of full
fact-finds conducted, competency assessments, and customer satisfaction
derived from customer surveys.
Comment: A remuneration structure for representatives that relies primarily on

commissions may create risks of product pushing and aggressive selling. Hence,
a financial institution should incorporate indicators which support fair dealing
objectives into the remuneration structure of its representatives.

Illustration 10.3H
To discourage representatives from adopting a product-focused approach when
recommending investment products to customers, a financial institution rejected
the proposal from one of its business units to offer representatives higher
remuneration for the sale of a new investment product.
Comment: Differentiating remuneration among different types of investment

products may encourage representatives to recommend products without due
consideration for the needs of customers. This leads to poor market conduct
practices such as product pushing. Instead, the financial institution should
consider remunerating its representatives, based on objective indicators such as
the medium-term performance of assets under advice.
Illustration 10.3I
A customer had cash of S$200,000. He sought a representative’s advice on the
best way to make the most of this money, in particular whether to invest the
money or use it to repay his mortgage. The representative was primarily
concerned about meeting the sales target for a new investment product that the
financial institution was promoting. The representative convinced the customer
to purchase the new product without considering whether the potential return
from the investment would outweigh the mortgage interest on the housing loan.
Subsequently, the customer found out that the return from his investment in the
product was not sufficient to cover the mortgage interest on his housing loan.
Comment: Representatives should not limit their recommendations to investment

options for which they would earn a higher fee or commission. Representatives
should ensure that the fact-find process is thorough and consider all information
provided by customers when providing advice.
C5. Key Issues For Self-Assessment
5.55 How does the financial institution ensure that its training and competency
programmes identify and address gaps in the knowledge and skills of its
representatives, so that they are competent to provide quality advice and
appropriate recommendations to its customers?
5.56 What has the financial institution done to put in place a robust supervisory
framework for its representatives?
5.57 How does the financial institution ensure that all its representatives conduct
proper fact-finds and needs analyses and provide quality advice that takes into
account the financial objectives, risk tolerance and personal circumstances of
customers?
5.58 How does the financial institution ensure that its remuneration structure
incentivises representatives to provide quality advice and appropriate
recommendations to its customers?

D. Fair Dealing Outcome Four
Customers receive clear, relevant and timely information to make informed

financial decisions.
D1. Rationale
5.59 Financial institutions should provide customers with clear and relevant
information to enable them to make informed financial decisions. Such
information should be given before, during and after the advisory and sales
process. This includes after-sales updates on product performance and any
material developments relating to the investments, so that customers can take
steps to protect their interests. This information, whether written or verbal,
should be presented in a fair and balanced fashion.
D2. Providing Clear Information
5.60 The extent to which customers are able to understand a particular investment
product depends on their investment experience and level of financial literacy, as
well as clarity of the information provided by the financial institution. The financial
institution should ensure that disclosures to customers are:
(a) in plain language and avoid the use of technical terms; and
(b) presented in a format that is simple to read and easy to understand.
5.61 In developing its marketing and disclosure documents, a financial institution must
ensure that information presented in the documents is consistent with the
information from the product provider. The financial institution should present
key information clearly and in a simple format. Important features and risks of the
investment product should not be in fine print.
5.62 Where information is explained verbally by representatives, the financial

institution must ensure that any representations are consistent with the written
information provided in the product disclosure documents. The financial
institution should provide scripts for its representatives to ensure that any
statements that they make are consistent with due diligence conducted on the
features and risk-reward characteristics of the investment product and on
customer suitability. The financial institution should train its representatives to
avoid the use of terms or phrases which some customers may not understand or
convey a false sense of security, for example "capital protected", or “similar to
fixed deposits and bonds”. The financial institution should have procedures to
effectively monitor that its representatives keep proper records of any
representations made and advice given to its customers.
5.63 When dealing with customers with limited knowledge or understanding of

investment products, the financial institution should put in place additional
safeguards during the advisory and sales process, including:
(a) providing appropriate translations of the product disclosure documents to
non-English speaking customers. Particular care should be taken when

translating technical terms into other languages, so as not to change their

meaning or lose important nuances;
(b) requiring the representative’s supervisor or an English speaking relative to be
present during the advisory process; and
(c) requiring the representative to clearly document the additional steps taken to
ensure that the customer fully understands the investment product, and the
basis for recommending the product to the customer.
Illustration 10.4A
A financial institution recently launched an interest rate-linked structured deposit.
The product disclosure documents and marketing materials furnished to
customers contained numerous technical terms such as “barrier spread”, “first
year no barrier” and “reference rate”. There was no explanation or glossary
provided for these terms. As a result, many of its customers were unable to
understand the product. The representatives also failed to explain the technical
terms to the customers during the advisory and sales process.
Comment: A financial institution should not provide customers with disclosures

containing information which they could not understand. Such information
should be presented in plain language, and avoid use of technical terms, where
possible. The financial institution should consider providing tables, diagrams,
graphics or simple examples to aid customers in understanding the key features
and risk-reward characteristics of the investment product. Representatives
should ensure that customers understand the information disclosed to them.
Where technical terms are used in the product disclosure documents and
marketing materials furnished to customers, representatives should ensure that
these terms are clearly explained to customers. If, despite these explanations, a
customer is still unable to fully understand the product, the representative should
not proceed with the transaction.
D3. Providing Relevant Information
5.64 Before customers make any financial decisions, the financial institution should
provide them with all relevant information. The financial institution should provide
product disclosure documents, including those prepared by the product provider
such as the prospectus, pricing statement, Product Highlights Sheet, factsheet
and marketing materials, to a customer before he makes a financial decision.
5.65 The financial institution should present the information in a fair and balanced
manner. It should highlight all key risks of the investment product, the potential
upside and downside of the investment, fees and charges, important terms and
conditions, rights and obligations of customers, and early withdrawal penalties.
Information on the free-look or cooling off period of the product, where applicable,
must be highlighted to customers.
5.66 The financial institution should ensure that all marketing and advertising
materials, in particular those for unlisted investment products, give a fair and
balanced representation of the features and risk-reward characteristics of the

products. The financial institution should be mindful that such advertising and
marketing materials:
(a) do not misrepresent or omit key product features and risks;
(b) do not contain words or graphics that can convey an impression that is
inaccurate or inconsistent with the nature or risks of the products;
(c) do not give the impression that a customer can make a profit without bearing
any risk. For unlisted investment products, the financial institution should
ensure that these materials do not suggest that the products are, or are
comparable to, bank deposits, or there is little or no risk of the customer
losing his principal or not achieving the stated or targeted rate of returns; and
(d) do not mislead customers about the possible performance of the products.
5.67 The financial institution should explain to customers the range of possible
outcomes for the investment product, including the worst case scenario. For
example, for products that involve market risk, the possible impact of market
movements should be made clear. For products where there is a risk of the
customer losing a portion of or the entire principal amount in return for higher
interest, this risk should be highlighted to the customer. This is especially
important when customers are opting for such products as an alternative to
traditional fixed income investments. For life insurance products, information
about exclusions and the likelihood of not being able to make a claim should be
carefully explained.
5.68 The financial institution should inform customers how they can provide feedback
or lodge complaints about the financial institution or its representatives. This
information should be provided to customers at the start of their relationship with
the financial institution, and should include information on the scope of
complaints that can be heard at the Financial Industry Disputes Resolution Centre
Ltd [“FIDReC”].
Illustration 10.4B
A customer sought advice from a representative on the purchase of an
investment product with high potential returns. She communicated that her
primary objective was preservation of capital. Upon the representative’s
recommendation, she purchased a single premium investment-linked policy. She
later realised that the representative did not explain to her that, under certain
circumstances, she could lose a portion of or the entire principal amount.
Comment: A financial institution should not withhold relevant information from

customers when providing financial advisory services. When making
recommendations on investment products, the financial institution should ensure
that its representatives highlight all key risks to customers, so that they can
make informed financial decisions.

Illustration 10.4C
At the account opening stage, a financial institution provides a brochure to all its
customers on the procedures for lodging feedback, queries or complaints, as well
as the contact details of the independent dispute resolution centre, FIDReC.
Comment: A financial institution should inform customers of its after-sales

services, customer support facilities, as well as the avenues for dispute
resolution at the start of the relationship. This is so that customers know who
to approach and how to go about resolving a dispute with the financial institution
or its representatives should the need arise.
D4. Providing Timely Information
5.69 The financial institution should set out the scope of its services, and what
customers could expect on the services provided by the financial institution at
the start of the relationship with its customers. For example, the financial
institution should clarify whether its after-sales services include periodic reviews
of customers' profiles and portfolios.
5.70 The financial institution should provide customers with information and updates
about their investments, both during the advisory and sales process, and after
the sale has been concluded.
5.71 When product providers provide ongoing disclosures on investment products,

such as semi-annual and annual reports or updates on material developments
affecting the investments, the financial institution should, in turn, provide such
after-sales updates to customers. This ensures that customers are kept abreast
of the investment performance and any material developments affecting their
investments. The financial institution should provide information on where
customers could access information about the product, such as the bid or
redemption prices.
Illustration 10.4D
The product provider of an investment-linked policy has appointed a new
investment manager for a number of its sub-funds. It informs the financial
institution which distributes the product about the change in investment manager,
and clarifies that there will be no change to the investment objectives of the
subfunds. The financial institution promptly issues a circular to all customers of
the product to update them on the matter.
Comment: A financial institution should ensure that customers are given relevant
information in a timely manner as part of its after-sales services. This would
enable customers to make changes or adjustments to their investment portfolios,
where necessary.

D5. Key Issues For Self-Assessment
5.72 How does the financial institution ensure that customers with limited knowledge
of investment products or who are non-English speaking understand the
information that is disclosed to them?
5.73 How does the financial institution ensure that relevant information on investment
products, such as the product features, fees and charges, benefits and risks, as
well as important terms and conditions, are properly explained and highlighted to
customers, before they make any decision to purchase the product?
5.74 What does the financial institution do to ensure that customers are provided with
timely updates on their investments?
E. Fair Dealing Outcome Five
Financial institutions handle customer complaints in an independent, effective

and prompt manner.
E1. Rationale
5.75 Financial institutions should establish a robust process to resolve customer

grievances independently, effectively and promptly. This is key to providing
assurance to customers that their concerns and feedback are dealt with fairly and
professionally. Financial institutions should regard complaints as potential
indicators of areas for improvement.
E2. Handling Complaints Independently And Effectively
5.76 Each financial institution must have a formalised complaints handling process to
ensure that complaints are handled independently and effectively. Every
complainant must be afforded full opportunity to state his complaint. The financial
institution should work with the complainant to identify all facts required for a
fair assessment of the complaint. The complaint should be properly documented
and a copy of the interview statements made by the complainant should be
furnished to him.
5.77 The financial institution should resolve complaints fairly and consistently. In
reviewing a complaint, the financial institution should look at the facts and
circumstances of each case. The financial institution should consider relevant
factors, such as its internal processes for the sale of the investment product; the
customer’s profile; and how the sale was conducted, including any verbal
representations or promises made by the representative to the customer during
the advisory and sales process.
5.78 Staff handling complaints should be properly trained. Complaints must be

assessed by reviewers who are not involved in the provision of financial advisory
services. The financial institution should set clear criteria for assessing the merits
of each complaint. The assessment outcome for each complaint should be

properly documented. Where appropriate, complaints should be escalated to the

Board and Senior Management.
5.79 Complaints can be a valuable indicator of potential problems which need to be

addressed. Where the financial institution receives a significant number of
complaints about a specific issue or investment product, it should conduct
investigations to identify the cause of the problems. The same applies if there are
multiple complaints relating to a specific representative, group of representatives,
representatives based at a specific location, or from customers of a specific
profile. The financial institution should take steps to rectify any problems
immediately.
Illustration 10.5A
A financial institution sets up a centralised unit to handle complaints and
implements an information system to document all complaint cases. It assigns
the Compliance Department to independently review and investigate all
complaints. All serious complaint cases are discussed at the monthly
management meetings involving the Chief Executive Officer and all Heads of
Department. To underscore the importance of dealing fairly with customers, the
Chairman of the financial institution reads all customer complaints addressed to
him.
Comment: To ensure that complaints are handled independently and effectively,

the financial institution should appoint reviewers who are not involved in the
provision of financial advisory services to oversee the investigation and resolution
of complaints. There should be guidelines on when to escalate complaints to the
Board and Senior Management.
E3. Resolving Complaints Promptly
5.80 The financial institution should set service standards for its complaints handling
and resolution, including reasonable time frames to acknowledge a customer’s
complaint, interview the customer and complete the review of the complaint. The
financial institution must devote sufficient resources to attend to and resolve
customer complaints within the stipulated turnaround times, without
compromising the quality of review.
E4. Key Issues For Self-Assessment
5.81 How does the financial institution ensure that all complaints are handled
independently, effectively and promptly?
5.82 How does the financial institution ensure that it has adequate resources to resolve
all complaints within the stipulated time frames?
5.83 What controls, processes and procedures does the financial institution have to
deal with recurring complaints?

6. GUIDELINES ON THE REMUNERATION FRAMEWORK FOR REPRESENTATIVES

AND SUPERVISORS (“BALANCED SCORECARD FRAMEWORK”), REFERENCE
CHECKS AND PRE-TRANSACTION CHECKS [GUIDELINE NO: FAA-G14]
6.1 The following contents in regard to “Purpose Of These Guidelines” has been
entirely extracted from the Guideline No: FAA-G14 from the MAS website:
(Cap. 110) (“FAA”). They apply to all licensed financial advisers and exempt financial
advisers, other than a financial adviser in respect of the activities, recommendations, or
transactions set out under regulation 34A of the Financial Advisers Regulations (“FAR”).
2 The Notice on Requirements for the Remuneration Framework for Representatives

and Supervisors (“Balanced Scorecard Framework”) and Independent Sales Audit Unit
(FAA-N20) (“the Notice”) sets out the requirements for the independent sales audit unit
(“ISA Unit”) and the design and operation of the balanced scorecard framework, which
financial advisers shall put in place in their remuneration structures for their
representatives and supervisors. These Guidelines are intended to provide general
guidance on some of the requirements in the Notice, such as the post-transaction checks
and classification of infractions by the ISA Unit. In addition, these Guidelines set out the
measures to be applied to all existing and newly recruited representatives who have been
assigned a balanced scorecard grade of “E” and all supervisors who have been assigned
a balanced scorecard grade of “Unsatisfactory” under the balanced scorecard
framework, as well as obtaining and sharing of information on the representatives’ and
supervisors’ balanced scorecard grades during reference checks. The Guidelines also set
out the Authority’s expectation for financial advisers to conduct pre-transaction checks
to minimise the impact of the balanced scorecard framework on representatives and
supervisors. The Authority may rely on a financial adviser’s failure to comply with these
Guidelines to establish or negate any liability in question in relation to any proceeding
under the Notice.
3 These Guidelines should be read in conjunction with the provisions of the FAA, the
FAR, as well as written directions, notices, codes and other guidelines that the Authority
may issue from time to time.
B. Definition
6.2 The following contents in regard to “Definition” has been entirely extracted from
the Guideline No: FAA-G14 from the MAS website:
4 For the purposes of these Guidelines,
“effective date” in relation to a transaction refers to the date –

(a) in the case of a life policy –
(i) the policy is issued;

(ii) the policy takes effect; or

(iii) the cover has commenced,
whichever is the latest, and
(b) in the case of an investment product other than a life policy, a client’s
application for a transaction has been accepted by a product manufacturer;
“selected client” in relation to a financial adviser, means any client of the financial adviser
who meets any two of the following criteria –
(a) is 62 years of age or older;
(b) is not proficient in spoken or written English1 ;
(c) has below GCE ‘O’ level or ‘N’ level certifications, or equivalent academic
qualifications,
other than a client who meets any two of the criteria and has been assessed by
the financial adviser (such assessment to be documented in writing) to possess
adequate investment experience and knowledge to transact in the investment
product recommended.
5 The terms used in these Guidelines shall, except where expressly defined in these
Guidelines or the context otherwise requires, have the same meanings as defined in the
FAA, FAR, the Notice on Recommendations on Investment Products (FAAN16), the
Notice on Information to Clients and Product Information Disclosure (FAAN03), the
Notice on Dual Currency Investments (FAA-N11), the Guidelines on Structured Deposits
(FAA-G09) and the Notice.
____________________
1
Paragraph (b) in relation to the definition of “selected client” does not apply if the representative provided
the financial advisory services to the client in a language (other than English) which the representative and
the client are proficient in and all sales documentation provided to the client is written in that language.
C. Adoption Of Higher Standards By Financial Advisers
6.3 The following contents in regard to “Adoption Of Higher Standards By Financial

Advisers” has been entirely extracted from the Guideline No: FAA-G14 from the
MAS website:
6 The Notice sets out the minimum requirements for the Balanced Scorecard
Framework and the ISA Unit. A financial adviser may adopt a higher standard in relation
to the Balanced Scorecard Framework and the ISA Unit. The financial adviser should
communicate its adoption of such higher standard to its representatives and supervisors.
If a financial adviser does adopt higher standards than that provided under the Act, the
FAR and this Notice, the financial adviser should not attribute its adoption of higher
standards to the Authority.

D. Guidance On Post-Transaction Checks Carried Out By The ISA Unit
6.4 The following contents in regard to “Guidance On Post-Transaction Checks

Carried Out By The ISA Unit” has been entirely extracted from the Guideline No:
FAA-G14 from the MAS website:
7 Paragraph 4.1.1 read with paragraph 4.4.1.1 of the Notice, provides that a financial
adviser shall require its ISA Unit to carry out and complete post-transaction checks on
sampled transactions in every calendar quarter. Annex 1 (Guidance for documentation
reviews) and Annex 2 (Guidance for client surveys) to these Guidelines set out the
minimum standards expected of the ISA Unit in respect of its carrying out post-
transaction checks.
8 The ISA Unit may –

(a) incorporate any other assessment criteria in the documentation review or
additional questions in the client surveys; or
(b) modify the assessment criteria in the documentation review or questions in the
client surveys to suit the business needs of the financial adviser without
changing the substance of each assessment criteria or question.
9 The ISA Unit should conduct both documentation review and client survey on each
sampled transaction. The Authority is of the view that conducting client survey would
serve as an additional tool for a financial adviser to –
(a) uncover infractions which may not be detected based solely on documentation
reviews; and
(b) complement documentation reviews in the assessment of potential cases of
infraction.
10 The ISA Unit should conduct client surveys via phone calls, face-to-face
interactions with the client or in a written form (“written surveys”) or electronic form
(“electronic surveys”) which is sent to the client. A financial adviser may treat a client
survey done through phone calls as being closed if the financial adviser is unable to reach
the client after three unsuccessful call attempts. A financial adviser may treat written
surveys or electronic surveys as being closed if the financial adviser does not receive
any response from the client within two weeks (in the case of an electronic survey) or
one month (in the case of a written survey) from the date the survey is sent.
11 Every financial adviser should strongly encourage its clients to participate in client
surveys. Where a client of a representative refuses to participate in a client survey, the
representative should not be penalised for the client’s non-participation. Nevertheless, a
financial adviser should be vigilant and put in place controls and processes to guard
against its representatives advising their clients or acting in a manner which may cause
their clients to not participate in client surveys.

E. Classification Of Infractions
6.5 The following contents in regard to “Classification Of Infractions” has been

entirely extracted from the Guideline No: FAA-G14 from the MAS website:
12 Paragraph 4.5 of the Notice provides that a financial adviser shall ensure that its
ISA Unit classifies every infraction committed by a representative as either a Category 1
infraction or Category 2 infraction. Examples of Category 1 infractions in relation to each
non-sales key performance indicators are as set out in Annex 3 (Examples of Category
1 infractions) to these Guidelines. For the avoidance of doubt, these examples are
illustrative and not exhaustive.
13 A financial adviser should ensure that the ISA Unit assesses every infraction based
on its own merits and circumstances (including any aggravating or mitigating factors) in
determining whether the infraction should be classified as a Category 1 infraction or
Category 2 infraction.
14 Notwithstanding that infractions uncovered will affect the remuneration of

representatives and supervisors, a financial adviser should also review whether to take
appropriate disciplinary action against such representatives who have committed
infractions or against the supervisors of such representatives.
F. Representatives Assigned A Balanced Scorecard Grade Of “E” And Supervisors

Assigned A Balanced Scorecard Grade Of “Unsatisfactory” Under The Balanced
Scorecard Framework
6.6 The following contents in regard to “Representatives Assigned A Balanced

Scorecard Grade Of “E” And Supervisors Assigned A Balanced Scorecard Grade
Of “Unsatisfactory” Under The Balanced Scorecard Framework” has been entirely
extracted from the Guideline No: FAA-G14 from the MAS website:
15 A financial adviser should place every representative who is assigned a balanced

scorecard grade of “E” in a calendar quarter (the “E representative”) under close
supervision. The chief executive officer of a financial adviser or any person designated
by the chief executive officer (other than a supervisor) should have oversight of the close
supervision of every E representative.
16 For the purposes of paragraph 15 of these Guidelines and subject to paragraph 17,
the close supervision of an E representative should include:
(a) having the supervisor of an E representative accompany the E representative

during the advisory and sales process for a minimum of five closed sales2 ; and
_________________________________
2
A closed sale is one where the representative has performed a fact-find, a needs analysis and provided a
recommendation on an investment product to the client, and the client has accepted the recommendation
to purchase the investment product.

(b) ensuring that the ISA Unit conducts full-scale independent post-transaction
checks on every transaction effected with a client by the E representative for
a minimum period of three months.
17 Where a direct supervisor of an E representative has been assigned a balanced

scorecard grade of “Unsatisfactory” in the same calendar quarter as the E representative,
a financial adviser should ensure that the role of the supervisor under paragraph 16(a) is
performed by a supervisor in a higher tier who has not been assigned a balanced
scorecard grade of “Unsatisfactory” in the same calendar quarter. If every supervisor in
a higher tier is assigned a balanced scorecard grade of “Unsatisfactory”, the financial
adviser should –
(a) designate a person who is independent and suitably qualified to be responsible
for conducting the supervisory role under paragraph 16(a); and
(b) submit a remedial plan to the Authority on the steps the financial adviser
intends to take to improve the performance of the relevant team comprising
the E representative and the supervisors assigned a balanced scorecard grade
of “Unsatisfactory”.
18 A financial adviser should not allow an E representative to perform any supervisory

or managerial role for a period of at least one year from the date he was assigned the
balanced scorecard grade of “E”.
19 Where a supervisor has been assigned a balanced scorecard grade of

“Unsatisfactory” in any calendar quarter by a financial adviser, the financial adviser
should conduct a review to ascertain whether the supervisor’s oversight of the
representatives under his supervision or management is adequate, and where
appropriate, reduce the number of representatives under the supervisor’s supervision or
management or impose a moratorium on the recruitment of new representatives by the
supervisor. A financial adviser should also not allow a supervisor who has been assigned
a balanced scorecard grade of “Unsatisfactory” for two consecutive calendar quarters
to perform any supervisory or managerial role for a period of at least one year from the
date the supervisor was assigned his second consecutive balanced scorecard grade of
“Unsatisfactory”.
20 Where a supervisor has been assigned a balanced scorecard grade of

“Unsatisfactory” in any calendar quarter, the chief executive officer or a person
designated by the chief executive officer is also responsible for the review of the
adequacy of the supervisor’s oversight of the representatives under his supervision or
management. For the avoidance of doubt, the chief executive officer remains ultimately
responsible for the oversight of the close supervision of every E representative and every
supervisor who is assigned a balanced scorecard grade of “Unsatisfactory”. In addition,
a financial adviser should assess the fitness and propriety of every E representative and
every supervisor who is assigned a balanced scorecard grade of “Unsatisfactory” and if
necessary, take appropriate disciplinary action against such E representative and
supervisor who is assigned a balanced scorecard grade of “Unsatisfactory”.

G. Reference Checks On Representatives And Supervisors
6.7 The following contents in regard to “Reference Checks On Representatives And

Supervisors” has been entirely extracted from the Guideline No: FAA-G14 from
the MAS website:
21 When a financial adviser conducts reference checks on an individual whom the

financial adviser intends to recruit as a representative or supervisor and who had
previously been a representative or supervisor for other financial advisers, the financial
adviser should request the last four balanced scorecard grades assigned to the individual
by his previous principal(s) within the past 10 years.
22 When a financial adviser (“first-mentioned adviser”) receives a request for a

reference check from another financial adviser (“second-mentioned adviser”) in respect
of an individual, the first-mentioned adviser should disclose to the second-mentioned
adviser the balanced scorecard grades which were assigned to the individual when he
was a representative of or supervisor for the first-mentioned adviser. For the avoidance
of doubt, where an individual was a representative of and supervisor for a financial
adviser and assigned respective balanced scorecard grades in each capacity, the financial
adviser should disclose both sets of balanced scorecard grades when responding to
reference checks requests by prospective principals of the individual.
H. Recruitment Of Representatives Assigned A Balanced Scorecard Grade Of “E”

And Supervisors Assigned A Balanced Scorecard Grade Of “Unsatisfactory”
Under The Balanced Scorecard Framework
6.8 The following contents in regard to “Recruitment Of Representatives Assigned A

Balanced Scorecard Grade Of “E” And Supervisors Assigned A Balanced
Scorecard Grade Of “Unsatisfactory” Under The Balanced Scorecard Framework”
has been entirely extracted from the Guideline No: FAA-G14 from the MAS
website:
23 As part of the recruitment process of a representative or supervisor, a financial

adviser should take into consideration the balanced scorecard grades which were
assigned by the previous principal to the individual in his capacity as a representative or
supervisor, and should satisfy itself that the individual is fit and proper to carry out his
duties as a representative or supervisor.
24 Where a financial adviser intends to recruit or recruits an individual who has been
assigned a balanced scorecard grade of “E” in the most recent balanced scorecard
assessment performed by his previous principal, the financial adviser should observe
paragraph 16 of these Guidelines, and ensure that the individual does not perform any
supervisory or managerial role for a period of at least one year from the date of his
appointment as a representative. A financial adviser should not recruit any individual
with a balanced scorecard grade of “Unsatisfactory” in the final calendar quarter of his
tenure with his previous principal, as a supervisor.

I. Pre-transaction Checks By Supervisors
6.9 The following contents in regard to “Pre-transaction Checks By Supervisors” has

been entirely extracted from the Guideline No: FAA-G14 from the MAS website:
25 A financial adviser should instill a strong culture of fair dealing where

representatives conduct proper fact-find and needs analysis, so as to provide its clients
with quality advice and appropriate recommendations. Besides carrying out and
completing post-transaction checks under the balanced scorecard framework, a financial
adviser should institute controls to check that its representatives have followed through
the financial adviser’s prescribed advisory and sales process, including the proper
collection of information from clients and documentation of the representatives’ basis of
recommendation, and that the representatives’ recommendations meet the needs of the
clients before a transaction is submitted to product manufacturers for processing and
execution (“pre-transaction stage”).
26 In this regard, a financial adviser should require its supervisors to review all the
documentation and basis of every recommendation made or transaction handled by its
representatives during the pre-transaction stage, other than a recommendation in respect
of or a transaction which is a rollover of any dual currency investment or structured note
relating to equities or commodities, or such other product as the Authority may approve
on an exceptional basis (“pre-transaction checks”). Pre-transaction checks would help to
minimise the impact of the balanced scorecard framework on representatives as any
infraction uncovered by a supervisor during pre-transaction checks will not be factored
into the balanced scorecard framework and will not affect the remuneration of the
representatives as well as that of their supervisors.
27 Pre-transaction checks should include:

(a) Documentation review:
A supervisor should review all documentation, including fact-find, needs
analysis and basis of every recommendation made by each representative
under his supervision or management; and
(b) Client call-back:

(i) Where a representative has made a recommendation to any selected client,
a supervisor should conduct client call-backs with the selected client in
respect of the recommendation; and
(ii) Where a representative is a selected representative, the supervisor should

conduct client call-backs with every client to whom the selected
representative made any recommendation. Such client call-backs should
be conducted as soon as practicable but in any event no later than the end
of the next quarter after the assignment of the second balanced scorecard
grade of “B” or worse to the representative.
28 A financial adviser may –

(a) engage a staff who does not make recommendations or effect transactions for
clients (“non-sales staff”) or a third party provider to conduct pre-transaction
checks; or

(b) implement systems to check whether the recommended product is suitable for
the client (“system-based method”),
subject to the condition that the financial adviser should be able to demonstrate and
ensure that the non-sales staff, third party provider or system-based method is as
effective and robust as pre-transaction checks conducted by a supervisor.
29 Where a supervisor, or the non-sales staff or third party provider referred to in

paragraph 28(a), or a financial adviser who implements and uses a system-based method
referred to in paragraph 28(b), is unable to complete the pre-transaction checks in
relation to any recommendation made by a representative to a client on an investment
product before the effective date of the transaction in relation to the investment product,
the supervisor, non-sales staff or third party provider referred to in paragraph 28(a), or
the financial adviser who implements and uses a system-based method referred to in
paragraph 28(b), should complete the pre-transaction checks within the free-look or
cancellation period of the investment product.
30 Where a recommendation is made by a representative to a client in relation to an

investment product which is time-sensitive and does not have a free-look or cancellation
period, the supervisor, non-sales staff or third party provider referred to in paragraph
28(a), or the financial adviser who implements and uses a system-based method referred
to in paragraph 28(b), should complete the pre-transaction checks in relation to the
recommendation within 5 business days from the effective date of the transaction in
relation to the investment product.
31 Where an investment product is found to be unsuitable for the client during the
pre-transaction checks, a financial adviser should allow the affected client to elect to
modify or cancel his transaction in relation to the investment product and the financial
adviser should not require the affected client to bear any difference in the value of the
investment product and any other relevant cancellation or modification fees and charges
(if any). The financial adviser should also provide a new recommendation on another
investment product to the client, if so requested.
32 A financial adviser should ensure that every infraction uncovered by a supervisor,

the non-sales staff or third party, or pursuant to the system-based methods, referred to
in paragraph 28(b), during the pre-transaction checks, is rectified.
33 A financial adviser should keep records of its processes and methods undertaken,
and every assessment and determination made for pre-transaction checks under or in
relation to the balanced scorecard framework for a period of not less than five years.
34 These Guidelines shall take effect on 1 January 2016.


Annex 1
Guidance for documentation reviews
Non-sales KPI 1: Understanding a client’s needs Yes No Not

applicable
Did the representative document all of a client’s personal
particulars?
(Name, age or date of birth, education qualifications, language
proficiency)
Did the representative document the following client
information:
a) Financial objectives (Including the client’s protection,
savings, investments, or heath needs. Time horizon
information should be indicated with the financial
objectives)
b) Risk tolerance or profile
c) Occupation or employment status
d) Financial situation (Including assets, liabilities, cash flow
and annual income)
e) Source and amount of regular income
f) Financial commitments of the client
g) Current investment portfolio, including any life policies or
collective investment schemes
h) Proportion of amount to be invested to total assets (i.e.
whether the amount to be invested is a substantial portion
of the client’s assets)
i) For any recommendation made in respect of any life policy,
the number of dependants of the client and the extent and
duration of financial support required for each dependant
Where the client has a joint investment application with
another investor, did the representative conduct the Customer
Knowledge Assessment for both the client and that investor?
If the information referred to in the sections above is not
collected and documented, is there a valid reason? If yes,
please specify the reason:

Non-sales KPI 2: Suitability of product recommendations Yes No Not

applicable
Did the representative document the assumptions used for his
recommendation (e.g. return on investment, inflation rate,
education costs, or retirement age of the client) and are these
assumptions reasonable?
Did the representative conduct a risk profiling for the client?
Did the representative document the basis of recommendation
for the investment product recommended?
Did the representative recommend an investment product
which:
a) meets the financial objectives of the client;
b) is affordable to the client;
c) is aligned with the client’s investment horizon;
d) matches the client’s risk profile;
e) takes into account the client’s concentration risk; or
f) takes into consideration the particular needs of the client
(e.g. the number and age of the client’s dependants)
FOR SELECTED CLIENTS ONLY3
Is there a file note, call-log or document annotation (whichever
is applicable) on the client call-back by the supervisor?
Depending on whether there are facts and circumstances in a
transaction which warrant a closer scrutiny, was the client call-
back adequately performed by the supervisor and did the
supervisor ask the client relevant questions in relation to the
transaction (e.g. if the client is an elderly person who has
invested his CPF monies, did the supervisor ask if the client
was aware on how the returns offered by the investment
product differ compared with the interest rates earned by
monies in the relevant CPF accounts held by the client?)
____________________________________
3
This section highlights the need for the ISA Unit to check that the supervisor has conducted pre-transaction
client call-backs with selected clients. The Authority does not regard a non-adherence to this section as an
infraction committed by a representative.

Non-sales KPI 3: Adequacy of information disclosure Yes No Not

applicable
Did the client sign the risk disclosure statement accompanying
the investment product?
Did the client acknowledge receipt of the following documents:
a) Financial Needs Analysis (Fact-find form, the specific
recommendations of the representative and the basis for
the recommendation)
b) Prospectus, Product Summary or Product Highlights Sheet
of the investment product
c) Benefit Illustration (for life policies)
Is there a written acknowledgement from the client, that the
following information, has been explained to the client: (Note:
A financial adviser should refer to FAA-N03 on its disclosure
requirements)
a) Nature and objective of the investment product
b) Details of the product provider
c) Party against whom the client may take action to enforce
his rights with respect to the investment product
purchased by the client
d) Intended client profile of the investment product
e) Frequency of the reports and source from which the client
could reasonably be expected to receive the reports on the
investment product
f) Amount of, frequency with which, and period over which
payment is to be made by the client in respect of the
investment product
g) Benefits of the investment product, including the amount
and timing for payment of benefits by the product provider
and whether the benefits are guaranteed or non-
guaranteed. For example:
• Whether capital or return is guaranteed
• Where the investment product is a life policy, reasons
why any benefit is excluded by the life insurer in respect
of the life policy
h) Risk factors of the investment product
i) Amount, frequency of payment, and nature, of fees and
charges to be borne by the client
j) Procedures, charges and restrictions on withdrawal or
surrender of, or claim on, the investment product
k) Warnings, exclusions and caveats in relation to the
investment product
l) Free-look period for life policies or cancellation period for
unit trusts (whichever is applicable)

Non-sales KPI 4: Standards of professionalism and ethical conduct Yes No

in relation to the provision of financial advisory services
Based on documentation reviewed, is there any indication that a
representative has conducted himself unprofessionally or
unethically?
For example, is there any indication that the documentation has

been tampered with (e.g. use of correction-pens on material
information and the correction made has not been acknowledged
by the client)?

Annex 2
Guidance for client surveys
Non-sales KPI 1: Understanding a client’s needs
1) Did the representative ask you questions in order to understand your financial
situation, investment objective and risk appetite before recommending an investment
product?
☐ Yes ☐ No ☐ Cannot Recall ☐ Others: (Please

specify)
2) Was there any instance during the financial advisory process where you felt that your
representative had influenced you to provide an answer or influenced you to modify
your original answer to an answer that you are uncomfortable with as it is inaccurate
or does not represent your intention?

specify)
If yes, please explain how the representative had influenced you:
Non-sales KPI 2: Suitability of product recommendations
3) Did you understand the representative’s explanation as to why an investment product

is suitable for you?

specify)
Non-sales KPI 3: Adequacy of information disclosure
4) Did the representative inform you that you have purchased a …..(Please refer to type
of investment product as set out in the first column of the table below), and are you
aware that …..(Please refer to corresponding brief description of the investment
product as set out in the second column of the table below)?

specify)

Type of investment
Brief description of investment product
product
i) …you will not get back the full amount you have invested if you
withdraw before the Maturity Date;
AND
ii)…structured deposits are not fixed deposits or savings deposits,

and are not covered under the deposit insurance scheme.
Where the structured deposit is a dual currency investment, the

following questions should also be raised:
Structured Deposit
i)…an investment in dual currency investments is subject to
investment risks and you will incur a premature termination
penalty if you terminate your investment before the Maturity
Date;
AND
ii)…you may or may not receive your original investment amount

if you terminate your investment before its Maturity Date.
i) …you will not get back the full amount paid if you terminate the
plan early; (Note: This brief description is only intended for
traditional insurance plans and may not be applicable to
investment-linked insurance plans);
OR
i)….you will be subject to investment risk on the premium paid

Insurance or
for investment-linked insurance plans;
Investment-linked
Insurance Plans
AND
ii)…there is a 14-day free look period, or you may cancel this

insurance plan or investment-linked insurance plan (as the case
may be) within 14 days from the date on which you receive the
policy from the insurance company, and if so, you would be
returned your monies or premiums.
i)…an investment in unit trusts is subject to investment risk;
AND
Unit Trusts
ii)…there is a 7-day cancellation period and you would be returned
your monies, including the sales charge.

Type of investment
Brief description of investment product
product
i)…an investment in bonds is subject to investment risk;
AND
Bonds
ii)… if the bond is prematurely sold prior to maturity, the sale price
of the bond will depend on prevailing market prices and may be
higher or lower than the initial purchase price of the bond.
i) …an investment in a structured note is subject to investment

risks and you will incur a premature termination penalty if you
withdraw your investment before the Maturity Date of the
structured note;
Structured Note
AND
ii) …there is a 7-day cancellation period where you would be

returned your monies.
Non-sales KPI 4: Standards of professionalism and ethical conduct in relation to the

provision of financial advisory services
5) Were there any aspects of the sales process that you were dissatisfied with?
☐ Yes If yes, please elaborate:

☐ No
Note: If the ISA Unit has reasons to believe there may be a potential infraction in relation
to a sampled transaction, the ISA Unit may consider asking more specific questions, for
example:
(i) Were you asked to sign blank or incomplete forms; or
(ii) Were you asked to sell part of your current investment portfolio and purchase another
investment product without a clear explanation from the representative on the basis
for so doing?

Annex 3
Examples of Category 1 infractions
Example 1 - KPIs 1 & 2

The information collected by the representative was insufficient to enable the
representative to have a good understanding of a client’s profile, risk appetite and
financial objectives, and the investment product recommended by the representative
was not suitable for the client.
Scenarios:
(a) A representative recommended an investment product to a client before collecting

pertinent information from the client on his profile, risk appetite and financial
objectives. As a result, the investment product recommended by the representative
to the client does not meet the risk appetite, financial objectives or particular needs
of the client.
(b) A representative did not conduct the Customer Knowledge Assessment on a client
and the client did not have the knowledge and experience to understand the risks and
features of a specified investment product (“SIP”), but the SIP was recommended to
the client nonetheless.
(c) A representative influenced a client’s answers to the risk profiling questions such that
the client’s risk profile is suitable for the investment product that the representative
was trying to sell to the client.
(d) During the fact-find, a client indicated that he wanted bonds with fixed coupon
payments. The representative assumed that the client was referring to bond funds
(unit trusts) and sold $250,000 of a global bond fund to the client, instead of a pure
vanilla bond.
(e) A client took up a mortgage loan with the bank. During the presentation, the
representative recommended a mortgage reducing term assurance (“MRTA”) policy
to the client without finding out from the client if he already has a term insurance
policy which can provide adequate coverage for the tenor of the mortgage loan. In
actual fact, the client did not need to purchase the MRTA policy.
(f) A representative failed to collect information on a client’s source of income in the

fact-find form. The representative assumed that the client was currently employed as
the client was dressed in business attire. As such, the representative ticked
“employment” as the client's source of income. The representative sold a monthly
investment plan for unit trusts to the client which required the client to contribute a
fixed amount for a minimum of 12 months. In fact, the client is a retiree with no
regular source of income.

Example 2 - KPI 2
Having conducted the necessary fact-find, a representative recommended an
investment product to a client without taking into account the client’s financial
objectives, investment horizon, risk profile, financial situation and particular
circumstances and needs. Relying on the representative’s recommendation, the client
bought the recommended investment product. During the post-transaction checks
carried out by the ISA Unit, the ISA Unit found that the representative did not have a
reasonable basis for his recommendation, and the investment product recommended by
the representative to the client did not meet the client’s financial objectives, investment
horizon, risk profile, financial situation or particular needs.
Scenarios:
(a) A client requested that a representative recommends an investment product that is

capital guaranteed as he did not wish to risk losing his retirement savings. However,
the representative recommended and sold a non-capital guaranteed investment
product to the client.
(b) A representative identified a client’s need for high protection coverage. However, the
representative recommended an investment product to the client which did not have
any protection coverage. The representative did not provide any justification for
recommending an investment product that did not address the client’s need for high
protection coverage.
(c) A representative recommended an insurance plan where the monthly premium

payment was more than the client’s monthly disposable income. The representative
did not provide the client any justification for his recommendation.
(d) A representative insisted that a client cancels an existing investment product to

purchase another new investment product without providing any justification. The
recommended investment product offered a lower level of benefit at a higher cost to
the client and it did not meet the financial objectives of the client.
(e) A representative told a client that he could gain higher returns if the client does a
partial withdrawal from his existing policy and purchases another new policy. The
representative had no reasonable basis to suggest that the new policy offered better
returns than the existing policy, as the investment returns of the two policies were
of different nature. The representative benefitted from the commissions arising from
these transactions.
(f) A representative recommended a client to do a partial withdrawal from an investment-

linked insurance policy to purchase another similar investment-linked insurance policy,
without providing a reasonable basis. The client had incurred additional transaction
cost for the second investment-linked insurance policy which the client could have
avoided if he did a fund switch.

(g) A representative recommended a client to take up a new policy rather than to reinstate
his lapsed policy, which was on premium holiday, without a reasonable basis. The
representative was aware that it was a better choice for the client to reinstate the
lapsed policy as it has a higher allocation rate than the new policy.
(h) A representative recommended a structured note to a client on the basis that the
client had understood the product. However, neither the client’s education
background, employment status, nor investment background supported this
conclusion.
(i) A client has indicated to the representative that he has medium to long term savings
needs to accumulate $50,000 in 10 years. However, the representative
recommended a 15-year savings plan and insisted that it was suitable for the client’s
profile.
Example 3 - KPI 3
A representative failed to disclose or omitted to provide information on the key features,
key risks or mechanics of an investment product which was recommended to a client,
and the client would not have bought the investment product if the abovementioned
information had been provided to him by the representative.
Scenarios:
(a) A representative recommended a dual currency investment product to a client but

failed to inform the client that he may end up holding an alternative currency at
maturity of the dual currency investment product, and the client would not have
bought the recommended dual currency investment product if the abovementioned
information had been provided to him by the representative.
(b) A representative failed to inform a client that the benefits or returns relating to a
recommended insurance plan are not guaranteed and subject to the performance of
the insurer's participating funds, and the client would not have bought the
recommended insurance plan if the abovementioned information had been provided
to him by the representative.
(c) A representative failed to inform a client that cancellation fees would apply for the
premature withdrawal or termination of a recommended structured deposit or the
capital of a structured deposit is not guaranteed unless the recommended structured
deposit is held to maturity. The client would not have bought the recommended
structured deposit if the abovementioned information had been provided to him by
the representative.
(d) A representative recommended a client to invest using his CPF monies to purchase
an investment product but failed to inform the client of the current interest rates
payable under the CPF Ordinary Account and Special Account, and the minimum
interest rate guaranteed under the CPF Act (Cap.36), and the client would not have
bought the investment product if he had known that the potential returns from the
investment product may be lower than the interest rates he would earn under his CPF
account.

Example 4 - KPIs 3 & 4

A representative provided misleading statements to a client which resulted in the client
believing that the recommended investment product is suitable for him. However, the
recommended investment product was unsuitable for the client and did not meet the
client’s particular circumstances and needs.
Scenarios:
(a) A client purchased an insurance policy based on a representative’s misrepresentation

that it was a savings account that allowed him to deposit or withdraw funds at any
point of time without incurring any charges or penalties.
(b) A representative misled a client to believe that a recommended insurance investment-

linked product is a unit trust.
(c) A representative guaranteed a client that the client would receive the maturity value
or cash value of a recommended investment product in six months’ time but this
promise did not materialise. The client had informed the representative before he
recommended the investment product that he needed the funds for a property
purchase in six months’ time.
(d) A representative documented in the fact-find form that the cashback of the insurance
policy would be paid out starting from the second year although he was fully aware
that the yearly cashback of the insurance policy is only payable from the third year
onwards.
(e) A representative misrepresented that the insurance policy he has recommended also
provides terminal illness coverage, when the policy only provides financial protection
against death. As a result, the client bought the policy on the understanding that he
would receive a payout under the policy if he was diagnosed with a terminal illness.
(f) A client was told that he had made a gain of $1,000 from his investment in an
investment-linked insurance policy. When the client surrendered his policy, he had
actually made a loss of $20,000.
(g) A representative told the client that the structured note was of very low risk and is a
low risk alternative to fixed deposits, which was inconsistent with the prospectus
and pricing statement of the structured note.
(h) A representative misrepresented an endowment insurance plan as a savings plan with

free insurance for the deposit and the client bought the product thinking that he was
opening a fixed deposit account.

Example 5 - KPI 4
A representative provided financial advisory services to a client in an unprofessional or
unethical manner, which impinges on the representative’s honesty, integrity or
reputation.
Scenarios:
(a) A representative falsified the client’s responses in the fact-find form to place the client
into a higher risk bucket so that the client was able to purchase an investment product
that was more risky than his actual risk profile.
(b) A representative failed to execute a transaction for a client based on the client’s
instructions without valid cause, as the representative intended to accumulate his
sales revenue based on his volume of closed sales for the following quarter, resulting
in the client incurring losses.
(c) A representative asked a client to pre-sign a blank fact-find form without going
through the fact-find and the representative completed the fact-find form in the
absence of the client.
(d) A representative persistently harassed a client notwithstanding that the client had
said that he was not interested in purchasing any investment product.
(e) A representative allowed unauthorised persons to meet and provide financial advice
to his clients on his behalf without him meeting the clients. In this regard, the
representative had failed to meet his clients to conduct proper fact-find and explain
the basis of recommendation in respect of investment products regulated under the
FAA.
(f) A representative misrepresented to a retiree who is illiterate, that an equity fund was
a capital-guaranteed product that is similar to a fixed deposit.

11. MAS Guidelines – Part III [Guideline Nos: FAA-G13; FAA-G15; FAA-G16; CMG-G02 & FSG-G02]
CHAPTER 11
MAS GUIDELINES – PART III [GUIDELINE NOS: FAA-G13; FAA-G15; FAA-G16;
CMG-G02 & FSG-G02]
CHAPTER OUTLINE
1. Introduction
2. Guidelines On Addressing Conflicts Of Interest Arising From Issuing Or Promulgating
Research Analyses Or Research Reports [Guideline No: FAA-G13]
3. Guidelines On The Online Distribution Of Life Policies With No Advice [Guideline No:
FAA-G15]
4. Guidelines On Application For Approval Of Arrangements Under Regulation 32CB Of
The Financial Advisers Regulations (RG2) Guideline No: FAA-G16]
5. Guidelines On Provision Of Digital Advisory Services [Guideline No: CMG-G02]
6. Guidelines On Standards Of Conduct For Marketing And Distribution Activities By
Financial Institutions [Guideline No: FSG-G02]
Appendix 11A – Guidelines On Addressing Conflicts Of Interest Arising From Issuing Or
Promulgating Research Analyses Or Research Reports [Guideline No: FAA-G13]
Appendix 11B – Guidelines On The Online Distribution Of Life Policies With No Advice
Appendix 11C – Guidelines On Application For Approval Of Arrangements Under
Regulation 32CB Of The Financial Advisers Regulations (RG2) [Guideline No: FAA-
G16]
Appendix 11D – Guidelines On Provision Of Digital Advisory Services [Guideline No: CMG-
G02]
Appendix 11E - Guidelines On Standards Of Conduct For Marketing And Distribution
Activities By Financial Institutions [Guideline No: FSG-G02]
KEY LEARNING POINTS

 understand the requirements of the following Guidelines and who they apply to:
- Guidelines On Addressing Conflicts Of Interest Arising From Issuing Or Promulgating

Research Analyses Or Research Reports [Guideline No: FAA-G13]
- Guidelines On The Online Distribution Of Life Policies With No Advice [Guideline No:
FAA-G15]
- Guidelines On Application For Approval Of Arrangements Under Regulation 32CB Of

The Financial Advisers Regulations (RG2) [Guideline No: FAA-G16]
- Guidelines On Provision Of Digital Advisory Services [Guideline No: CMG-G02]
- Guidelines On Standards Of Conduct For Marketing And Distribution Activities By

Financial Institutions [Guideline No: FSG-G02]

1. INTRODUCTION
1.1 In this chapter, we will cover the MAS Guidelines relating to Addressing Conflicts
Of Interest Arising From Issuing Or Promulgating Research Analyses Or Research
Reports, The Online Distribution Of Life Policies With No Advice, Application For
Approval Of Arrangements Under Regulation 32CB Of The Financial Advisers
Regulations (RG2), Provision Of Digital Advisory Services and Standards Of
Conduct For Marketing And Distribution Activities By Financial Institutions.
2. GUIDELINES ON ADDRESSING CONFLICTS OF INTEREST ARISING FROM

ISSUING OR PROMULGATING RESEARCH ANALYSES OR RESEARCH REPORTS
2.1 These Guidelines are issued pursuant to section 64 of the Financial Advisers Act
(Cap. 110) [“FAA”]. They apply to any financial adviser who provides the
financial advisory service of advising others by issuing or promulgating research
analyses or research reports, whether in electronic, print or other form,
concerning any investment product [“FA Service”] under the FAA [such financial
adviser hereinafter referred to as a “Financial Institution”].The expressions used
in this Notice shall, except where expressly defined in this Notice or where the
context otherwise requires, have the same meanings as in the Act.
2.2 These guidelines apply to all licensed financial advisers and exempt financial
advisers.
2.3 They set out examples of potential conflicts of interest that may arise from issuing
or promulgating research reports that contain opinions or recommendations about
clearly identifiable investment products. They cover the standards and practices
expected of financial advisers in dealing with such conflicts of interest. Please
refer to Appendix 11A for Guideline No: FAA-G13 which has been entirely
3. GUIDELINES ON THE ONLINE DISTRIBUTION OF LIFE POLICIES WITH NO

ADVICE [GUIDELINE NO: FAA-G15]
(Cap. 110) (the Act). Subject to paragraph 2, these Guidelines apply to all
licensed financial advisers and exempt financial advisers.
3.2 These guidelines apply to all licensed financial advisers and exempt financial
advisers.
3.3 They set out the safeguards that financial advisers should put in place when
distributing life policies online without advice which include:
▪ Offer of equivalent Direct Purchase Insurance products (DPI).
▪ Provision of key information.
▪ Provision of tools and calculators.
▪ Handling of queries, complaints and claims.

3.4 Please refer to Appendix 11B for Guideline No: FAA-G15 which has been entirely
4. GUIDELINES ON APPLICATION FOR APPROVAL OF ARRANGEMENTS UNDER

REGULATION 32CB OF THE FINANCIAL ADVISERS REGULATIONS (RG2)
(Cap. 110) [“the Act”] to provide guidance on an application for approval of an
arrangement under regulation 32CB of the Financial Advisers Regulations (Rg 2)
[“Regulation 32CB”].
4.2 These Guidelines set out the Monetary Authority of Singapore [“the Authority”]’s
assessment criteria and application procedures for approval of arrangements
under Regulation 32CB and the Authority’s supervisory expectation in relation to
approved arrangements.
4.3 Please refer to Appendix 11C for Guideline No: FAA-G16 which has been entirely
5. GUIDELINES ON PROVISION OF DIGITAL ADVISORY SERVICES [GUIDELINE NO:

CMG-G02]
5.1 These Guidelines are issued pursuant to section 321 of the Securities and Futures
Act (Cap. 289) (“SFA”) and section 64 of the Financial Advisers Act (Cap. 110)
(“FAA”) (collectively, the “Acts”) to provide guidance on the regulatory
requirements and expectations in relation to the provision of digital advisory
services.
5.2 These guidelines apply to all financial institutions offering digital advisory
services.
5.3 They set out the licensing and other pertinent requirements applicable to digital
advisers under the Financial Advisers Act and the Securities and Futures Act.
These include:
▪ Governance and supervision of algorithms.
▪ Technology risk management.
▪ Prevention of money laundering and countering the financing of terrorism.
▪ Disclosure of pertinent information.
▪ Suitability of advice.
5.4 Please refer to Appendix 11D for Guideline No: CMG-G02 which has been entirely

6. GUIDELINES ON STANDARDS OF CONDUCT FOR MARKETING AND

DISTRIBUTION ACTIVITIES BY FINANCIAL INSTITUTIONS [GUIDELINE NO: FSG-
G02]
6.1 The Monetary Authority of Singapore (“MAS”) has issued the Guidelines on
Standards of Conduct for Marketing and Distribution Activities (“the Guidelines”)
to emphasise our expectations for financial institutions and their representatives
to conduct their marketing and distribution activities at retailers and public places
in a responsible and professional manner. The Guidelines apply to all financial
institutions which conduct marketing and distribution activities that target retail
customers, and the representatives who act on behalf of these financial
institutions.
6.2 They set out the roles and responsibilities of Board and senior management, and
safeguards that FIs should put in place to address market conduct risks when
marketing financial products and services to retail customers at retailers and
public places.
6.3 Please refer to Appendix 11E for Guideline No: FSG-G02 which has been entirely

Appendix 11A
Guideline No: FAA-G13

Issue Date : 2 April 2013 (Last revised on: 8 October 2018)
GUIDELINES ON ADDRESSING CONFLICTS OF INTEREST ARISING FROM ISSUING OR

PROMULGATING RESEARCH ANALYSES OR RESEARCH REPORTS
Purpose of these Guidelines
(Cap. 110) [“FAA”]. They apply to any financial adviser who provides the financial
advisory service of advising others by issuing or promulgating research analyses or
research reports, whether in electronic, print or other form, concerning any investment
product [“FA Service”] under the FAA [such financial adviser hereinafter referred to as
a “Financial Institution”]
2 Regulation 14(b)(viii) of the Financial Advisers Regulations (Rg 2) [“FAR”]

stipulates that a Financial Institution shall, in the manner that is commensurate with the
nature, scale and complexity of its business, ensure effective controls and segregation
of duties to mitigate potential conflicts of interest that may arise from its operations.
While the obligation to manage conflicts of interest is applicable to the provision of
every type of financial advisory service under the FAA, these Guidelines focus
specifically on the conflicts of interest that may arise from issuing or promulgating
research analyses or research reports. For the purposes of these Guidelines, research
analyses or research reports refer to analyses or reports that contain opinions or
recommendations about a clearly identifiable investment product1. These Guidelines set
out examples of potential conflicts of interest that may arise, and the standards and
practices expected of the Financial Institution and its representatives [such
representatives hereinafter referred to as “analysts”] in relation to addressing such
potential conflicts of interest arising from the Financial Institution’s FA Service. For the
avoidance of doubt, the examples of potential conflicts set out in these Guidelines are
illustrative and are not exhaustive. The failure to comply with the Guidelines may be
relied upon to establish or negate any liability in question in relation to any proceeding
under the FAR.
3 These Guidelines should be read in conjunction with the provisions of the FAA,
the FAR, as well as written directions, notices, codes and other guidelines that the
Authority may issue from time to time.
4 All terms used in these Guidelines shall, except where the context otherwise
requires, have the same meaning as defined in the FAA.
_____________________
1
For example, economic research or research on asset allocation does not include an opinion or recommendation
about a named or readily identifiable investment product, and hence is excluded from these Guidelines.

Internal Policies on Research Activities
5 Research analyses and reports play an important role in providing investors with
valuable insights and information to assist investors with assessing any particular
investment opportunity. They can have a significant impact on the market, and should
be objective, clear, fair and not misleading. To this end, a Financial Institution should
have in place appropriate mechanisms to ensure the independence of its FA Service
from its other business units. Each Financial Institution should establish and implement
written policies to effectively manage conflicts of interest which may affect the
impartiality of its research analyses and reports.
6 Any procedures or controls designed to manage actual or potential conflicts of

interest should be tailored according to the nature, scale and complexity of the Financial
Institution’s business. The internal conflict management policy should identify sources
of conflicts of interest and address the effects of these conflicts so that the quality of
the research and recommendations is not compromised. Senior management should
approve and endorse the policies and the Financial Institution should monitor the
effectiveness of its conflict management policies.
7 The internal policies should address:
(i) Conflicts arising from:

a. Trading activities and financial interests of the Financial Institution and its
analysts;
b. Reporting lines and compensation of analysts;
Sc. Influence from business relationships of the Financial Institution and
other external parties; and
(ii) Standards of disclosure.
Trading Activities and Financial Interests of Financial Institutions and Analysts
8 A Financial Institution may hold stakes in investment products that allow it to

benefit from favourable research analyses or recommendations issued by its analysts.
Conflicts of interest arise when the Financial Institution has an incentive or is in a
position to influence the outcome of the research recommendations. A Financial
Institution’s trading activities or financial interests should not be allowed to prejudice
the research analyses and recommendations made by its analysts. To this end, a
Financial Institution should have an adequate basis, supported by research, for making
a research recommendation. It should not issue a research report or recommendation
that is not consistent with its analysts’ actual views regarding a subject company.
[Amended on 8 October 2018]
9 If an analyst trades in or has financial interests in the investment products that

he covers, the integrity of the Financial Institution’s research report may be
compromised. To address such potential conflicts of interest, a Financial Institution
should establish, implement and enforce policies and procedures for personal trading by
its analysts, as well as all its other staff who have access to non-public information.

Generally, the personal trading activities of the analysts and staff should be monitored,
recorded and where necessary, subject to a formal approval process.
10 An analyst should not trade for himself in a manner that is contrary to his
outstanding research recommendations, except in special circumstances that are
deemed acceptable by the Financial Institution’s conflict management policies. In the
event of such special circumstances2, prior written approval for each trade by the
analyst should be obtained from a senior compliance or management staff who is
independent of the research, sales trading, dealing or corporate finance advisory
functions. Proper documentation of the decision and approval for each trade should be
maintained by the Financial Institution.
11 A Financial Institution should have proper segregation policies and mechanisms

between the FA Service and other business functions such as sales trading, dealing or
corporate finance advisory, to ensure that these other business functions are not privy
to information that is not generally available to the public regarding the timing of and
recommendations contained in the research reports to be issued.
12 The Financial Institution and its analysts should not improperly trade in the
investment products in advance of the issuance of the research reports. An example of
such improper trading by the Financial Institution is where a staff in another business
function of the Financial Institution has come to be in possession of non-public
information set out in the research reports, and carries out trading in respect of such
investment products for the Financial Institution or for himself. In this regard, the
Financial Institution should have a policy in place for analysts and other staff of the
Financial Institution with access to non-public information in the research reports that
mandates a “blackout period” for trading of those investment products before and after
the issuance of the research reports. The Financial Institution should assess what is a
reasonable “blackout period” to be imposed and take reasonable steps to ensure that
such analysts and other staff do not circumvent any trading restrictions by encouraging
or arranging for others to trade in those investment products during the “blackout
period”. In assessing what constitutes a reasonable “blackout period” to be imposed
after the issuance of the research report, the Financial Institution may take into
consideration whether the recipients of the reports would have had a reasonable
opportunity to act on the research recommendations and information therein.
Reporting Lines and Compensation of Analysts
13 The reporting lines and remuneration practices within the Financial Institution
should be structured to ensure research objectivity by eliminating or where this is not
possible, effectively managing, conflicts of interest. The Financial Institution should
ensure that its analysts are separate from staff who are performing sales trading,
_________________
2
Special circumstances include situations where significant news is publicly announced that would change the research
recommendation, or for personal reasons relating to financial hardship, the analyst is required to liquidate a position.

dealing, corporate finance advisory or any other back office function that may affect
the independence of the analysts’ FA Service. Separate reporting lines should be in
place between the analysts and staff from other corporate or business functions. In
particular, research reports should not be reviewed or approved by the sales trading,
dealing, or corporate finance advisory function, or any other business function that may
pose potential conflicts of interest.
14 An analyst’s remuneration should be structured in a way to avoid any bias in his

research analyses and recommendations. In particular, the analyst’s bonus, salary or
other form of compensation should not be based on any sales trading, dealing or
corporate finance advisory transaction.
Influence from Business Relationships of the Financial Institution and Other External
Parties
15 A Financial Institution’s business relationships should not prejudice the research

analyses and recommendations of its analysts. A potential issuer might be encouraged
to engage the commercial services of the Financial Institution if promised favourable
reviews by the research unit. This creates a conflict of interest for the research analyst
assigned to cover the investment products of that issuer. The Financial Institution
should not offer favourable research coverage as consideration for business or
compensation. Accordingly, a Financial Institution should have an adequate basis,
supported by research, for making a research recommendation. It should not issue a
research report or recommendation that is not consistent with its analysts’ actual views
regarding a subject company.
16 Issuers and their stakeholders3 have a vested interest in the research and
recommendations provided by analysts, and may seek to influence the analysts to issue
favourable recommendations. The Financial Institution should put in place procedures
to manage or eliminate the undue influence of issuers, institutional investors and other
external parties on its analysts.
17 There should be robust and effective information and system access barriers
between the FA Service and other business dealings or functions of the Financial
Institution to ensure independence and objectivity of the analysts’ research and
recommendations. The Financial Institution should have clearly defined procedures for
dealing with situations where such information and system access barriers have been
crossed and maintain proper records of such occurrences. In this regard, any pre-deal
research that is issued by the Financial Institution or its analysts shall comply with the
applicable regulatory requirements under the FAA, the Securities and Futures Act (Cap.
289) and the Securities and Futures (Offers of Investments)(Shares and Debentures)
Regulations 2005.
________________
3
Stakeholders include substantial shareholders, substantial unitholders, and persons with controlling interest as may be
applicable.

Standards of Disclosure
18 To ensure that investors who rely on the research reports are aware of the
conditions under which a Financial Institution and its analysts issue the reports and are
therefore able to make informed decisions, disclosures of actual and potential conflicts
of interest should be in writing and should be clear and prominent. The information
provided should be complete, concise and specific such that investors can understand
the actual or potential conflicts of interest and their likely impact on the quality of the
research report published. For example, if the Financial Institution makes a market in a
particular investment product, generic or boilerplate statements such as the Financial
Institution “may or may not have interest in the investment products of the issuer” on
their own would not achieve the intended outcome of complete, concise and specific
disclosure.
19 The Financial Institution and its analysts should disclose any material interest in
the subject of the report or recommendation that may create a potential conflict of
interest and thereby affect the ability of the Financial Institution to maintain
independence and objectivity in its FA Service. This includes, but is not limited to,
making disclosures in relation to the issues set out in the following paragraphs.
20 The Financial Institution and where applicable, its analysts, should disclose in its
research reports if it or its connected persons have a financial interest or make a market
in the investment products of an issuer covered within the research report, and how
this can create a conflict of interest that may affect the Financial Institution’s or
analysts’ ability to offer independent and unbiased analyses and recommendations.
21 The Financial Institution and where applicable, its analysts, should disclose in its
research reports when its staff or connected persons serve on the board or in trustee
positions of an issuer covered within the research report, and if this can create a conflict
of interest that may affect the Financial Institution’s ability to offer independent and
unbiased analyses and recommendations.
22 The Financial Institution should disclose in its research analyses or reports any
corporate finance advisory relationship between the Financial Institution or its
connected persons, and issuers of the investment products being covered in any
research analysis or report over the past 12 months, or any other relationship that may
create a potential conflict of interest.
23 The Financial Institution and its analysts should disclose any compensation or
benefit received by them in connection with the production of a research report. The
disclosure should include the identity of the party who provided the compensation or

benefit, and the nature of such compensation or benefit, including the form in which
such compensation or benefit is made.
24 The Financial Institution should disseminate research recommendations to all

interested parties simultaneously to ensure that that no one party would receive, or be
deemed to receive, preferential service.
Maintenance of proper records
25 A Financial Institution should maintain proper records of the bases and

supporting documents of its analysts’ research recommendations for a period of not
less than 5 years from the date of publication of the research recommendation.

Appendix 11B
Guideline No: FAA-G15

Issue Date : 31 March 2017 (Last revised on: 29 June 2018)
GUIDELINES ON THE ONLINE DISTRIBUTION OF LIFE POLICIES WITH NO ADVICE
(Cap. 110) (the Act). Subject to paragraph 2, these Guidelines apply to all
licensed financial advisers and exempt financial advisers.
2 These Guidelines do not apply to a financial adviser which is exempt from section
27 of the Act under regulations 32B(1) and (3), regulation 34(1) (read with
regulation 34(2)) or regulations 36(1) and (2) (read with regulation 36(3)), of the
Financial Advisers Regulations (FAR) in respect of the activity or activities for
which the financial adviser is exempt under those respective provisions.
3 These Guidelines set out the Authority’s expectations on the safeguards that
licensed financial advisers and exempt financial advisers should put in place for
the online distribution of life policies without the provision of advice.
4 These Guidelines should be read in conjunction with the provisions of the Act,
the FAR, as well as written directions, notices, codes and other guidelines that
the Authority may issue from time to time.
5 The Guidelines shall take effect on 31 March 2017.
Definitions
6 For the purposes of these Guidelines,
“advice” means a recommendation made with respect to any investment

product, after taking into account a client’s investment objectives, financial
situation and particular needs; “conditional acceptance”, in relation to a life
policy, refers to any additional conditions or exclusions imposed by a direct life
insurer in respect of the application for a life policy;
"direct life insurer" means a direct insurer licensed under section 8 of the
Insurance Act (Cap. 142) to carry on life business;
“Direct Purchase Insurance Products” has the same meaning as in regulation

40B of the Financial Advisers Regulations (Rg 2);

financial adviser’s licence under section 23(1)(a), (b), (c), (d) or (e) of the Act;
“financial adviser” means a holder of a financial adviser’s licence under the Act
or an exempt financial adviser;
“life policy” has the same meaning as in the First Schedule to the Insurance Act
(Cap.142);

“online direct channel”, in relation to a life policy, means any web portal or
application in the internet created, developed and maintained or operated by any
financial adviser, on which a client may purchase a life policy.
7 The terms used in these Guidelines, except where expressly defined in these
Guidelines or the context otherwise requires, have the same respective meanings
as in the Act and the FAR.
Offer of equivalent Direct Purchase Insurance products (DPI)
8 Before a financial adviser offers a particular life insurer’s specific life policy
online, it should first determine if that insurer offers an equivalent DPI. If an
equivalent DPI is currently available, the financial adviser should also make
available that DPI on its online direct channel. To illustrate, a financial adviser
which intends to offer a whole life insurance policy on its online direct channel
from an insurer is expected to also make available that insurer’s whole life DPI
on its online direct channel.
9 The Authority has not required all financial advisers to offer DPIs online,
recognising that not all financial advisers have an online platform for the
distribution of life policies. However, where a financial adviser has an online
platform to distribute life policies, it should also offer the equivalent DPI online
to its clients.
Provision of key information
10 A financial adviser should put in place the following safeguards at the point of a
client’s application for the purchase of a life policy via the online direct channel:
(a) Provision of product information: To assist a client in making an informed

decision, the financial adviser should provide the client with an online copy
of, or access to, the following before the client completes the purchase of
a life policy via the online direct channel:
i. the documents set out in paragraph 37(b) of the MAS Notice on

Recommendations on Investment Products (FAA-N16) (as may be
amended from time to time), including the cover page, policy illustration,
product summary, bundled product disclosure document, and product
highlights sheet in respect of that life policy (where a cover page, policy
illustration product summary, bundled product disclosure document and
product highlights sheet are available for that policy); and
ii. full policy wordings of the relevant life policy.
The financial adviser should also obtain the client’s acknowledgement that
he has completed the items set out in Annex A.
(b) Acknowledgement of conditional acceptance: The financial adviser should

highlight to a client any conditions, including special exclusions or additional
premium loadings imposed by a direct life insurer as a result of underwriting
the policy application. Where the client intends to purchase a life policy with
a conditional acceptance, the financial adviser should require the client to

acknowledge that he has read and understood these conditions before

purchasing the life policy. Examples of conditional acceptance include
instances where the direct life insurer’s acceptance of a client’s policy is
contingent upon exclusion of the client’s pre-existing medical condition or
there is additional premium loading imposed by the direct life insurer due to
the client’s pre-existing medical condition.
(c) Incorporation of prominent statement(s): Before a client completes the

purchase of a life policy via the online direct channel, the financial adviser
should alert the client (such as via a pop-up prompt) that:
i. a life policy is not a savings account or deposit;

ii. the client may not get back the premiums paid (partially or in full) if the
client terminates or surrenders the policy early;
iii. some benefits of a life policy are not guaranteed (only if applicable);
iv. there is a 14-day free-look period;
v. the client can request the financial adviser to explain the product
features;
vi. the client may wish to separately seek advice on the suitability of the
life policy; and
vii. in the event that the client chooses not to seek advice on the suitability
of the life policy, the client should consider if the life policy is suitable
for his financial circumstances and needs.
These statements should be worded in a simple and concise manner.
Provision of tools and calculators and considerations of other types of life policies
11 A financial adviser should encourage its clients to go through the items set out in
Annex B before buying a life policy via the online direct channel. This will enable
the client to:–
(a) calculate the amount of life insurance coverage the client would need, so that
the client may determine if the life policy meets his protection needs;
(b) check if the premium payable for the life policy is affordable based on his
income and expenditure; and
(c) consider the different types of DPI and other types of life policies available,
and whether the life policy is suitable for his financial circumstances and needs.
12 The safeguard set out in paragraph 11 may not be applicable for all types of life
policies sold via the online direct channel. For example, a financial adviser which
offers monthly renewable group term life policies via the online direct channel is
not expected to make available such tools and calculators to its clients as there
is no long term financial commitment.
Handling of queries, complaints and claims
13 A financial adviser should set up appropriate avenues to address general queries

from its clients relating to the life policies offered on its online direct channel,
including but not limited to telephone or email helplines.

14 A financial adviser should also provide information, such as contact details,

information on the claims process and the process for filing complaints, on its
online direct channel.
Implementation of internal controls, policies and procedures
15 It is an existing obligation for a financial adviser to ensure that it has adequate

policies, procedures and controls to mitigate money laundering and terrorism
financing risks, as set out in the relevant Regulations, Notices and Guidelines
issued by the Authority under the Monetary
Authority of Singapore Act. A financial adviser must take steps to address any specific
risks associated with non-face-to-face business relations with a client.
16 It is also an existing obligation for a financial adviser to implement internal

policies and processes to address technological risks. A financial adviser should:
(a) establish a sound and robust technology risk management framework;
(b) strengthen system security, reliability, resiliency and recoverability; and
(c) deploy strong authentication to protect customer data, transactions and

systems.
A financial adviser should also put in place an appropriate business continuity plan to
minimise system downtime or component failures to the online direct channel, and to
ensure the functionality and continued operation of the online direct channel.
17 A financial adviser should, where relevant, consider and implement other

safeguards to manage any other risks arising from the distribution of life policies
on the online direct channel so as to protect the interest of its clients.
Application of the Guidelines
18 Financial advisers should be able to demonstrate to the Authority that they are
able to observe the Guidelines.
19 Where the Authority is not satisfied with a financial adviser’s observance of the
Guidelines, the Authority may require the financial adviser to take additional
measures to address the deficiencies noted.

Annex A
I acknowledge that I have
Part A
(a) Read and understand the cover page, policy illustration and product summary.
Including any coverage exclusion
(b) Completed and disclosed fully and truthfully all the information requested in the
Proposal Form and any supplementary questionnaire(s)
Part B – Only applicable if medical and moratorium or financial underwriting are
conducted
(c) Declared all pre-existing medical conditions in the Proposal Form
(d) Reviewed all existing life policies that I own, or am in the process of applying
for in the Proposal Form
(e) Declared my current financial situation such as my income in the Proposal Form.

Appendix 11C
Notice No : FAA-G16
Issue Date : 1 January 2019
Last revised on: 01 August 2019
GUIDELINES ON APPLICATION FOR APPROVAL OF ARRANGEMENTS UNDER

REGULATION 32CB OF THE FINANCIAL ADVISERS REGULATIONS (RG2)
(Cap. 110) [“the Act”] to provide guidance on an application for approval of an
arrangement under regulation 32CB of the Financial Advisers Regulations (Rg 2)
[“Regulation 32CB”].
2 These Guidelines set out the Monetary Authority of Singapore [“the Authority”]’s
assessment criteria and application procedures for approval of arrangements under
Regulation 32CB and the Authority’s supervisory expectation in relation to approved
arrangements.
Definitions
3 For the purposes of these Guidelines: “ACMF Framework” means ASEAN Capital
Market Professional Mobility Framework;
“ACMF Handbook” means the Handbook on ACMF Pass under ASEAN Capital
Market Professional Mobility Framework, set out at
https://www.mas.gov.sg//media/MAS/Regulations-and-Financial-
Stability/Regulations-Guidance-andLicensing/Financial-
Advisers/Guidelines/Handbook-on-ACMF-Pass-under-the-ASEAN-Capital-
Market-Professional-Mobility-Framework.pdf;
“ACMF Pass” means an arrangement between a relevant entity and a

Singapore Entity approved by the Authority under Regulation 32CB in
relation to the provision of the financial advisory service specified under
paragraph 8(a) of these Guidelines;
“ACMF Participant” means a relevant entity that is providing a financial

advisory service in Singapore effected under an arrangement approved by the
Authority under Regulation 32CB;
“ASEAN” means Association of Southeast Asian Nations;
“Cross-Border Publication of Research Report Arrangement” means an

arrangement between a relevant entity and a Hosting Platform Operator
approved by the Authority under Regulation 32CB in relation to the provision

of the financial advisory service specified under paragraph 8(b) of these

Guidelines;
“FAR” means the Financial Advisers Regulations (Rg 2);
“host entity”, in relation to —
(a) an application for approval of an ACMF Pass, means a Singapore Entity that
is proposing to enter into an arrangement with a relevant entity in relation
to the provision of the financial advisory service specified under paragraph
8(a) of these Guidelines; or
(b) an application for approval of a Cross-Border Publication of Research Report

Arrangement, means a Hosting Platform Operator that is proposing to enter
into an arrangement with a relevant entity in relation to the provision of the
financial advisory service specified under paragraph 8(b) of these Guidelines;
“Hosting Platform Operator” means any person mentioned in paragraph (2)(a)(i)

to (iii) of Regulation 32CB, who will be making available research reports,
whether in electronic, print or other form, containing advice by a ACMF
Participant concerning any Specified ASEAN capital markets products to
investors in Singapore, pursuant to a Cross-Border Publication of Research
Report Arrangement;
“officer” has the same meaning as in section 4(1) of the Companies Act (Cap.
50);
“Recognised ACMF member” means a regulatory authority that is specified in

the Appendix of these Guidelines;
“Recognised Representative” means a person, by whatever name called, in the

direct employment of, or acting for, or by arrangement with, an ACMF
Participant, who performs on behalf of the ACMF Participant any financial
advisory service in Singapore pursuant to a ACMF Pass, whether or not he is
remunerated, and whether his remuneration, if any, is by way of salary, wages,
commission or otherwise, and includes any officer of the ACMF Participant;
“Singapore Entity” means a person who is a licensed financial adviser or an

exempt financial adviser under section 23(1)(a), (b), (c), (d) or (e) of the Act;
“Specified ASEAN capital markets products” means the following types of

ASEAN capital markets products:
(a) shares that are listed for quotation or quoted on an organised market in any
member country of ASEAN;

(b) bonds1, whether or not such bonds are listed for quotation or quoted on an
organised market in any member country of ASEAN;
(c) units in a collective investment scheme, whether or not such units are listed
for quotation or quoted on an organised market in any member country of
ASEAN;
“Specified ASEAN participating country” means any ASEAN participating

country that is specified in the Appendix of these Guidelines.
3A The expressions used in these Guidelines, shall, except where expressly defined
in these Guidelines and where the context otherwise requires, have the same
meanings as in the Act and Regulation 32CB.
Applicability of Regulation 32CB
4 Section 6(1) of the Act provides that no person shall act as a financial adviser
in Singapore in respect of any financial advisory service unless he is authorised to do
so by a financial adviser's licence or is an exempt financial adviser.
5 In particular, Regulation 32CB prescribes a relevant entity as an exempt financial

adviser under section 23(1)(f) of the Act in respect of a financial advisory service
provided under an arrangement between the relevant entity and a company incorporated
in Singapore, an unincorporated association formed or constituted in Singapore, a
licensed financial adviser or a financial adviser who is exempt under sections 23(1)(a)
to (e) of the Act, which has been approved by the Authority pursuant to an application
made to the Authority.
6 Individuals who are representatives of the relevant entity are not required to be
appointed or provisional representatives under the Act if —
(a) the type and scope of the financial advisory service provided by the
representatives are within the type and scope of, or are the same as, that
provided by the relevant entity; and
(b) the manner in which the representatives provide that type financial advisory
service is the same as the manner in which the relevant entity provides that
type of financial advisory service.
7 The Authority only considers arrangements made between the relevant entity
and a host entity for approval under Regulation 32CB.
____________________
1
For the avoidance of doubt, bonds include bonds that are sukuk.

8 The types of arrangement and financial advisory service which the Authority
considers for approval under Regulation 32CB are:
(a) an arrangement between a Singapore Entity and a relevant entity under the
ACMF Pass, in respect of the financial advisory service of advising others,
either directly or through publications or writings, and whether in electronic,
print or other form concerning any Specified ASEAN capital markets product,
other than in the manner under paragraph 2 of the Second Schedule of the
Act or advising on corporate finance within the meaning of the Securities and
Futures Act (Cap. 289); and
(b) an arrangement between a Hosting Platform Operator and a relevant entity
under the Cross-Border Publication of Research Report Arrangement, in
respect of the financial advisory service of advising others by issuing or
promulgating research analyses or research reports, whether in electronic,
print or other form concerning any Specified ASEAN capital markets products.
9 The approval of the arrangement should not be taken as an approval of all

activities proposed to be conducted by the host entity under the arrangement. The host
entity should ensure that its proposed activities are in compliance with all applicable
laws, rules and regulations in Singapore, including all applicable licensing requirements
under the Act.
Assessment Criteria of Relevant Entity
10 In assessing whether approval of the arrangements specified under paragraph

8(a) and (b) should be granted, the Authority will consider whether the relevant entity
satisfies certain criteria, including but not limited to the following criteria:
(a) whether it possesses a minimum of five years of corporate track record in the
specific financial advisory services that it is proposing to effect under the
arrangement;
(b) whether it is financially sound and has discharged its functions in an efficient,
honest and fair manner during the five-year period mentioned in sub-
paragraph (a); and
(c) whether it is licensed or otherwise authorised to conduct the relevant financial
advisory services in a Specified ASEAN participating country and is subject
to supervision by the Recognised ACMF member having regulatory oversight
in the Specified ASEAN participating country.
11 Paragraph 10 sets out a list of non-exhaustive criteria that needs to be met in

order for an approval to be obtained. Nonetheless, the Authority reserves the right to
refuse to grant approval as the Authority deems fit, including where the Authority is of
the view that the arrangement may facilitate business practices or market conduct that
could undermine regulatory integrity or pose a risk to financial stability and market
confidence.

ACMF Pass
Responsibilities of Singapore Entity
12 The Authority expects that the Singapore Entity ensures that all Recognised
Representatives of the ACMF Participant meet the following criteria at all times:

(b) is licensed or otherwise authorised to conduct the relevant financial advisory
services by a Recognised ACMF member;
(c) is subject to the laws and regulations of the Specified ASEAN participating
country where the Recognised ACMF member has regulatory oversight and
is subject to supervision by the Recognised ACMF member having regulatory
oversight in the Specified ASEAN participating country; and
(d) satisfies the fit and proper criteria as set out in Section C in the Singapore
section of Appendix 2 to the ACMF Handbook.
13 With respect to the Recognised Representatives’ activities in connection with

the arrangement that is approved by the Authority, the Singapore Entity must ensure
that:
(a) the Recognised Representatives only act as representatives of the ACMF
Participant in respect of the arrangement that is approved by the Authority
under Regulation 32CB; and
(b) the Recognised Representatives do not conduct any of the following
activities:
(i) solicit for sales of any Specified ASEAN capital markets product; or
(ii) provide advice to investors by considering investor’s investment
objective, financial situation and particular needs.
14 For arrangements where the Recognised Representative act as a representative

in respect of a financial advisory service that is provided to any investor who does not
fall within the definition of “accredited investor”, “expert investor” or “institutional
investor” under regulation 2(1) of the FAR, the Authority expects that the Singapore
Entity —
(a) ensures that the Recognised Representative is accompanied at all times by
an authorised employee or representative of the Singapore Entity when
meeting any client or member of the public in the course of acting as a
representative in respect of the financial advisory service;
(b) monitors the conduct of the Recognised Representative; and
(c) ensures the Recognised Representative’s compliance with the laws and
regulations as well as any conditions or restrictions imposed by the
Authority when conducting any activities under the ACMF Framework.
15 For arrangements where the financial advisory service is provided to investors

that are investment vehicles, applicants should apply a “look-through” method to

ascertain whether the end-beneficiaries of such investment vehicles satisfy the

definition of “accredited investor”, “expert investor” or “institutional investor” in
regulation 2(1) of the FAR, as the case may be.
16 The Singapore Entity is also subject to conditions and restrictions imposed under
the approval granted by the Authority, including the following:
(a) The Singapore Entity shall maintain a register in respect of every Recognised
Representative (regardless of the duration the Recognised Representative
resides in Singapore) containing information such as the duration of the
Recognised Representative’s visit to Singapore to carry out activities under
the approved arrangement, his qualifications and the status of his licence or
authorisation in jurisdictions other than Singapore;
(b) The Singapore Entity shall ensure that proper documentation in relation to
the approved arrangement, such as materials circulated or presented to
investors, are kept for the duration of the approved arrangement until at least
five years after the date of cessation of the approved arrangement and furnish
such documentation to the Authority as the Authority may require; and
(c) The Singapore Entity shall implement policies and procedures to provide for
the oversight of the conduct of the ACMF Participant and the Recognised
Representatives, handling complaints arising from the approved arrangement
and the resolving of disputes between investors and the Recognised
Representatives.
17 These Guidelines do not set out an exhaustive list of the Authority’s expectations
on the Singapore Entity. The Authority may also impose other conditions and
restrictions upon the approval granted, as the Authority deems fit, taking into account
the particular arrangements proposed by the applicants.
Validity Period of ACMF Pass
18 Upon approval, the ACMF Pass will be valid for a period of two years, unless
the ACMF Pass lapses or is cancelled by the Authority prior to the expiry of this period.
19 If the Singapore Entity intends to renew the ACMF Pass, it must submit a
renewal application at least 14 working days prior to the expiry of the ACMF Pass. The
Authority shall re-assess the arrangement to consider if the ACMF Pass should be
renewed.

Cross-Border Publication of Research Report Arrangement
Conditions and Restrictions
20 The Authority will impose conditions and restrictions under an approval granted
by the Authority to a Cross-Border Publication of Research Report Arrangement,
including the following:
(a) the research analyses and research reports are issued or promulgated by the
ACMF Participant to the same classes of investors in Singapore as it is
issued or promulgated to in the Specified ASEAN participant country where
it is being licensed and supervised by a Recognised ACMF Member;
(b) The Hosting Platform Operator had obtained consent from the ACMF
Participant for the Hosting Platform Operator to make available the research
analyses and the research reports to investors in Singapore, whether in
electronic, print or other form;
(c) the research analyses and research reports are made available by the
Hosting Platform Operator in its original form with no changes to the
research analyses and the research reports prepared by the ACMF
Participant;
(d) the Hosting Platform Operator does not endorse or otherwise comment on
the research analyses and research reports;
(e) the research analyses and research reports must include a disclaimer to
notify investors in Singapore that the research analyses or research reports
are issued or promulgated by the ACMF Participant, and not the Hosting
Platform Operator; and
(f) the Hosting Platform Operator does not provide a financial advisory service
in respect of the research analyses and research reports.
21 The Authority may also impose other conditions and restrictions upon the
approval granted, as the Authority deems fit, taking into account the particular
arrangements proposed by the applicants.
Applications
22 An application for approval under Regulation 32CB for the purposes of obtaining
the ACMF Pass or for the approval of a Cross-Border Publication of Research Report
Arrangement, must be submitted by the host entity using the format specified in this
link:https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-
Stability/RegulationsGuidance-and-Licensing/Financial-Advisers/Guidelines/ACMF-
Application-Form01082019.docx. The application should include key information that
seeks to address the assessment criteria in paragraph 10. In approving an application,

the Authority would expect the roles and responsibilities of the relevant entity and the
host entity in the proposed arrangement to be clearly formalised in a service level
agreement or an equivalent document.
23 In respect of an application for approval of an arrangement under the ACMF

Pass, the application must include the declarations in relation to the activities of the
Recognised Representatives mentioned in paragraph 13(b), in the application form.
24 In respect of an application for approval of a Cross-Border Publication of

Research Report Arrangement, the application must include the declarations in relation
to the approval conditions set out in paragraph 20, in the application form.
25 In granting the approval under Regulation 32CB, the Authority reserves the right
to review, cancel or vary the approval of any arrangement or impose new conditions or
restrictions under the approval as the Authority sees fit, including where there is a
material change in the circumstances of the arrangement. A material change refers to
a change in the substance of the arrangement rather than one of form. Such changes
may be in relation to the type of financial advisory services provided, the target clientele
or the role of the host entity. Changes in organisational structure or names of entities,
and similar organisational changes which do not affect the substance of the
arrangement, would not normally be considered material.
APPENDIX
ASEAN PARTICIPATING RECOGNISED ACMF MEMBER

COUNTRIES
1 Thailand The Securities and Exchange

Commission
2 Malaysia The Securities Commission Malaysia
3 Philippines The Philippines Securities and
Exchange Commission

Appendix 11D
Guideline No: CMG-G02

Issue Date : 8 October 2018
GUIDELINES ON PROVISION OF DIGITAL ADVISORY SERVICES
Contents
Purpose of these Guidelines …..………………………………………………………………..1
Definitions………..…………………………………………….……………………………….….5
Section I: Licensing Requirements and Exemptions…..……………………….....….….….6
Licensing requirements………………………………..…………………………………….…..6
Digital advisers operating as FAs: Licensing exemption for dealing in Capital markets
products that are specified products other than OTC derivatives contracts………......7
Digital advisers operating as FAs: Licensing exemption for fund management……..…8
Digital advisers operating as fund managers: Track record and minimum assets under
management requirements……………………..…….………………………………………...9
Section II: Other Regulatory Requirements Applicable to Digital Advisers………….…11

Governance and supervision and algorithms………………………………………………..11
Developing the client-facing tool………………………………………………………….…..12
Monitoring and testing of the client-facing tool………………………………………….…13
Technology Risk management……………………………………………….………………..13
Prevention in money laundering and countering the financing of terrorism……….…..14
Disclosure of pertinent information………………………………………………………..….14
Information on algorithms………………………………………………………………………14
Conflicts of interest………………………………………………………………………….....15
Risk warning statement for overseas-listed investment products………….……………15
Suitability of Advice………………………………………………………………………..……16
Exception to collecting full information under paragraph 11 of FAA-N16………….....16
Assessing cilents’ knowledge and experience………………………………………..…….17
Balanced scorecard (“BSC”) framework……..……………………………………..……….18
Advertisement and Marketing……………..…………………………………………..………18
Annex A – Licensing Considerations for Digital Advisers….…..……………….……….19

1. These Guidelines are issued pursuant to section 321 of the Securities and
Futures Act (Cap. 289) (“SFA”) and section 64 of the Financial Advisers Act (Cap. 110)
(“FAA”) (collectively, the “Acts”) to provide guidance on the regulatory requirements
and expectations in relation to the provision of digital advisory services.
2. These Guidelines are applicable to all financial institutions offering or seeking to

offer digital advisory services in Singapore (“digital advisers”). Where certain regulatory
requirements or expectations are also applicable to conventional financial advisers1
(“FAs”), they are specified in the Guidelines.
3. Digital advisers (also known as robo-advisers) provide advice on investment

products through direct access to automated, algorithm-based tools by clients (“client-
facing tools”), with limited or no human adviser interaction. In contrast, conventional
FAs may rely on similar algorithm-based tools at the back-end to help their
representatives advise and service their clients.
4. The digital advisory process typically begins with the client inputting an
investment amount and answering a series of questions on his risk tolerance,
investment objectives and investment time horizon. The digital adviser then analyses
the client’s responses using algorithms and generates a recommended portfolio. If the
client accepts the recommended portfolio, the digital adviser may relay the client’s trade
orders directly to a brokerage firm for execution. Over time, due to market movements,
the client’s portfolio may deviate from its original recommended asset allocation. When
this happens, the digital adviser will adjust the client’s investments to maintain the
target asset allocation (referred to as “rebalancing”). This rebalancing of portfolios is
typically automated and performed periodically.
5. Digital advisers operating in Singapore will have to be licensed for fund

management, dealing in capital markets products and/or providing financial advisory
services under the relevant Acts. The type of licensing depends on the operating model
of the digital adviser. A digital adviser may also qualify for exemption from licensing, if
it meets the relevant exemption provisions in the Acts. Further guidance on licensing
considerations is set out in Section I of these Guidelines.
_______________
6. As algorithms are core components of a digital adviser’s client-facing tool2, we
have set out guidance on the governance and supervision of algorithms expected of
digital advisers in Section II of the Guidelines. In addition, Section II highlights some of
the pertinent requirements and provides clarity on the applicability of existing
requirements to digital advisers, such as those relating to technology risk management,
prevention of money laundering and countering the financing of terrorism, suitability of
advice, disclosure of information, applicability of the balanced scorecard framework, as
well as advertisements and marketing.
____________________________
1
Conventional financial advisers refer to FA firms which use human advisers to provide financial advice on investment
products to clients.
2
This refers to automated, algorithm-based tools that clients can use directly, with limited or no human adviser
interaction.

7. These Guidelines should be read with the relevant Acts and their subsidiary
legislation, written directions, notices, codes and other guidelines that MAS may issue
from time to time.
Definitions
8. For the purposes of these Guidelines,
"collective investment schemes that are in substance Excluded Investment

Products” means collective investment schemes (“CIS”) that comply with the
investment restrictions set out in paragraph 2 of the Schedule of the Securities
and Futures (Capital Market Products) Regulations 2018, regardless of whether
such binding investment restrictions are stated in the CIS documents;
“digital adviser” means a person who provides digital advisory services;
“digital advisory services” means the provision of advice on investment products

using automated, algorithm-based tools which are client-facing, with limited or
no human adviser interaction in the advisory process3;

financial adviser’s licence under section 23(1) or section 100 of the FAA;
“financial adviser” means a holder of a financial adviser’s licence under the

FAA or an exempt financial adviser;
“investment product” has the same meaning as in section 2(1) of the FAA;
and
“specified products” has the same meaning as in section 2(1) of the SFA.
9. The terms used in the Guidelines shall, except where expressly defined in the
Guidelines or the context otherwise requires, have the same meanings as defined in the
relevant Acts.
Section I: Licensing Requirements and Exemptions
Licensing requirements
10. There is no separate authorisation regime for digital advisers. The licensing
framework embodied in the SFA and FAA is technology agnostic and is applicable to
digital advisers. Financial institutions (“FIs”) that carry on regulated activities under
these Acts are required to be appropriately licensed, unless they qualify for the relevant
exemptions in the Acts. This is regardless of the channel used to deliver such regulated
activities (i.e. whether via human advisers or digital advisory tools).
_________________
3
Elements of human interaction is allowed only if it is providing technical assistance to clients, assisting clients on IT-
related queries/issues or clarifying with clients on their responses if inconsistencies are noted.

11. We have observed a range of business models for the offering of digital advisory
services. In Singapore, the relevant regulatory framework applicable to a digital adviser
would depend on the operating model of, and specific activities carried out by, the
digital adviser. Please refer to Annex A for a summary of the licensing considerations
for digital advisers.
12. The provision of financial advisory services is regulated under the FAA. Digital
advisers carrying out such services are required to hold a financial adviser’s licence,
unless otherwise exempted. Digital advisers which are FAs can carry out limited SFA-
regulated activities that are incidental to the provision of advice, without the need for
additional licensing under the SFA. These include passing on their clients’ orders to a
brokerage firm4 for execution after advising them, or rebalancing their portfolios
comprising CIS back to the most recent advice provided based on the agreed asset
allocation. However, digital advisers which are FAs are not allowed to handle or have
control over clients’ assets or moneys, or operate an omnibus account for clients.
13. Besides the provision of financial advisory services, some digital advisers also
offer a platform for the execution of capital markets products beyond the passing of
such orders to brokerage firms for execution. These digital advisers are required to hold
a Capital Markets Services (“CMS”) licence for dealing in capital markets products.
14. Some digital advisers have discretion over the management of clients’
investment portfolios beyond portfolio rebalancing. Such digital advisers are required to
hold a CMS licence in fund management. ____________
15. Some digital advisers may choose to outsource the development and
maintenance of their client-facing tools to a third party provider5. For the avoidance of
doubt, the third party provider is not required to be licensed by MAS if it does not carry
out financial advisory services, fund management or dealing activities directly for
clients6. Digital advisers should nonetheless subject the third party provider to
appropriate due diligence processes in order to assess the risks associated with the
outsourcing7 arrangement.
__________________________________________________
4 In the case of CIS, clients’ orders will be passed on to fund management companies for processing.
5 This refers to a situation where a third party provider offers white labelling services for the use of its platforms or algorithms
to a financial institution under a business-to-business arrangement.
6 Examples include arrangements whereby the third party provider is simply providing white-label technology to the digital
adviser, where the advice is provided to clients through the digital adviser.
7 The Guidelines on Outsourcing set out MAS ’expectations of an FI that has entered into any outsourcing arrangement or is
planning to outsource its business activities to a service provider.

Digital advisers operating as FAs: Licensing exemption for dealing in capital markets
products that are specified products other than OTC derivatives contracts
16. As mentioned in paragraph 12, some digital advisers typically assist clients to
pass their buy or sell orders (e.g. CIS, bonds and stocks) to brokerage firms for
execution. The passing of such orders to brokerage firms for execution constitutes
dealing in capital markets products under the SFA. However, MAS recognises that the
risks posed by facilitating the execution of clients’ buy or sell orders are low. To allow
FAs to provide better services to clients, digital advisers which are FAs are exempted
from the need to hold a CMS licence for dealing in capital markets products if they
merely assist to pass on clients’ buy or sell orders to brokerage firms for execution,
provided that such dealing is incidental to their financial advisory activities (“Dealing
Exemption”)8.
17. Dealing is considered incidental only if the digital adviser has provided advice to
a client and subsequently assists the client to pass on the order to a brokerage firm for
execution. For avoidance of doubt, the Dealing Exemption is independent of whether
the specific recommendation is accepted by the client. For instance, if the client decides
on an alternative product or CIS which is different from the digital adviser’s advice and
recommendation, the digital adviser may still rely on the Dealing Exemption to execute
the order for the client. Where clients choose not to rely on the advice provided, digital
advisers are additionally required to meet the safeguards set out in the FAA Notice on
Recommendations on Investment Products (“FAA-N16”). These safeguards include
documenting the decision of the client and highlighting to the client in writing that it is
the client’s responsibility to ensure the suitability of the products purchased.
18. For the avoidance of doubt, the Dealing Exemption is applicable to:
(a) all FAs i.e. both digital advisers and conventional FAs; and
(b) execution of specified products other than OTC derivatives contracts.
FAs which rely on the Dealing Exemption to facilitate clients’ buy or sell orders are
required to meet the relevant conduct requirements9 set out in paragraph 2(2) of the
Second Schedule to the Securities and Futures (Licensing and Conduct of Business)
Regulations (“SF(LCB)R”).
Digital advisers operating as FAs: Licensing exemption for fund management

19. It is common for digital advisers to offer rebalancing of clients’ portfolios to
address portfolio drift. This entails bringing the clients’ portfolios back to the most
recent advice provided to the clients on the recommended asset allocation. This
rebalancing of portfolios is automated and performed periodically.
_____________________________
8
The Dealing Exemption is prescribed under paragraph 2(1)(j) of the Second Schedule to the Securities and Futures
(Licensing and Conduct of Business) Regulations.
9
These include keeping proper records of orders received from clients and how the order is executed, and other
requirements relating to priority of clients’ orders, dealing in specified products as a principal, and prohibition from
holding clients’ moneys or assets.

20. Such portfolio rebalancing activities are deemed as fund management under the
SFA and persons who conduct such activities are required to hold a CMS licence in
fund management unless otherwise exempted. That said, MAS recognises that there
are merits to exempt digital advisers from holding a CMS licence in fund management
to carry out rebalancing activities for portfolios that comprise solely of listed and
unlisted CIS (“Fund Management Exemption”)10. Portfolio rebalancing is considered
incidental to the advice provided where it is solely for the purpose of aligning the
portfolio back to its last recommended allocation as agreed or chosen by the client, and
there is no change to the constituents of the portfolio. The scope of the Fund
Management Exemption is limited to CIS as rebalancing of portfolios comprising
individual securities requires FAs to advise clients on which securities to invest in, and
the client’s consent should be obtained for this purpose.
21. Digital advisers relying on the Fund Management Exemption will be required to:
(a) ensure that the rebalancing activity is carried out only for portfolios comprising
solely listed and unlisted CIS;
(b) obtain a one-time prior written authorisation from the client to periodically
rebalance the constituent units of the portfolio;
(c) provide a written disclosure to the client on the following, prior to obtaining
the client’s written authorisation referred in sub-paragraph (b) and as and
when there are any changes in any of the following:
(i) the scope of rebalancing activities, including frequency and methodology
of rebalancing;
(ii) fees payable and any other material terms and conditions associated with
periodic rebalancing;
(iii) advance notice period that will be provided prior to carrying out any
rebalancing activities; and
(d) notify the client prior to each and every rebalancing transaction.
22. Similar to the Dealing Exemption, the Fund Management Exemption is applicable
to all FAs, i.e. both digital advisers and conventional FAs.
Digital advisers operating as fund managers: Track record and minimum assets under
management requirements
23. The licensing criteria for fund management are set out in the Guidelines on
Licensing, Registration and Conduct of Business for Fund Management Companies
(“SFA04-G05”). Digital advisers that seek to offer their services to retail clients, but
are unable to meet the requirement for a five-year corporate track record or minimum
assets under management (“AUM”) of S$1 billion, can apply to be licensed for fund
management, if they are able to meet additional safeguards, as follows:
(a) key individuals of the digital adviser (e.g. chief executive officer, directors, and
management members who are responsible for the design, operation and/or
________________
10
The Fund Management Exemption is prescribed under paragraph 5(1)(g) of the Second Schedule to the Securities
and Futures (Licensing and Conduct of Business) Regulations.

oversight of the digital advisory platform) have relevant experience in fund

management and technology;
(b) the digital adviser only offers to retail clients, portfolios that comprise all CIS
that are in substance Excluded Investment Products (“EIPs”); and
(c) the digital adviser undergoes a post-authorisation audit11 conducted by an
independent third party at the end of its first year of operations.
These safeguards seek to enable digital advisers that have the relevant competency and
good control and compliance arrangements, to offer digital advisory services on simple
and diversified investment products to retail clients.
24. Digital advisers that do not meet the five-year corporate track record or minimum
AUM criteria should not manufacture the underlying CIS used to build the model
portfolios offered on their digital advisory platforms. In addition, the client-facing tools
operated by such digital advisers should be fully automated, to avoid undue influence
on the advisory and portfolio construction process or the client’s investment decision.
25. Firms seeking to apply for a CMS licence or FA licence to provide digital advisory
services in Singapore may refer to the following guidelines.
(a) Guidelines on Criteria for the Grant of a Capital Markets Services Licence
Other Than for Fund Management and Real Estate Investment Trust
Management (“SFA04-G01”);
(b) Guidelines on Licensing, Registration and Conduct of Business for Fund
Management Companies (“SFA04-G05”); and
(c) Guidelines on Criteria for the Grant of a Financial Adviser’s Licence (“FAA-
G01”).
Section II: Other Regulatory Requirements Applicable to Digital Advisers
26. A digital adviser is required to comply, on an ongoing basis, with all the
applicable business conduct requirements set out in the SFA and/or FAA, and the
accompanying Regulations, Notices and Guidelines issued under these Acts, as the case
may be. Some of these requirements are highlighted below. The requirements in this
section are not intended to be comprehensive or exhaustive.
27. Client-facing tools are primarily algorithm-driven. A fault or bias in the algorithms
could adversely affect a large number or all of the digital advisers’ clients who relied on
the recommendations generated by the algorithms. Considering these additional risks,
it is important that digital advisers put in place adequate governance and supervisory
arrangements to effectively mitigate these risks. Our expectations on the governance
and supervision of algorithms are set out below.
________________________
11
The post-authorisation audit should minimally cover the governance and controls over the development and
maintenance of algorithms, handling of client moneys and assets, suitability of advice, technology risk, and
prevention of money laundering and countering the financing of terrorism.

Governance and supervision of algorithms
28. It is the responsibility of the Board12 and Senior Management of the digital
adviser to maintain effective oversight and governance of the client-facing tool. Given
the potential detriment to a significant number of clients arising from a fault or bias in
the algorithms, whether due to oversight or as a result of poor design, the Board and
Senior Management should ensure that there are sufficient resources to monitor and
supervise the performance of algorithms. The digital adviser should be adequately
staffed with persons who have the competency and expertise to develop and review
the methodology of the algorithms. Adequate training should also be provided to all
staff who use the client-facing tool.
29. The Board and Senior Management should also put in place systems and
processes to ensure a sound risk management culture and environment in their firms,
as well as compliance with the relevant rules and regulations. These include:
(a) approving the design and methodology development of the client-facing
tool and ensuring its proper maintenance;
(b) approving the policies and procedures that apply to the systems and processes
of the client-facing tool;
(c) maintaining oversight over the management of the client-facing tool, such as
designating appropriate personnel to approve changes to the algorithms, and
having security arrangements to identify and prevent unauthorised access to the
algorithms;
(d) ensuring that the requirements set out in the Notice and Guidelines on
Technology Risk Management are adhered to; and (e) maintaining proper
documentation on the design and development of the algorithms .
(e) maintaining proper documentation on the design and development of the
algorithms.
30. While the Board and Senior Management may delegate the day-to-day
operational oversight and governance of the client-facing tools to other personnel, they
remain ultimately responsible and accountable for the proper development, monitoring
and testing of the client-facing tools.
Developing the client-facing tool
31. In developing the client-facing tools, digital advisers should:

(a) ensure that the methodology of the algorithms behind the client-facing tool
is sufficiently robust;
_______________________
12
The duties and responsibilities of a director and CEO are set out in regulations 13 to 13C of the Securities and Futures
(Licensing and Conduct of Business) Regulations and regulations 14 to 14AA of the Financial Advisers Regulations.

(b) ensure that the tool collects all necessary information and sufficiently
analyses the information to make a suitable recommendation, including
have proper mechanisms to identify and resolve contradictory or
inconsistent responses from clients13;
(c) have controls in place (e.g. knock-out questions) to identify and eliminate
clients who are unsuitable for investing14;
(d) perform sufficient testing, prior to the launch of the tool and when changes
are made to the tool, to detect any error or bias in the algorithms and to
consistently and reliably achieve the following key outcomes:
(i) The algorithms correctly classify clients according to their risk profiles
based on inputs provided by them. In particular, the digital adviser is
expected to conduct back-testing using hypothetical inputs to ensure that
the risk profiles generated by the algorithms are in line with its risk
profiling methodology. The testing should ensure that the algorithm
scores and assigns risk profiles to clients correctly and consistently; and
(ii) The algorithms produce the intended asset allocation and investment
recommendation according to the digital adviser’s risk profiling
methodology.
Monitoring and testing of the client-facing tool

32. Digital advisers should also have policies, procedures and controls in place to
monitor and test their algorithms on a regular basis to ensure that they are performing
as intended. Digital advisers should, at a minimum, have the following processes in
place:
(a) access controls to manage changes to the algorithms whenever necessary;
(b) controls to detect any error or bias in the algorithms;
(c) controls to suspend the provision of advice if an error or bias within the
algorithms is detected; and
(d) compliance checks on the quality of advice provided by the client-facing
tool. Such checks should be conducted regularly and when there are
changes to the algorithms. This should include post-transaction sample
testing, and should be reviewed by an independent and qualified human
adviser15 to ensure compliance with the requirements under the FAA. The
frequency of such review should commensurate with the size and
complexity of the digital adviser’s operations.
______________________
13
For instance, digital advisers can alert a client to inconsistencies in his responses through pop-up boxes and suggest
for the client to reconsider the information provided. Digital advisers may also resolve contradictory or inconsistent
responses from the client by asking additional questions or through other means such as by contacting the client to
obtain further clarification on his response.
14
Digital advisers can implement the use of “knock-out” or threshold questions to identify and eliminate clients who
are not suitable to participate in the digital advisory platform and may need to consider seeking investment advice
from a human adviser. Examples include clients who indicate the need for capital preservation or who state that
they cannot afford to lose their principal investment sum.
15
The individual should have the relevant competency and experience in providing FA services in order to carry out his
or her role, and is not involved in the design, development and monitoring of algorithms.

Technology risk management

33. It is an existing obligation for all FIs, including digital advisers, to implement
internal policies and procedures to address technology risks. As digital advisers
principally interact with their clients, transmit, store and process client information, and
generate and deliver investment recommendations electronically, they may be more
prone to malicious cyberattacks.
34. It is therefore imperative that digital advisers meet the requirements set out in
FAA Notice on Technology Risk Management (“FAA-N18”) and SFA Notice on
Technology Risk Management (“CMG-N02”). Digital advisers should also refer to the
Technology Risk Management Guidelines (“TRM Guidelines”) for industry best practices
which FIs are expected to adopt.
35. Digital advisers should also perform a gap analysis against the requirements set
out in the Notices FAA-N18 and CMG-N02, as the case maybe, and TRM Guidelines
and ensure that all gaps are adequately mitigated prior to the launch of the client-facing
tools and when changes are made to these tools.
Prevention of money laundering and countering the financing of terrorism

36. Similar to other FIs, digital advisers are required to have in place adequate
policies, procedures and controls to mitigate money laundering and terrorism financing
risks. This is set out in the FAA Notice on Prevention of Money Laundering and
Countering the Financing of Terrorism (“FAA-N06”) and SFA Notice to Capital Markets
Intermediaries on Prevention of Money Laundering and Countering the Financing of
Terrorism (“SFA04-N02”) respectively.
37. Given the online business model of digital advisers, they must also take steps to
address specific risks associated with non-face-to-face (“NFTF”) business relations with
a client. In this regard, digital advisers are expected to employ additional checks to
manage the risk of impersonation when onboarding clients through NFTF means. Further
guidance is set out in MAS’ Circular on Use of MyInfo and Customer Due Diligence
Measures for NFTF Business Relations (“AMLD 01/2018”).
Disclosure of pertinent information

38. As a general disclosure principle, digital advisers should provide sufficient
information to their clients to allow them to make informed investment decisions.
Disclosures should also be presented in plain English and in a clear, simple and easily
understandable manner.
Information on algorithms
39. Specifically, on information relating to algorithms, MAS expects digital advisers
to minimally disclose in writing, the following to their clients:
(a) assumptions, limitations and risks of the algorithms;
(b) circumstances under which the digital advisers may override the algorithms or
temporarily halt the digital advisory service; and
(c) any material adjustments to the algorithms.

Conflicts of interest
40. Digital advisers operating as FAs are required to comply with the existing
disclosure requirement on conflicts of interest set out under the FAA Notice on
Information to Clients and Product Information Disclosure (“FAAN03”). In particular,
they must disclose in writing to their clients, any actual or potential conflict of interest
arising from any connection to or association with any product provider, including any
material information or facts that may compromise their objectivity or independence.
41. In the context of their business model, digital advisers should disclose situations
where their algorithms are designed to direct clients to invest into investment products
managed by their head office or affiliates or which pay higher commissions.
Risk warning statement for overseas-listed investment products

42. FAs are allowed to pass clients’ orders concerning specified products other than
OTC derivatives contracts (such as overseas-listed exchange-traded funds) to brokerage
firms for execution. As such, it is important for FAs to highlight to clients that the level
of protection afforded to them may differ for such overseas-listed investment products,
which operate under a different regulatory regime. All FAs, whether they are digital
advisers or conventional FAs, are required to furnish such a risk warning statement to
their clients at the point of account opening when advising them on overseas-listed
investment products. Similarly, brokerage firms are required to provide a risk warning
statement to clients before allowing them to transact in any overseas-listed investment
product for the first time. The risk warning statement is set out in Annexes 4 of FAA-
N16 and SFA04-N12.
43. When advising on overseas-listed investment products, all FAs are required to
properly assess the merits of the overseas listed investment products, as well as the
client’s investment objectives, financial situation and particular needs. They are also
required to ensure that they are not in violation of any applicable laws and regulations,
including section 285(1) of the SFA which prohibits any person from making an offer
of units in a CIS if the CIS has not been authorised or recognised for distribution in
Singapore. In this regard, all FIs are prohibited from acting as principals or agents of
foreign fund houses, if the CIS offered by these foreign fund houses are neither
authorised nor recognized for distribution in Singapore. MAS considers an FI as acting
as an agent of a foreign fund house when the former has a distribution arrangement
with the latter.
Suitability of Advice
44. As set out under section 27 of the FAA, digital advisers operating as FAs must
have a reasonable basis for recommending any investment product to a person who
may reasonably be expected to rely on the recommendation.
45. Paragraph 11 of the FAA-N16 sets out the following information that digital
advisers are required to take reasonable steps to collect and document to ensure that
the recommendation takes into account a client’s investment objectives, financial
situation and particular needs:
(a) the financial objectives of the client;
(b) the risk tolerance of the client;

(c) the employment status of the client;

(d) the financial situation of the client, including assets, liabilities, cash flow and
income;
(e) the source and amount of the client’s regular income;
(f) the financial commitments of the client;
(g) the current investment portfolio of the client, including any life policy;
(h) whether the amount to be invested is a substantial portion of the client’s
assets; and
(i) for any recommendation made in respect of life policies, the number of
dependants of the client and the extent and duration of the financial support
required for each of the dependants.
Exception to collecting full information under paragraph 11 of FAA-N16

46. MAS recognizes that the risk of clients being subject to undue influence or active
solicitation on their investment amounts during a fully-automated advisory process is
considerably lower compared to when they are dealing with conventional FAs. Clients
who utilize the services of digital advisers are typically self-directed and have discretion
on the amount they wish to invest. For the avoidance of doubt, fully-automated digital
advisers refer to digital advisers with no human adviser intervention in the entire
advisory process16. In view of the above, it is less crucial for fully-automated digital
advisers to collect the information set out in limbs (c) to (i) of paragraph 11 of FAA-
N16.
47. In view of the above, fully-automated digital advisers are not required to collect
full information on a client’s financial circumstances as prescribed under paragraphs
11(c) to (i) of FAA-N16 (“FAA-N16 Exception”) provided that all of the following
conditions are met:
(a) the advice is fully-automated, with no human adviser intervention in the advisory
process. Human interactions are limited to providing technical assistance to
clients, such as assisting clients on IT-related issues or clarifying with clients on
their responses when inconsistencies are noted;
(b) there are in-built “knock-out” or threshold questions to effectively identify and
eliminate unsuitable clients (e.g. clients who cannot afford to lose their principal
investment sums);
(c) there are controls in place to identify and follow up on inconsistent responses
provided by clients;
(d) a risk disclosure statement is provided to clients to alert them that the
recommendation does not take into consideration their financial circumstances,
at the point when the recommendations are provided to them; and
(e) the advice is limited to CIS that are in substance EIPs.
48. The FAA-N16 Exception is provided for under paragraph 11A of FAA-N16. For
the avoidance of doubt, digital advisers relying on the FAAN16 Exception must still take
reasonable steps to collect information on the client’s financial objectives and risk
tolerance to satisfy themselves that the investment recommendation is suitable.
_______________
16
Elements of human interaction to assist with non-advisory related matters, such as IT or technical support, or
clarifying with clients on inconsistencies in their responses to fact-find, etc. do not disqualify an adviser from being
deemed a fully-automated digital adviser.

Assessing clients’ knowledge and experience

49. FIs are required to assess if a client possesses the relevant knowledge and
experience to invest in Specified Investment Products (“SIPs”) through the Customer
Knowledge Assessment (“CKA”) or Customer Account Review (“CAR”). The same
applies to digital advisers, regardless of whether the client is self-directed or not. These
requirements are set out in SFA04-N12 and FAAN16 respectively.
50. As such, it is important for digital advisers to have the relevant framework to
collect information from clients to enable them to conduct CAR or CKA assessments
for product suitability. If self-directed clients are assessed not to have the knowledge
and experience to invest in SIPs, digital advisers are required to appropriately warn them
and/or offer to provide advice to them. MAS would ordinarily not expect to exempt
digital advisers from complying with the CAR and CKA requirements, unless a digital
adviser is able to satisfy MAS that it has an alternative but equivalent framework that
will achieve the same effect and policy objectives as the CAR and CKA requirements in
substance.
Balanced scorecard (“BSC”) framework

51. The BSC framework is only applicable to FAs and representatives that provide
recommendation or advice directly to clients. Digital advisers that operate without any
representatives that provide recommendation or advice directly to clients, are not
subject to the BSC requirements.
52. Persons who are appointed to design the FI’s algorithms or review the suitability
of recommendations generated by the client-facing tools and who do not provide
recommendations or advice directly to clients are also not be subject to the BSC
requirements. Digital advisers can refer to the FAQs on the BSC Framework
Requirements for further guidance.
Advertisements and Marketing

53. Digital advisers are reminded of their obligations to comply with the
advertisement requirements set out under regulations 46 to 46AD of the SF(LCB)R and
regulations 22 to 22D of the Financial Advisers Regulations. This includes abiding by
the principle that advertisements are not false or misleading. Advertisements including
disclosures should also be fair and balanced, as well as clear and eligible. In instances
where, for example, digital advisers disclose projected returns, they should highlight
the probability of losses so as to provide a fair and balanced view. If past performance
is disclosed, digital advisers should highlight visibly in writing to clients that past
performance is not necessarily indicative of future performance.
54. Digital advisers may advertise their financial advisory services generally.
However, given that digital advisers need to give due consideration to a client’s
investment objectives, financial situation and particular needs, where relevant, before
recommending any model portfolio, digital advisers should not advertise specific model
portfolios that they may recommend or provide on their digital platforms.


Appendix 11E
Guideline No : FSG-G02
Issue Date : 23 December 2016
GUIDELINES ON STANDARDS OF CONDUCT FOR MARKETING AND DISTRIBUTION

ACTIVITIES BY FINANCIAL INSTITUTIONS
INTRODUCTION
1 The Monetary Authority of Singapore (“MAS”) has issued the Guidelines on

Standards of Conduct for Marketing and Distribution Activities (“the Guidelines”)
to emphasise our expectations for financial institutions and their representatives
to conduct their marketing and distribution activities at retailers and public places
in a responsible and professional manner. The Guidelines apply to all financial
institutions which conduct marketing and distribution activities that target retail
customers, and the representatives who act on behalf of these financial
institutions.
2 Financial institutions today have various marketing and distribution

arrangements, such as roadshows and tie-ups with retailers, to market their
products and services to customers1. These arrangements increase the reach of
financial institutions to members of the public and if not properly managed, may
give rise to the following issues:
(a) Harassment of customers

Customers who are not seeking to purchase financial products and services,
may feel harassed or make impulse purchases when they are prospected.
Furthermore, they may not be adequately prepared to provide information
necessary for a proper sales and advisory session and could face increased
risk of buying a product or service that is not suitable for their needs, financial
situation or risk profile.
(b) Unconducive environment for the purchase of financial products

When financial institutions market and sell financial products and services at
retailers and public places, it is common for them to set up sales booths in
open and visible spaces with high foot traffic.
Under such circumstances, the physical environment may not be conducive

for financial institutions to conduct proper sales and advisory sessions.
________________________________________________
1
For example, these may include roadshows held at public places such as MRT stations, bus interchanges or shopping
malls, and tie-ups with retailers such as supermarket chains or furniture and electrical product retailers.

(c) Confusion over the identities and roles of the financial institution and its
representatives
Where there is a tie-up between a financial institution and a retailer, the sales
booths of the financial institution may be located within the premises of the
retailer and there may be co-branding efforts between the two parties. In
such scenarios, customers may be confused as to whether they are dealing
with a representative of the financial institution or staff of the retailer when
approached to purchase a financial product or service.
When financial institutions conduct marketing and distribution activities in

public places or temporary locations, customers may have difficulty
identifying the financial institution which the representatives are acting on
behalf of. This is because the prospecting activities and sales and advisory
sessions are not conducted within the premises of the financial institution
and it may not be obvious to customers that the person they are dealing with
is from a financial institution.
(d) Enticement of customers to purchase unsuitable products

Financial institutions often attract customers with gifts when they conduct
marketing and distribution activities. Customers may be enticed by these gifts
or by bundled promotions offered by financial institutions and the retailers
they have tie-ups with, and purchase financial products or services which
they may not require or which are not suitable for them.
(e) Mishandling of cash and cheques collected

Financial institutions may collect payments from customers in the form of
cash or cheques for transactions closed at retailers and public places. The
mishandling of such payments exposes financial institutions to possible
financial losses or fraud.
3 The Guidelines set out safeguards that financial institutions should put in place
and adhere to when they market and sell financial products and services to retail
customers at retailers and public places. While the safeguards set out in the
Guidelines are aimed at addressing the market conduct risks arising from
marketing and distribution arrangements at retailers and public places, we expect
financial institutions to also apply the Guidelines to all other activities conducted
to market and sell their financial products and services, where relevant. This
may include street canvassing, conduct of surveys, door-to-door prospecting and
holding seminars where there is also marketing and sale of financial products
and services.
4 The Guidelines also set out MAS’ expectations that the board and senior
management of financial institutions are accountable and responsible for
ensuring that there are proper controls in place for their financial institution’s
marketing and distribution activities.
5 The Guidelines are principles-based. They set out the objectives and intended
outcomes of each safeguard. Each financial institution should consider how best

to apply and achieve the objectives of the Guidelines to suit its business model
and customer base.
6 The Guidelines should be read with the relevant Acts, and their subsidiary
legislation, written directions, notices, codes and other guidelines that MAS may
issue from time to time. MAS will take into account a financial institution’s
ability or failure to observe the Guidelines in assessing whether a financial
institution or any of its representatives satisfy the business conduct
requirements set out in the relevant Acts and subsidiary instruments, and
whether they continue to be fit and proper to conduct regulated activities.
7 The Guidelines shall take effect on 1 April 2017.
DEFINITION
8 For the purposes of the Guidelines,
“representative” refers to any employee or agent that is engaged by a financial

institution to conduct marketing and distribution of financial products and services on
its behalf;
"customer" includes a prospective customer.
9 The terms used in the Guidelines shall, except where expressly defined in the
Guidelines or the context otherwise requires, have the same meanings as defined
in the relevant Acts.

1 BOARD AND SENIOR MANAGEMENT RESPONSIBILITIES
1.1 MAS expects the Board and senior management of financial institutions to set
the right tone in conducting marketing and distribution activities to customers
in a responsible and professional manner. MAS will also hold the Board and
senior management accountable for ensuring that their financial institution’s
business conduct practices are in line with the objectives of the Guidelines.
1.2 The Board and senior management should ensure that the safeguards
elaborated in section 2 are incorporated into the financial institution’s policies,
systems and processes relating to its marketing and distribution activities, as
relevant. They should also ensure that the risks posed by their financial
institution’s marketing and distribution activities are properly assessed and
addressed. Where issues arise that may compromise the interests of
customers, the financial institution should consider instituting measures that
are more stringent than those set out in the Guidelines.
2 MARKET CONDUCT SAFEGUARDS
2.1 Exercising adequate oversight of marketing and distribution activities
2.1.1 Marketing and distribution activities at retailers and public places increase the
reach of financial institutions to members of the public. If such activities are
not properly managed, they could lead to heightened market conduct risks to
customers. To mitigate these risks, financial institutions should maintain
adequate oversight of their marketing and distribution arrangements at these
places to ensure that their representatives engage in proper marketing, sales
and advisory practices.
2.1.2 Financial institutions should carefully assess the potential market conduct risks
that could arise and ensure that they devote sufficient resources to, and put in
place sound processes for, the oversight of their marketing and distribution
arrangements at retailers and public places. These are elaborated in
Safeguards 1 to 4.
Safeguard 1
Financial institutions should conduct call-backs or surveys for all customers

prospected at retailers and public places before or within the free-look or
cooling-off period, to ensure that customers have understood their purchases
closed at such locations.
Financial institutions are expected to implement this safeguard for the sale of
life insurance policies2, accident and health policies, and collective investment
schemes.
__________________________________
2
Financial institutions are not expected to implement Safeguard 1 for any sale made with respect to simple life policies
sold as an ancillary product to loans with a simple payment basis for the insurance cover. These include policies that
cover outstanding loans in relation to personal loans, car loans and credit card balances, but exclude mortgage
reducing term assurance plans.

2.1.3 Marketing and distribution arrangements are usually held at public areas or at
the premises of retailers with high foot traffic (e.g. roadshows at shopping
malls or supermarket chains). Some customers may find it difficult to make a
considered decision in such circumstances and could make impulse purchases
while being prospected at retailers and public places.
2.1.4 The financial institution should conduct call-backs or surveys to customers

when its representatives prospect and close sales at retailers and public places
to ensure these customers are fully aware of the features and risks of the
financial product or service they have bought. This will also enable the financial
institution to detect inappropriate conduct such as mis-selling,
misrepresentation or pressure selling.
2.1.5 The call-backs or surveys are only applicable to financial products with a free-
look or cooling off period (referred to as “specified period”) and should be
conducted on all sales closed at retailers and public places before or during the
specified period. This is to allow customers to cancel the transaction within
the specified period should they subsequently reconsider their decision and
decide not to proceed with the transaction.
2.1.6 The call-backs may be conducted by a supervisor of the representative who

closed the sale as part of the supervisor’s endorsement of the sale. The
financial institution may also engage a staff who does not make
recommendations or effect transactions for customers, or a third-party provider
to conduct the call-backs.
2.1.7 The financial institution may choose to survey customers using other means
including in written or electronic form, such as letters, electronic mails or text
messages, if the financial institution has assessed that these avenues are more
effective, taking into account the financial institution’s business model and
customer base.
2.1.8 The financial institution should also have procedures to effectively monitor and
keep proper records of sales closed at retailers and public places and the call-
backs and surveys conducted.
Safeguard 2
Financial institutions should conduct regular mystery shopping and site visits
to monitor and ensure that the marketing, sales and advisory practices of
representatives at retailers and public places are conducted in line with their
internal standards and procedures as well as the Guidelines on Standards of
Conduct for Marketing and Distribution Activities.
Financial institutions are not required to implement this safeguard for the sale
of banking and general insurance products and services, where the banking or
general insurance product or service purchased is related to the product or
service that the customer has bought3.
____________________________________
3
For example, housing loans entered into at show flats for purchase of property or travel insurance purchased at travel
fairs for holiday packages bought.

2.1.9 Customers often rely on the representatives of financial institutions to explain

to them the features, risks, and fees and charges of financial products and
services, and recommend financial products and services that are suitable for
them. As the purchase of financial products or services may require long-term
and/or significant financial commitment by customers, it is important that
customers are treated fairly and are recommended financial products or
services that meet their needs.
2.1.10 However, some representatives may be motivated by the commissions,

incentives, and other rewards that are tied to their sales performance and
engage in inappropriate practices such as product pushing and
misrepresentation, in order to meet sales targets. As such, financial institutions
should institute regular checks on their representatives’ marketing, sales and
advisory activities.
2.1.11 Financial institutions should generally conduct both mystery shopping

exercises and site visits as they complement each other in a financial
institution’s oversight of its marketing and distribution activities at retailers and
public places. Mystery shopping exercises entail more rigorous checks on
representatives’ sales and advisory practices, while site visits ensure that
marketing and distribution activities are conducted professionally in an ongoing
manner as they can be conducted more frequently. However, the financial
institution may choose to conduct mystery shopping in place of site visits as
long as it ensures that there are regular and adequate mystery shopping checks
conducted.
2.1.12 The financial institution should ensure that its mystery shopping exercises and
site visits provide sufficient coverage of its marketing and distribution
arrangements, taking into account the scale of its business and marketing and
distribution activities. The mystery shopping exercises and site visits should be
conducted on a regular basis throughout the year and cover at least half of all
marketing and distribution arrangements conducted by the financial institution
in that year.
Safeguard 3
Financial institutions should separately track and monitor complaints arising

from their marketing, sales and advisory activities at retailers and public places.
Complaints statistics should also be reported to senior management on a regular
basis.
2.1.13 Complaints can be an important indicator of potential problems occurring as a

result of a financial institution’s business activities. The monitoring of
complaints allows financial institutions to identify issues arising from their
marketing and distribution activities and implement timely measures to address
these issues.
2.1.14 Currently, financial institutions have in place their own complaints monitoring
mechanisms and resolution frameworks to track and resolve complaints on
their business conduct practices, service standards and commercial practices.

Financial institutions should enhance their existing complaints monitoring

mechanisms to separately track complaints arising from their marketing and
distribution arrangements. Where a financial institution receives a large number
of complaints relating to such arrangements, it should take steps to identify
the root cause of the problem and implement measures to rectify the issue
promptly and effectively. This should also apply when there are complaints
relating to marketing and distribution activities at a specific location, by a
specific representative or group of representatives, for specific financial
products, or with customers of a certain profile.
2.1.15 The results of the complaints monitoring and analysis done on the complaints
statistics should be reported to senior management on a regular basis.
Safeguard 4
Financial institutions should maintain a register containing information on their

marketing and distribution arrangements at retailers and public places.
2.1.16 When financial institutions conduct marketing and distribution activities, their
representatives may be deployed to various locations and there may be
concurrent events happening at the same time. In order to exercise effective
oversight of their marketing, sales and advisory activities at retailers and public
places, financial institutions should maintain proper records of their marketing
and distribution arrangements. This will also allow financial institutions to more
easily identify the source, nature and cause of any issue or complaint.
2.1.17 Financial institutions should maintain a register containing information on their

marketing and distribution arrangements at retailers and public places. The
register should minimally keep records of:
(a) the locations of the financial institution’s marketing and distribution
arrangements and/or events;
(b) the period and duration of the arrangements and/or events;
(c) the identities of representatives and supervisors involved; and
(d) the financial products and/or services marketed or distributed.
2.1.18 The financial institution should consider maintaining records of other relevant
information or more granular details than those listed in paragraph 2.1.17 if
they are deemed necessary for better oversight of its marketing and distribution
arrangements.
2.2 Conducting marketing, sales and advisory activities in a professional manner
2.2.1 Representatives who market and sell financial products and services on behalf
of their financial institutions should be competent, adopt ethical practices and
uphold the professional image of the financial industry. Financial institutions
currently have in place internal codes of professional conduct and requirements
that their representatives must adhere to when conducting marketing, sales

and advisory activities. Safeguards 5 to 10 set out the standards of conduct

financial institutions and their representatives are expected to observe and the
steps financial institutions should take to ensure that their representatives
conduct proper marketing, sales and advisory practices at retailers and public
places.
2.2.2 Financial institutions should review their existing policies and procedures, and
ensure that they are in line with the following safeguards and the outcomes
that they are intended to achieve. In addition, financial institutions should put
in place controls and procedures to monitor and ensure that their
representatives adhere to the safeguards.
Safeguard 5
Financial institutions and their representatives should conduct themselves in a

professional manner at all times when prospecting for and dealing with
customers at retailers and public places. They must not cause annoyance by
being unreasonably persistent or by placing undue pressure on members of the
public to purchase any financial product or service.
2.2.3 The marketing and distribution activities conducted by financial institutions at

public areas or at the premises of retailers increase their visibility and widen
their reach to a larger group of potential customers. It is therefore important
that representatives conduct themselves professionally when prospecting for
and dealing with customers at retailers and public places.
2.2.4 The financial institution should incorporate into its policies and procedures the
standards of professional conduct that it expects of its representatives.
Appropriate actions should be taken against representatives who engage in
unethical or unprofessional conduct when prospecting for customers at
retailers and public places. Examples of inappropriate and unprofessional
conduct include being rude, unreasonable and aggressive, or causing
annoyance by being overly persistent or by placing undue pressure on members
of the public to purchase financial products or services.
Safeguard 6
Financial institutions should ensure that their representatives clearly disclose

upfront their identities and the financial institution they represent when they
prospect for customers.
Where financial institutions market third-party products or services, they should

ensure that their representatives disclose and explain to customers the
relationship between the financial institution and the third-party product
provider.
Where there are tie-ups with retailers, financial institutions should ensure that
their representatives clearly disclose to customers the tie-up between the
financial institution and the retailer, and explain each party’s roles and
responsibilities.

2.2.5 When a representative prospects for customers at retailers and public places,
the customers should be able to discern that they have been approached by a
representative of a financial institution. It is important to avoid any confusion
as such encounters are usually not anticipated by customers as they would not
have visited the retailer or public area with the intention of purchasing financial
product or service.
2.2.6 The financial institution should ensure that its representatives make upfront
disclosures to customers of their identities and the financial institution that
they represent. Where the financial institution markets and distributes financial
products or services manufactured or provided by a third party, the financial
institution should ensure that its representatives clearly disclose and explain to
customers the relationship between the financial institution and the third party.
2.2.7 Similarly, when the financial institution enters into partnerships with retailers
to market and distribute its financial products and services at the retailers’
premises, the financial institution should ensure that its representatives clearly
disclose to customers the tie-up between the financial institution and the
retailer, and explain each party’s roles and responsibilities. In this regard, the
financial institution and retailer may organise co-branding activities to increase
customers’ awareness of their respective brands and range of products and
services offered. The financial institution should ensure that any co-branding
efforts with retailers are not misleading and do not create any confusion among
customers. The financial institution should avoid a situation where a customer
thinks that he is dealing with a staff of a retailer when he is in fact purchasing
a financial product or service from a representative of the financial institution.
2.2.8 The financial institution should set out and communicate clearly to its
representatives the information to be disclosed and how the disclosures should
be made. Examples of good practices include (i) ensuring that representatives
prospect in the immediate vicinity of the sales booth, (ii) providing a script for
representatives to adhere to when they approach customers, (iii) requiring
representatives to furnish their name cards to customers, and (iv) requiring
representatives to prominently display their staff passes or to wear corporate
shirts, logos and badges to identify their financial institution.
Safeguard 7
Financial institutions should ensure that their representatives undergo training

on proper sales and advisory conduct for their marketing and distribution
activities at retailers and public places.
2.2.9 Representatives should be properly trained and equipped with the knowledge
and skills to conduct themselves appropriately and to provide sound advice
when conducting marketing and distribution activities at retailers and public
places.
2.2.10 The financial institution should put in place training programmes to set out
clearly the conduct and professional standards expected of its representatives

when they conduct marketing and distribution activities at retailers and public
places. Representatives should only be allowed to participate in the financial
institution’s marketing and distribution arrangements after they have
completed the training programme.
2.2.11 The financial institution should take into consideration specific market conduct
risks that it may face and the scale of its marketing and distribution activities
in the design of its training programmmes for representatives.
Safeguard 8
Financial institutions should ensure that their representatives who conduct

marketing and distribution activities at retailers and public places have a good
compliance record.
2.2.12 Given that marketing and distribution activities conducted at retailers and
public places could potentially lead to increased market conduct risks to
customers, it is important that the representatives participating in such
activities act in the best interests of customers. In this regard, the financial
institution should ensure that only representatives with good compliance
records are assigned to or stationed at retailers and public places to conduct
marketing and distribution activities.
2.2.13 The financial institution should assess a representative’s compliance record by

considering a combination of factors, including but not limited to the following:
(a) the representative’s balanced scorecard grade4;
(b) any complaint(s) filed against the representative previously;
(c) any disciplinary action(s) taken against the representative previously; and
(d) any other relevant information gathered from the financial institution’s due
diligence conducted on the representative.
2.2.14 The financial institution should, to the best of its ability, assess the compliance
records of all representatives participating in its marketing and distribution
arrangements, regardless of the nature and period of their employment with
the financial institution.
Safeguard 9
Financial institutions should ensure that the remuneration and incentives paid
to their representatives do not lead to aggressive sales tactics and other
inappropriate conduct.
2.2.15 The conduct of representatives may be influenced by commissions, incentives

and other rewards that are often tied to their sales performance. They may
resort to aggressive and inappropriate sales tactics, such as product pushing
and misrepresentation, in order to meet sales targets. This may result in
significant financial detriment to customers.
________________________________
4
This refers to the balanced scorecard grade as defined in the Notice on Requirements for the Remuneration Framework
for Representatives and Supervisors and Independent Sales Audit Unit (FAA-N20).

2.2.16 The financial institution should ensure that the remuneration and incentive
structure for representatives who recommend financial products and execute
transactions at retailers and public places do not lead to aggressive sales
tactics and other inappropriate conduct. For example, the financial institution
should ensure that the remuneration and incentives paid to a representative for
financial products and services sold at retailers and public places are not
significantly higher than what he will receive for the same products and
services sold at other locations or channels.
Safeguard 10
Financial institutions should ensure that any gift offered to customers does not
unduly influence the decisions of customers to purchase any financial product
or service. Financial institutions should also ensure that the details of gifts are
not displayed or promoted in such a manner as to inappropriately influence the
purchase decisions of customers.
2.2.17 It is a common practice for financial institutions to offer gifts to customers

when they purchase a financial product or service. The value of the gift may
be contingent on the amount of investment made.
2.2.18 Given that customers rely on the information and recommendation provided by
representatives to decide whether to make a purchase, it is important that
representatives provide accurate product information and sound advice that
will allow customers to make informed decisions. Financial institutions should
ensure that their representatives do not actively promote or draw customers’
attention to the gifts being offered as this may influence customers to purchase
a financial product or service which does not meet their needs or which they
do not need.
2.2.19 Examples of good practices include (i) prescribing a monetary limit on the value
of gifts such that the gifts offered to customers are only of nominal value
relative to the amount invested, (ii) requiring all gifts distributed at such
arrangements to be approved by the financial institution, and (iii) monitoring
representatives’ sales and advisory practices to ensure that the gifts are not
the main focus of the transaction.
2.2.20 The financial institution should also ensure that its marketing collaterals and
promotional materials used at such arrangements focus on accurate and
relevant product information and do not present or offer gifts in a way that is
likely to divert or mislead customers’ focus from the proper consideration of
the financial product or service.
2.3 Providing a suitable environment for a proper sales and advisory session
2.3.1 Marketing and distribution arrangements at retailers and public places are often
located in an open environment where there is high foot traffic. Such
environment may not be the most ideal for a proper sales and advisory session
to take place and for customers to make a considered financial decision. In

addition, customers may not be actively looking to purchase financial products

and services when they are prospected at retailers and public places, and may
not fully consider the implications of the purchase, including any long-term
financial commitments involved.
2.3.2 Safeguards 11 and 12 set out measures that financial institutions should put
in place to ensure that the location of their marketing and distribution
arrangements facilitate proper sales and advisory sessions and are conducive
for customers to properly consider their purchases of financial products or
services.
Safeguard 11
Financial institutions should ensure that the venue for their marketing and
distribution activities are conducive for representatives to conduct a proper
sales and advisory session.
2.3.3 Venues for marketing and distribution activities should facilitate proper sales
and advisory sessions to ensure that customers have a positive experience and
are able to clearly understand the risks, features and benefits of the financial
products or services they are purchasing.
2.3.4 The financial institution should ensure that the space allocated and the
environment where their marketing and distribution arrangements are located
are suitable for the type and scale of activities involved. For example, the
financial institution should ensure that there are adequate tables and chairs to
facilitate a comfortable and conducive sales and advisory session. Distractions
should also be minimised, by ensuring that the location is not too congested
or noisy.
Safeguard 12
Financial institutions should have adequate controls in place to ensure that

payments collected from customers at retailers and public places are properly
handled and securely kept.
2.3.5 Collecting payments from customers at retailers and public places poses higher
risks due to the open environment and high human traffic, as compared to
collecting payments within a financial institution’s premises.
2.3.6 The financial institution should ensure that adequate measures are put in place
to account for and safe-keep payments received at marketing and distribution
arrangements located at retailers and public places. Examples of good
practices include (i) minimising the collection of cash payments, (ii) issuing
receipts to customers and maintaining proper records of all payments collected
on a timely basis, (iii) appointing a dedicated staff or representative to be
responsible for the safekeeping of the payments collected, and (iv) requiring
representatives to pass on customers’ monies and cheques to the financial
institution as soon as practicable.

Annex 1
List of Safeguards
No. Safeguard
1 Financial institutions should conduct call-backs or surveys for all
customers prospected at retailers and public places before or within the
free-look or cooling-off period, to ensure that customers have
understood their purchases closed at such locations.
Financial institutions are expected to implement this safeguard for the

sale of life insurance policies, accident and health policies, and collective
investment schemes.
2 Financial institutions should conduct regular mystery shopping and site
visits to monitor and ensure that the marketing, sales and advisory
practices of representatives at retailers and public places are conducted
in line with their internal standards and procedures as well as the
Guidelines on Standards of Conduct for Marketing and Distribution
Activities.
Financial institutions are not required to implement this safeguard for

the sale of banking and general insurance products and services, where
the banking or general insurance product or service purchased is related
to the product or service that the customer has bought.
3 Financial institutions should separately track and monitor complaints
arising from their marketing, sales and advisory activities at retailers and
public places. Complaints statistics should also be reported to senior
management on a regular basis.
4 Financial institutions should maintain a register containing information
on their marketing and distribution arrangements at retailers and public
places.
5 Financial institutions and their representatives should conduct
themselves in a professional manner at all times when prospecting for
and dealing with customers at retailers and public places. They must not
cause annoyance by being unreasonably persistent or by placing undue
pressure on members of the public to purchase any financial product or
service.
6 Financial institutions should ensure that their representatives clearly
disclose upfront their identities and the financial institution they
represent when they prospect for customers.
Where financial institutions market third-party products or services, they

should ensure that their representatives disclose and explain to
customers the relationship between the financial institution and the
third-party product provider.
Where there are tie-ups with retailers, financial institutions should

ensure that their representatives clearly disclose to customers the tie-up
between the financial institution and the retailer, and explain each
party’s roles and responsibilities.

7 Financial institutions should ensure that their representatives undergo

training on proper sales and advisory conduct for their marketing and
distribution activities at retailers and public places.
8 Financial institutions should ensure that their representatives who
conduct marketing and distribution activities at retailers and public
places have a good compliance record.
9 Financial institutions should ensure that the remuneration and incentives
paid to their representatives do not lead to aggressive sales tactics and
other inappropriate conduct.
10 Financial institutions should ensure that any gift offered to customers
does not unduly influence the decisions of customers to purchase any
financial product or service. Financial institutions should also ensure that
the details of gifts are not displayed or promoted in such a manner as to
inappropriately influence the purchase decisions of customers.
11 Financial institutions should ensure that the venue for their marketing
and distribution activities are adequate and conducive for
representatives to conduct a proper sales and advisory session.
12 Financial institutions should have adequate controls in place to ensure
that payments collected from customers at retailers and public places
are properly handled and securely kept.


12. Revised Code On Collective Investment Schemes
CHAPTER 12
REVISED CODE ON COLLECTIVE INVESTMENT SCHEMES
CHAPTER OUTLINE
1. Introduction
2. Key Changes Introduced
3. The Manager
4. The Scheme
5. Accounts And Reports
6. Dealing And Valuation
7. Breaches
8. Recognised Schemes and Authorised Schemes Which Feed Into An Underlying
Scheme
9. Core Investment Requirements For All Authorised Schemes
10. Appendix 3 of the Code - Hedge Funds
11. Appendix 4 of the Code - Capital Guaranteed Funds
KEY LEARNING POINTS

 explain the requirements found in the revised Code on Collective Investment Schemes
(CIS) regarding:
- the manager
- the scheme
- accounts and reports
- dealing and valuation
- breaches
- recognised schemes and authorised schemes which feed into an underlying scheme
- core investment requirements
- hedge funds
- capital guaranteed funds

1. INTRODUCTION
1.1 The Monetary Authority of Singapore (MAS) has issued a revised Code on
Collective Investment Schemes (“Code”) pursuant to Section 321 of the
Securities and Futures Act (Cap. 289) (“SFA”). The Code sets out the best
practices on management, operation and the marketing of Collective Investment
Schemes (“schemes”) that managers and approved trustees are expected to
observe.
1.2 The Code is non-statutory in nature. If a person fails to comply with any
requirement in this Code, it will not of itself render that person liable to criminal
proceedings, although any such failure may, in any proceedings whether civil or
criminal, be relied upon by any party to the proceedings, as tending to establish
or to negate any liability which is in question in the proceedings.
1.3 A breach of this Code by the responsible person of a scheme may be taken into
account by the MAS, in determining whether to revoke or suspend the
authorisation or recognition of the scheme under Section 286 and 287 of the
SFA respectively, or to refuse to authorise or recognise new schemes proposed
to be offered by the same responsible person. Similarly, a breach of this Code by
a trustee may be taken into account by the MAS, in determining whether to
revoke approval granted under Section 289 of the SFA, or to prohibit the trustee
from acting as trustee for any new scheme.
1.4 The Code was first issued on 23 May 2002 and was last revised on 8 October
2018.
1.5 The effective date of this revised Code is 8 October 2018, except for the
following:
(a) Revisions made to paragraph 8.8 of Appendix 1 and paragraph 11.1(c)(v) of
Appendix 6 will take effect for the first annual report relating to their
respective financial year ending on or after 31 December 2018.
(b) Revisions made to paragraph 5 of Appendix 2 will take effect on 18 February
2019.
2. KEY CHANGES INTRODUCED
2.1 The revised Code on Collective Investment Schemes aims to provide greater
clarity and to increase the flexibility for fund managers in managing their funds.
The Code also aims to enhance safeguards for retail investors. MAS will only
recognise a foreign scheme if it is satisfied that the scheme is subject to
investment guidelines which are substantially similar to those as set out in the
revised Code.
2.2 The key changes to the Code include:

(a) Strengthening Core Investment Requirements for Schemes -
(i) Introducing a list of permissible investments for funds;

(ii) Strengthening safeguards on the use of financial derivatives and

counterparty requirements;
(iii) Enhancing guidelines on securities lending activities;
(iv) Enhancing requirements for funds investing in structured instruments;
(b) Introducing New Guidelines for Specialised Fund Categories -
(i) Establishing new guidelines for funds which track an index;
(ii) Introducing the concept of weighted portfolio maturities for money
market funds;
(c) Other Safeguards to Enhance Investor Protection -
(i) Standardising the methods used to calculate any performance fees
imposed;
(ii) Introducing principles on the naming of funds (schemes); and
(iii) Prohibiting the use of simulated past performance data for disclosure of
performance figures.
A. The Revised CIS Code
2.3 The revised Code consists of 92 pages, ten chapters and seven Appendices in
total and can be downloaded from the MAS Website. For the purpose of this
Study Guide, we will be highlighting only selected sections of the Code.
2.4 The ten chapters of the Code are:

Chapter 1: Interpretation;
Chapter 2: The Trustee;
Chapter 3: The Manager;
Chapter 4: The Scheme;
Chapter 5: Accounts and Reports;
Chapter 6: Dealing and Valuation;
Chapter 7: Breaches;
Chapter 8: Assets under Management;
Chapter 9: Recognised Schemes and Authorised Schemes which Feed into an
Underlying Scheme; and
Chapter 10: Schemes Offered Under the ASEAN CIS Framework
2.5 The seven Appendixes of the Code are as follows:

Appendix 1 – Investment: Core Requirements
Appendix 2 – Investment: Money Market Funds
Appendix 3 – Investment: Hedge Funds
Appendix 4 – Investment: Capital Guaranteed Funds
Appendix 5 – Investment: Index Funds
Appendix 6 – Investment: Property Funds
Appendix 7 – Investment: Precious Metals Funds

3. THE MANAGER
A. Functions And Responsibilities
3.1 The following contents in regard to “Functions And Responsibilities” has been
entirely extracted from the “Code On Investment Schemes” from the MAS
website:
Records retention
a) The manager should maintain a record of the instructions, if any, to the trustee as to
how votes in relation to investments of a scheme should be exercised.
b) The manager should maintain a record of all soft dollars received.
Transactions
c) The manager should:
Transactions with related corporations

i) not invest the monies of the scheme in the manager's own securities or securities-
based derivative contracts, or those of any of its related corporations unless the
securities are constituents of the scheme’s reference benchmark, which is
constructed by an independent party, and the scheme complies with paragraph 2.3
of Appendix 1;
Guidance
For the avoidance of doubt, this prohibition does not extend to schemes managed by the
manager or its related corporations.
ii) not lend monies of the scheme to its related corporations;
Guidance
For the avoidance of doubt, deposits made with banks licensed under the Banking Act
(Cap.19), finance companies licensed under the Finance Companies Act (Cap. 108),
merchant banks approved as financial institutions under section 28 of the Monetary
Authority of Singapore Act (Cap. 186) or any other deposit-taking institution licensed
under an equivalent law in a foreign jurisdiction, in the ordinary course of business of
the scheme, shall not be construed as monies lent to such institutions.
iii) not purchase real estate assets owned by the manager or its related corporations
for the scheme unless such purchases are allowed by Appendix 6: Property Funds;
Transactions at arm’s length

iv) conduct all transactions with or for a scheme at arm’s length; and
Transactions consistent with scheme’s objective and approach

v) acquire permissible investments and enter into transactions which are consistent
with the investment objective and approach of the scheme.
Best execution
d) The manager should have arrangements in place to take all reasonable steps to obtain
the best possible result for the scheme, taking into account the following execution
factors: price, costs, speed, likelihood of execution and settlement, size, nature or any
other consideration relevant to the execution of a trade or transaction.

Arrangements for participants to receive accounts, reports and statements

e) For participants who purchase units in the scheme through a distributor and whose
names will not be entered on the register of the scheme, the manager should require
the distributor to put in place arrangements for such participants to receive the
accounts, reports or statements, if applicable.

f) For schemes which use financial derivatives, the manager should ensure that the risks
related to such financial instruments are duly measured, monitored and managed on
an ongoing basis. The manager should not act as the counterparty of an OTC financial
derivative that is invested into by the scheme. For the avoidance of doubt, the manager
should ensure that chapter 3.1(d) is complied with in dealing with any other
counterparty (including its related corporation).
Use of credit ratings

g) The manager should not rely solely or mechanistically on ratings issued by credit rating
agencies. The manager should establish a set of internal credit assessment standards
and put in place a credit assessment process to ensure that its investments are in line
with these standards. For the purposes of the Code, the manager should, where
possible, make its own credit assessments to verify ratings issued by credit rating
agencies. In the event of a difference between the ratings issued by credit rating
agencies, or between such external ratings and the manager’s internal credit
assessment, the lowest rating should be used. For the avoidance of doubt, all ratings
used should be based on a rating scale that is globally comparable.
h) Where the manager relies on ratings issued by credit rating agencies, the manager
should provide the following in the scheme’s prospectus:
i) a statement that the manager has established a set of internal credit assessment
standards and has put in place a credit assessment process to ensure that its
investments are in line with these standards; and
ii) a statement that information on the manager’s credit assessment process would be
made available to investors upon request.
Guidance
For the purpose of Chapter 3.1(h)(ii), the manager may enter into agreements with the
investor to keep the disclosed information confidential.
Significant influence
i) The manager should not, through the scheme, carry out its investment activities in a
manner which would enable it to exercise significant influence over the management
of an issuer of permissible investments.
Liquidity risk management

j) The manager should assess and adopt the liquidity risk management practices that are
set out in the Guidelines on Liquidity Risk Management Framework for Fund
Management Companies, on a proportionate basis that is commensurate with its role
and the scale and complexity of its operations and the schemes that it manages.

B. Operational Obligations
3.2 The following contents in regard to “Operational Obligations” has been entirely
extracted from the “Code On Investment Schemes” from the MAS website:
Payment of redemption proceeds

a) A redemption request is considered received on day T if it is received with all requisite
documents and information by the close of dealing as specified in the prospectus. The
manager should pay out, or cause to be paid out, redemption proceeds to the scheme’s
participants within T+7 business days.
For property funds, the manager should pay out redemption proceeds within the period
allowed under the guidelines in Appendix 6: Property Funds. For hedge funds, the
manager should pay out redemption proceeds according to its prospectus as required
under Appendix 4 of the Third Schedule of the SFR. Proceeds are deemed to be paid on
the day the participant’s account is credited or a cheque is mailed to the participant.
Guidance
A participant refers to the end-investor who is a beneficial owner of the units and
excludes a distributor or a Central Provident Fund (“CPF”) Agent Bank.
Preparation of accounts and reports

b) The manager should prepare, or cause to be prepared, the semi-annual accounts,
annual accounts, semi-annual report and annual report relating to the scheme in
accordance with chapter 5 and the Appendices. The manager should prepare and
furnish to the trustee the accounts and reports in sufficient time for the trustee to
cause them to be audited (where an audit is required) and sent to participants within
the time stipulated in chapter 2.3(b).
Exercise of voting rights

c) Where the manager may face conflicts of interests exercising voting rights relating to
investments of a scheme, the manager should cause these votes to be exercised in
consultation with the trustee.
Notification of significant changes

d) The manager should inform the Authority and existing participants of any significant
change to be made to a scheme not later than one month before the change is to take
effect. Significant changes include, but are not limited to, the following:
i) a change in the investment objective or focus of the scheme or in the investment

approach of the manager as stated in the prospectus or trust deed, where
“investment approach” refers to how the manager selects investments for the
portfolio of the scheme;
ii) an increase in the remuneration payable to the manager or trustee (even where the
remuneration is not increased beyond the maximum amount provided for in the trust
deed or prospectus) or a change in the basis upon which such remuneration is
determined;
iii) an increase in any other fees or charges payable by the scheme that are substantial
(i.e. fees that are 0.1% or more of the scheme’s NAV) or in any fees or charges
payable by the participants, unless the trustee certifies that the increase in such
fees or charges are not material;
iv) an amendment to the trust deed or prospectus to allow a new form of remuneration
or expense payable by the scheme;
v) the replacement, removal or appointment of a manager, sub-manager, investment
adviser or trustee to the scheme;

vi) a variation in the rights or obligations of participants as set out in the trust deed
and prospectus, where the variation is materially prejudicial to participants;
Guidance
Where there is doubt as to whether such variation would be prejudicial to participants,
advance notification to the Authority and participants is not required if the trustee
certifies that the variation is not materially prejudicial to participants.
vii) a change from direct investment to feeder fund structure or vice versa;
viii) a change in the collateral policy from that disclosed in the prospectus; or
ix) a change referred to in chapter 3.2(d)(i) to (viii) in relation to an underlying fund
into which the scheme feeds substantially (i.e. 30% or more of the scheme’s NAV).
Guidance
The manager should take reasonable steps to obtain prior notification of any material
change in relation to the underlying scheme. Where such prior notification is neither
possible nor practicable, notification should be made in accordance with chapter 3.2(e).
Guidance
Notifications should be made in clear and simple language that participants can easily
understand. Managers should avoid using technical terms but where the use of such
terms is unavoidable, participants should be provided with clear explanations.
e) Notwithstanding chapter 3.2(d), where a significant change cannot be determined by

the manager at least one month in advance, the manager should inform the Authority
and existing participants of the significant change as soon as practicable. Examples
of such changes include, but are not limited to, the following:
i) suspension and resumption of dealings as a result of exceptional circumstances;

ii) any change which may materially affect the risks and returns of a scheme;
Guidance
Changes which cannot be determined at least one month in advance but may materially
affect the risks and returns of a scheme include significant unexpected changes in
general market conditions, the industry, sector or country or specific aspects of the
financial instruments which the scheme invests in.
iii) any change which may materially affect the ability of any key counterparty of a
overthe-counter (“OTC”) financial derivative, securities lending or repurchase
transaction to fulfil its obligations to the scheme; or
Guidance
For example, the counterparty of an OTC financial derivative used by an index fund to
replicate an index would be considered a key counterparty.
iv) the cessation of market making activity by designated market makers.
Modifications to the trust deed

f) The manager should obtain an extraordinary resolution of participants for any
modification of the trust deed unless the trustee certifies that:
i) the modification does not materially prejudice the interests of participants and does
not release to any material extent the manager from any responsibility to the
participants; or

ii) the change to the scheme or rights or obligations of participants, which requires a
modification to the trust deed, is necessary in order to comply with applicable fiscal,
statutory or official requirements (whether or not having the force of law); or
iii) the modification is made to remove obsolete provisions or to correct manifest errors.
Cash rebates and soft dollars

g) The manager should not retain for its own account, cash or commission rebates arising
out of transactions for the scheme executed in or outside Singapore.
h) The manager should not retain soft dollars in the management of the scheme unless
the following conditions are met:
i) the soft dollars received can reasonably be expected to assist in the manager’s
provision of investment advice or related services to the scheme;
ii) best execution is carried out for the transactions; and
iii) the manager does not enter into unnecessary trades in order to achieve a sufficient
volume of transactions to qualify for soft dollars.
i) The receipt of goods and services such as travel, accommodation and entertainment
does not meet the condition set out at chapter 3.2(h)(i) and is prohibited.
Schemes admitted under the CPF Investment Scheme

j) The manager should not charge any costs arising from CPF failed trades to the scheme.
C. Delegation
3.3 The following contents in regard to “Delegation” has been entirely extracted from
the “Code On Investment Schemes” from the MAS website:
a) Where a scheme’s NAV is sub-managed, the manager should ensure that the scheme
is invested in accordance with the Code and there are:
i) adequate procedures in place to monitor the conduct of its delegate and to ensure
that the function delegated or outsourced is performed in a proper and efficient
manner; and
ii) controls in place to ensure compliance with the trust deed, laws, and regulations.
b) Where more than 10% of the scheme’s NAV is sub-managed abroad, the manager
should, together with its related corporations, already be managing at least S$500
million of discretionary funds in Singapore.
c) In assessing an application for a scheme where more than 10% of a scheme’s NAV
is sub-managed abroad by another manager, the Authority will consider whether the
sub-manager is reputable and supervised by an acceptable financial supervisory
authority.

D. Investments in Other Schemes
3.4 The following contents in regard to “Investments in Other Schemes” has been
website:
Where more than 10% of the scheme’s NAV is invested in other schemes which are
registered in a foreign jurisdiction, the manager should, together with its related
corporations, already be managing at least S$500 million of discretionary funds in
Singapore.
E. Payments
3.5 The following contents in regard to “Payments” has been entirely extracted from
a) No payment should be made from the scheme if it is unfair to, or materially prejudices
the interests of, any participant or prospective participant.
b) The manager should not pay or cause to be paid any fees from the scheme that have
not been provided for in the trust deed.
c) The manager should not pay or cause to be paid any marketing or promotion expenses
from the scheme. Such expenses include those for advertisements in the media,
mailers, fact sheets, but exclude those for the preparation, printing, lodgement and
distribution of prospectuses, profile statements or product highlights sheets.
F. Performance Fees
3.6 The following contents in regard to “Performance Fees” has been entirely
a) Performance fees payable should meet the following requirements:
i) the calculation of performance fees payable should be equitable to all participants;
ii) the performance fee should be calculated and paid after consideration of all other
payments;
iii) the period over which the performance fee accrues and the frequency with which
it crystallises should be appropriate. Crystallisation of performance fee should be
no more frequent than once a year;
Calculation method
iv) the performance fee should be calculated based on a:
A) fulcrum fee; or
B) high water mark
arrangement;

v) where chapter 3.6(a)(iv)(A) applies, the fulcrum fee should increase or decrease
proportionately with the investment performance of the scheme as compared to the
specified benchmark and be limited to between zero and 200% of the base fee;
Guidance
The fulcrum fee, as a percentage of the NAV per unit of the scheme, should be applied
in a symmetric manner. For example, where the base fee is 1.5%, the fulcrum fee should
range from 0 to 3.0%
vi) where chapter 3.6(a)(iv)(B) applies, the high water mark should be reset to the NAV
of the scheme only when the NAV of the scheme reaches a new historical high at
the end of each performance period; and
Guidance
The high water mark should be reset to the scheme’s NAV whenever a historical high is
reached at the point of performance fee calculation. Therefore, the high water mark of
a scheme with performance fee that is calculated yearly should be reset to the scheme’s
NAV at the year end when the performance fee is calculated, regardless of whether a
performance fee accrues or crystallises.
vii) the performance fee should be calculated based on an appropriate benchmark such
as an index, a defined positive rate of return which may be fixed or variable or any
other factor given the scheme’s investment objectives and consistently applied.
b) The manager should consult the Authority if it intends to use a performance fee
calculation method other than those specified in chapter 3.6(a)(iv).
Disclosure requirements
c) Where performance fees are payable, the prospectus should contain disclosures on:
i) the fact that a performance fee is payable and to whom it is payable;
ii) the fact, if applicable, that a performance fee can be levied even if the return of the
scheme is negative;
iii) the maximum amount or percentage of the scheme’s NAV that the performance
fee might represent in an annual accounting period;
iv) illustrations, such as numerical examples, of how the performance fee is calculated;
and
v) whether the scheme:

A) achieves equalisation of performance fees; or
B) where it does not achieve equalisation of performance fees, to state the fact and
how the absence of equalisation may affect the amount of performance fees
borne by the participant.

3.7 The following “Illustration 1 and Illustration 2” has been entirely extracted from
Illustration 1: Fulcrum Fee Arrangement

Illustration 2: High Water Mark Arrangement

4. THE SCHEME
A. Name Of Scheme
4.1 The following contents in regard to “Name Of Scheme” has been entirely
a) The scheme’s name should:

i) be appropriate;
ii) not be undesirable; and
iii) not be misleading.
b) In assessing whether a name is undesirable or misleading, the Authority will consider

factors including whether the name:
i) is substantially similar to the name of another scheme;

ii) implies that the scheme has merits which are not, or might not be, justified;
iii) implies that the manager has particular qualities, which may not be justified;
iv) is inconsistent with the scheme's investment objective or approach;
v) implies that the scheme is not a collective investment scheme (for example,
describing the scheme as a "plan" or "account"); or
vi) might mislead prospective participants into thinking that persons other than the
manager are responsible for the scheme.
For the avoidance of doubt, the use of acronyms in names is permissible provided that
they are appropriate.
Guidance 1
The name of a scheme is appropriate if it reflects the scheme’s geographical focus, asset
type and sector focus and is in line with the scheme’s investment objective, approach
and investment universe. The use of acronyms which reflect an index provider, a credit
rating agency or geographical region (e.g. “MSCI”, “S&P” or “BRIC”) may be acceptable
if it is consistent with the scheme's investment objectives or approach.
Guidance 2
In assessing whether it is appropriate to include the term ‘fund-of-funds’ in the name of
a scheme, the Authority would consider it acceptable if the scheme’s primary investment
approach is to invest all or substantially all of its assets into five or more underlying
funds via the fund-of-funds investment approach.
Guidance 3
In the case where the scheme’s name includes or uses a term (e.g. “capital guaranteed”)
which belongs to any category of schemes that is prescribed in the Appendices, the
scheme should comply with those relevant guidelines. Conversely, if a scheme’s name
uses a term which is prescribed in the Appendices but does not comply with those
guidelines, the name would be deemed inappropriate.
c) The name of a scheme’s class of unit should not be undesirable or misleading.
d) The use of the following terms, or any other derivative or form of such terms, in a
scheme’s name and description is prohibited:
i) “capital protected”; and
ii) “principal protected”.

B. Prohibited Activities
4.2 The following contents in regard to “Prohibited Activities” has been entirely
A scheme should not engage in:
a) direct lending of monies;
b) the granting of guarantees;
c) underwriting; or
d) short selling except where this arises from financial derivatives which are invested in
accordance with sections 4 and 5 of Appendix 1.
C. Limited Liability
4.3 The following contents in regard to “Limited Liability” has been entirely extracted
from the “Code On Investment Schemes” from the MAS website:
The liability of participants should be limited to their investment in the scheme. For this
purpose, the trust deed of the scheme should contain a provision limiting the liability of
participants to their investments in the scheme.
D. Investment: Core Requirements
4.4 The following contents in regard to “Investment: Core Requirements” has been
website:
The core investment guidelines and borrowing limits which the scheme should adhere to
are set out in the Appendices. Where the scheme contains a novel or new structure, risk
or investment policy, the manager should consult the Authority prior to its application
for authorisation.
E. Advertisements
4.5 The following contents in regard to “Advertisements” has been entirely extracted
Advertisements in relation to a scheme should be prepared in accordance with the Code

of Best Practices in Advertising Collective Investment Schemes and Investment-Linked
Life Insurance Policies jointly issued by Investment Management Association of
Singapore and the Life Insurance Association. Illustrations of income statistics in
advertisements should also be prepared in accordance with the Guidance Notes on

Recommended Disclosures to Support the Presentation of Income Statistics in

Advertisements issued by the Investment Management Association of Singapore.
5. ACCOUNTS AND REPORTS
A. Accounts
5.1 The following contents in regard to “Accounts” has been entirely extracted from
5.1.1 The manager should prepare the half-yearly financial statements and the audited
financial statements, for the semi-annual report and annual report respectively, in the
manner prescribed by the Institute of Singapore Chartered Accountants in the Statement
of Recommended Accounting Practice 7: Reporting Framework for Unit Trusts.
5.1.2 The semi-annual report or annual report need not be prepared, audited (where
applicable) and sent when they cover:
a) a period ending three months or less from the start of the initial launch period of a
scheme. However, the first semi-annual and annual reports prepared, audited
(where applicable) and sent to participants should cover the period from the start
of the initial launch period; or
b) a period ending before the termination or maturity date of a scheme if they are due
to be sent to participants within one month prior to the termination or maturity
date.
Guidance
For example, the annual report for a scheme for the financial year ended 31 December
20X1 (i.e. due to be sent to participants on 31 March 20X2) need not be prepared,
audited and sent if the termination or maturity date of the scheme is on or before 30
April 20X2.
B. Reports
5.2 The following contents in regard to “Reports” has been entirely extracted from
The semi-annual report and annual report, based on a scheme’s financial year, should
contain the following (where relevant):
a) investments at market value and as a percentage of the scheme’s NAV as at the end
of the period under review classified by:
i) country;
ii) industry;
iii) asset class; and
iv) credit rating;

b) the top 10 holdings at market value and as a percentage of the scheme’s NAV as at
the end of the period under review and a year ago;
c) exposure to financial derivatives:
i) market value of financial derivative contracts and as a percentage of the scheme’s

NAV as at the end of the period under review;
ii) net gains or losses on financial derivative contracts realised during the period under
review; and
iii) net gains or losses on outstanding financial derivative contracts marked to market
as at the end of the period under review;
d) amount and percentage of the scheme’s NAV invested in other schemes as at the end
of the period under review;
e) amount and percentage of borrowings to the scheme’s NAV at the end of the period
under review;
f) amount of redemptions and subscriptions for the period under review;
g) amount of related-party transactions for the period under review;
h) the performance of the scheme and where applicable, the performance of the
benchmark, in a consistent format, covering the following periods of time: 3-month,
6-month, 1-year, 3-year, 5- year, 10-year and since inception of the scheme. Returns
should be calculated on a bid-to-bid basis with dividends reinvested at the bid price.
Where there has been a change in the benchmark used, this should also be disclosed;
i) expense ratios for the period under review and a year ago. A footnote should state
that the expense ratio does not include (where applicable) brokerage and other
transaction costs, performance fee, foreign exchange gains or losses, front or back
end loads arising from the purchase or sale of other schemes and tax deducted at
source or arising out of income received;
j) turnover ratios for the period under review and a year ago;
k) any material information that will adversely impact the valuation of the scheme such
as contingent liabilities of open contracts;
l) where the manager invests 30% or more of the scheme’s NAV in another scheme, the
following key information on the underlying scheme should be disclosed:
i) top 10 holdings at market value and as a percentage of the scheme’s NAV as at

the end of the period under review and a year ago;
ii) expense ratios for the period under review and a year ago. A footnote should state
(where applicable) that the expense ratio does not include brokerage and other
transaction costs, performance fee, foreign exchange gains or losses, front or back
end loads arising from the purchase or sale of other schemes and tax deducted at
source or arising out of income received; and
iii) turnover ratios for the period under review and a year ago;

Guidance
Where the underlying scheme is managed by a foreign manager which belongs to the
same group of companies as, or has a formal arrangement or investment agreement
with, the Singapore manager, the above information should be disclosed on the
underlying scheme. In other cases, such information on the underlying scheme should
be disclosed only if it is readily available to the Singapore manager.
m) a statement describing the soft dollars received from each broker which executed
transactions for the scheme. If the broker also executed trades for other schemes
managed by the manager, a statement to that effect may be included. The manager
should also confirm that the goods and services received were for the benefit of the
scheme, the trades were made on a best execution basis and there was no churning
of trades; and
n) where the scheme offers pre-determined payouts, an explanation on the calculation

of the actual payouts received by participants and any significant deviation from the
pre-determined payouts.
6. DEALING AND VALUATION
A. Dealing In Units
6.1 The following contents in regard to “Dealing In Units” has been entirely extracted
from the Code On Investment Schemes” from the MAS website:
The manager should deal in units in a scheme in accordance with the trust deed and the
prospectus, and in any event, at least one dealing day a month.
B. Suspension Of Dealings
6.2 The following contents in regard to “Suspension Of Dealings” has been entirely
a) The manager may suspend dealings in units only in exceptional circumstances, after
having determined that a suspension is in the best interest of participants.
Guidance
Difficulties in realising scheme assets or temporary shortfalls in liquidity may not, on
their own, be sufficient justification for suspension.
b) The manager should immediately notify participants and the Authority if the dealing
in units is suspended, stating the reasons for the suspension.
Guidance
The manager is considered to have notified the participants if a notice on the suspension
is sent to the distributors of the scheme for dissemination to the participants.

c) The suspension should cease as soon as practicable when the exceptional

circumstances cease to exist, and in any event, within 21 days of the commencement
of the suspension. The period of suspension may be extended if the manager satisfies
the trustee that it is in the best interest of participants for the dealing in units to remain
suspended. Such extension should be subject to weekly review by the trustee.
C. Resumption Of Dealings
6.3 The following contents in regard to “Resumption Of Dealings” has been entirely
The trustee should notify the Authority when the manager has resumed the dealing in
units. In addition, the manager should notify participants when the dealing in units has
resumed.
Guidance
The manager is considered to have notified the participants if a notice on the resumption
is sent to the distributors of the scheme for dissemination to the participants.
D. Valuation
6.4 The following contents in regard to “Valuation” has been entirely extracted from
Valuation of units in a scheme

a) The manager should issue, redeem or repurchase units in a scheme at a price arrived
at by dividing the scheme’s NAV by the number of units outstanding. The price of
units may be adjusted by adding or subtracting, as the case may be, fees and charges,
in compliance with the scheme’s prospectus or trust deed. Where a closed-end
scheme is listed on an approved or overseas exchange, the manager should issue,
redeem or repurchase units in a closed-end scheme in accordance with the applicable
listing requirements of the approved or overseas exchange.
b) The manager should ensure that the scheme’s NAV is calculated on a consistent basis
and in accordance with the manner prescribed by the Institute of Singapore Chartered
Accountants in the Statement of Recommended Accounting Practice 7: Reporting
Framework for Unit Trusts.
Guidance
Where third parties are appointed to perform valuation services (such as valuation
agents), the manager should conduct initial and periodic due diligence on such third party
valuation service providers.
c) At the maturity of capital guaranteed schemes which comply with Appendix 4: Capital
Guaranteed Funds, the units should be redeemed at a price equal to the higher of the
guaranteed amount and the scheme’s NAV, divided by the number of units
outstanding.
d) Chapter 6.4(a) does not apply during the initial offer period of the scheme.

Valuation of assets of a scheme

e) The value of the assets of a scheme, in the case of quoted investments, should be
based on:
i) the official closing price or last known transacted price on the organised market on
which the investment is quoted; or
ii) the transacted price on the organised market on which the investment is quoted at
a cut-off time specified in the scheme’s prospectus and applied consistently by the
manager;
unless such price is not representative or not available to the market. The manager should
be responsible for determining, with due care and in good faith, whether the price should
be considered representative.
f) The value of the scheme’s assets, in the case of unquoted investments and quoted
investments where the transacted prices are not representative or not available to the
market, should be based on the fair value. The fair value should be the price that the
scheme would reasonably expect to receive upon the current sale of the investment.
Fair value should be determined with due care and in good faith, and the manager
should ensure that the basis for determining the fair value of the investment is
documented.
g) Except for quoted investments, all the investments of a scheme should be valued by
a person approved by the trustee as qualified to value such assets.
h) When the market value or fair value of a material portion of the scheme’s assets
cannot be determined, the manager should suspend valuation and dealing in the units
in the scheme.
Basis other than market quotations

i) The value of the assets of a scheme may be determined using methods other than
those specified in chapter 6.4(e) and (f) above provided that the trustee agrees with
the alternative method. Such a valuation may be performed by a person approved by
the trustee as qualified to value the scheme’s investments.
Frequency of valuation
j) The manager should ensure that the units in a scheme are valued every business day.
Where the scheme:
i) does not offer dealing every business day, it should be valued every regular dealing
day, but in any event, at least once a month; and
ii) is a property fund which complies with Appendix 6: Property Funds, it should have
a full valuation at least once a year.
k) The manager should, subject to chapter 6.4(j), publish the value of a unit of the
scheme at least once every dealing day.
Rounding Differences
l) When calculating the price at which the units in a scheme may be issued, redeemed
or repurchased, it may be necessary to round up or down the resultant figure in order to
obtain a finite dollar value. (Please see Illustration 3.) When calculating the number of
units to be issued to a participant, it may also be necessary to round up or down the
resultant figure in order to obtain a finite number of units. Rounding differences arising

from calculating the price of units in a scheme or arising from calculating the number of
units to be issued should be credited to the scheme.
6.5 The following “Illustration 3” has been entirely extracted from the “Code On
Investment Schemes” from the MAS website:
Illustration 3: Crediting of Rounding Differences
Example: Crediting of Rounding Differences
Price per unit = NAV/Number of units outstanding

= $122.4 million / 100 million
= $1.224
Assuming a participant with 10,000 units redeems all his units at $1.22 per unit, the
scheme should then be credited with a rounding difference of:
$(1.224 – 1.22) x 10,000 = $0.004 x 10,000

= $40
E. Valuation Errors and Compensation
6.6 The following contents in regard to “Valuation Errors and Compensation” has
been entirely extracted from the “Code On Investment Schemes” from the MAS
website:
a) When a manager becomes aware of an error in the calculation of a scheme’s NAV per
unit, the manager should notify both the Authority and the trustee by using the
template set out in Illustration 4 of the error as soon as practicable. A revised valuation
should be performed, by the person responsible for the valuation, for each valuation
date during the period when the error occurred to ascertain the size of the error.
b) When a valuation error represents 0.5% or more of the scheme’s NAV per unit after
adjustment for the error, the manager should compensate:
i) affected participants and notify them of the compensation made; and

ii) the scheme for any losses incurred as a result of the valuation error.
The requirement to compensate participants does not apply if the amount of

compensation due to any single participant does not exceed $20. For the avoidance of
doubt, the requirement to compensate the scheme for any losses incurred would apply
in all circumstances where the valuation error represents 0.5% or more of the scheme’s
NAV per unit.
c) When a valuation error represents less than 0.5% of the scheme’s NAV per unit, there
is no requirement for the manager to compensate participants or the scheme for any
losses incurred by them as a result of the valuation error. However, if the manager
chooses to compensate one or more participants, then the manager should
compensate all other participants in the scheme on the same basis.

d) The manager should not pay or cause to be paid from the scheme any expenses
incurred as a result of effecting compensation for a valuation error.
e) The trustee should notify the Authority when the manager has completed such
compensation satisfactorily.
6.7 The following “Illustration 4” has been entirely extracted from the “Code On
Illustration 4: Valuation Error Report Template
VALUATION ERROR REPORT TEMPLATE
The valuation error report should be made using the manager’s company letterhead and
sent via electronic means. The report should contain the following information:
1. State the name of the scheme and class(es) of units affected by valuation error.
2. Describe the nature of the error (e.g. overvalued or undervalued) and state the
magnitude of error as a percentage of the scheme’s Net Asset Value (NAV).
3. Attach a calculation of the valuation error.
4. State when and how the valuation error was discovered.
5. Provide detailed reasons for the valuation error.
6. Name the entities responsible for the valuation error.
7. State the time period over which the valuation error occurred.
If compensation (i.e. valuation error represents 0.5% or more of the scheme’s NAV per
unit) is required:
8. State the number of affected Singapore participants (as recorded in the fund
register) who (a) subscribed; and (b) redeemed, during the time period over which
the valuation occurred, if any.
9. State the amount of compensation to be paid to (a) participants; and (b) the
scheme, if any.
10. State the name of the entity that pays for the compensation.
11. Attach a calculation of the total compensation to be made.
12. Describe the measures taken, or to be taken, to improve internal controls and
prevent the occurrence of similar incidents.
7. BREACHES
A. Rectification
7.1 The following contents in regard to “Rectification” has been entirely extracted
The manager should take all necessary action to rectify any breach of the Code as soon
as practicable. The manager should not enter into any transaction that would increase
the extent of the breach.

B. Notification
7.2 The following contents in regard to “Notification” has been entirely extracted
a) The manager should inform the Authority within three business days after it becomes
aware of any breach of the guidelines or limits set out in Part I and Part II of this Code.
For the avoidance of doubt, this requirement also applies to the obligation of the
trustee under regulation 7(1)(a) of the SFR.
b) Notwithstanding chapter 7.2(a), any breach as a result of any:
i) appreciation or depreciation in the value of the scheme’s underlying investments;

ii) redemption of units or payments made from the scheme;
iii) change in the capital of a company; Guidance Examples of changes in the capital
include changes in the total outstanding shares of a company arising from the
issuance of (pro-rata) rights or bonuses.
iv) reduction in the weight of a constituent in the benchmark being tracked by a
scheme; or
v) downgrade in or cessation of a credit rating,
need not be reported to the Authority as long as such breach is rectified in accordance
with chapter 7.1 but no later than three months from the date of the breach unless
otherwise specified in Part I of this Code. This period may be extended if the manager
satisfies the trustee that it is in the best interest of participants. Such extension should
be subject to monthly review by the trustee.
8. RECOGNISED SCHEMES AND AUTHORISED SCHEMES WHICH FEED INTO AN

UNDERLYING SCHEME
A. Disclosure In Marketing Material
8.1 The following contents in regard to “Disclosure In Marketing Material” has been
website:
a) Where a recognised scheme or the underlying scheme which an authorised scheme

feeds into intends to use or invest in financial derivatives, a prominent statement
drawing attention to this intention should be included in the marketing material of
the recognised scheme or authorised scheme which feeds into an underlying
scheme.
b) Where the NAV of a recognised scheme or the underlying scheme which an

authorised scheme feeds into is likely to have a high volatility due to its investment
policies or portfolio management techniques, a prominent statement drawing
attention to this possibility should be included in the marketing material of the
recognised scheme or authorised scheme which feeds into an underlying scheme.

B. Ongoing Notification
8.2 The following contents in regard to “Ongoing Notification” has been entirely
a) Where the home financial supervisory authority of a recognised scheme or the

underlying scheme which an authorised scheme feeds into imposes or varies any
condition or restriction in relation to its authorisation, the Authority should be
informed as soon as practicable, but no later than 14 days after the condition or
restriction has been imposed or varied in the case of a recognised scheme or no later
than 14 days after the responsible person of the authorised scheme which feeds into
an underlying scheme is notified of the condition or restriction so imposed or varied.
b) The documentation of the scheme’s risk management process (if applicable) should
be submitted to the Authority whenever it is revised. The revised documentation
should be submitted to the Authority as soon as practicable, but no later than one
month after it has been filed with and approved by the home financial supervisory
authority in the case of a recognised scheme or no later than one month after the
responsible person of the authorised scheme which feeds into an underlying scheme
is notified of the revised documentation of the underlying scheme.
9. CORE INVESTMENT REQUIREMENTS FOR ALL AUTHORISED SCHEMES
9.1 All non-specialised authorised schemes (excluding property funds and hedge
funds) are required to comply with the core investment requirements as set out
in Appendix 1 of the Code. There are also requirements specific to money market
funds, hedge funds, capital guaranteed funds, index funds and property funds
which have their own set of requirements (Appendices 2 to 6 of the Code
respectively).
9.2 For the purpose of this study guide, we will only cover the key core investment
requirements relating to capital guaranteed funds and hedge funds to allow the
reader to have a general idea of the revised CIS Code. Apart from these funds,
the revised CIS Code also provides guidelines for money market funds, index
funds and property funds which will not be covered in this study guide. Readers
are strongly encouraged to refer to the appendices of the revised CIS Code for
further details.
A. Permissible Investments
9.3 The following contents in regard to “Permissible Investments” has been entirely
1 Permissible Investments
1.1 The scheme’s underlying investments may only consist of the following permissible
investments:
a) transferable securities;

b) money market instruments;

c) eligible deposits;
d) units in other schemes;
e) financial derivatives; and
f) shares or securities equivalent to shares that are not listed for quotation or quoted and
have not been approved for listing for quotation or quotation on an organised
exchange.
1.2 For the purpose of paragraph 1.1,

a) “transferable securities” refer to:
i) shares or securities equivalent to shares; and
Guidance
Shares include units in a business trust.
ii) bonds or other securitised debt instruments,

that meet the requirements of paragraph 1.3 but do not include:
A) money market instruments; or

B) any security the title to which cannot be transferred or can be transferred only
with the consent of a third party.
b) “eligible deposits” refer to deposits with banks licensed under the Banking Act (Cap.
19), finance companies licensed under the Finance Companies Act (Cap. 108),
Authority of Singapore Act (Cap. 186) or any other deposit-taking institution licensed
under an equivalent law in a foreign jurisdiction.
Requirements of transferable securities

1.3 Transferable securities should meet the following requirements:
a) the maximum potential loss which may be incurred as a result of the investment is
limited to the amount paid for it;
b) the investment is liquid;
c) the investment is subject to reliable and verifiable valuation on a daily basis; and
d) there is appropriate information available to the market on the investment or, where
relevant, on the portfolio
Guidance
In determining whether information on a transferable security is appropriate, the manager
should consider if the information available on the market is regular and accurate, as well
as sufficient to analyse the investment. For example, reliance on annual or financial
reports is acceptable if the manager is of the view that it is appropriate.
Requirements on investments in other schemes

1.4 A scheme may invest in other schemes only if the underlying scheme is:
a) an authorised or recognised scheme;
Guidance
Notwithstanding paragraph 1.4(a), the scheme should not invest in an underlying scheme
which is a hedge fund or fund-of-hedge funds even if the underlying scheme complies
with Appendix 3 of the Code.

b) a scheme which:
i) is constituted and regulated in a jurisdiction where the laws and practices afford to
participants in Singapore protection at least equivalent to that afforded to
participants of schemes which are wholly managed in Singapore;
ii) adheres to investment and borrowing guidelines which are substantially similar to
those set out in the relevant Appendices of the Code; and
iii) has a manager that is reputable and supervised by an acceptable financial

supervisory authority; or
c) a scheme which is invested in permissible investments, commodities or real estate,

meets the requirements set out in paragraph 1.3(a) to (d) and, for the purposes of
this paragraph, the units in the scheme are listed for quotation and traded on an
organised exchange.
Guidance
Restricted schemes may be acceptable as underlying investments if they can meet the
conditions in paragraph 1.4(b) or (c).
1.5 A scheme may feed substantially into an underlying fund-of-funds but the underlying
fund-offunds should invest in other schemes directly and not through another fund-
of-funds.
Requirements of financial derivatives

1.6 Financial derivatives should meet the following requirements:
a) the underlying consists of instruments referred to in paragraph 1.1, commodities,

indices which meets the requirements in Appendix 5: Index Funds, interest rates,
foreign exchange rates or currencies. In the case of financial derivatives on
commodities, such transactions should be settled in cash at all times. The manager
should also undertake in the trust deed to settle such transactions in cash and disclose
the fact in the prospectus;
b) the financial derivatives are liquid;
c) the financial derivatives are subject to reliable and verifiable valuation on a daily basis
and can be sold, liquidated or closed by an offsetting transaction at any time at their
fair value; and
d) the financial derivatives should not result in the delivery of investments other than
those described in paragraph 1.1(a) to (f).
OTC financial derivatives

1.7 In the case of OTC financial derivatives, reliable and verifiable valuation stated in
paragraph 1.6(c) of this Appendix refers to:
a) a valuation made by the manager based on a current market value; or
b) where such value is not available, a fair value based on an appropriate valuation model
which is checked at an appropriate frequency by an independent party. The valuation
by the manager should not be based solely on a valuation provided by the counterparty

to the transaction. Guidance The party who carries out the verification should be
independent of the counterparty as well as the manager’s fund management function.
B. Spread of Investments
9.4 The following contents in regard to “Spread of Investments” has been entirely
2 Spread of Investments Single entity limit and group limit
Single entity limit and group limit

2.1 A scheme should comply with the following limits:
a) Investments in:
i) transferable securities; or
ii) money market instruments issued by a single entity should not exceed 10%
of the scheme’s NAV (“single entity limit”).
b) Aggregate investments in, or exposures to, a group of entities through:
i) transferable securities;
ii) money market instruments;
iii) eligible deposits; and
iv) counterparty risk exposures arising from the use of OTC financial derivatives
should not exceed 20% of the scheme’s NAV (“group limit”). For the purposes of
this paragraph, a group of entities refers to an entity, its subsidiaries, fellow
subsidiaries and its holding company.
Guidance 1
Investments in transferable securities and money market instruments issued by a
trust should be included in the single entity limit and group limit.
Guidance 2
The group of entities referred to in the group limit also applies to aggregate
investments in, or exposures to, special purpose vehicles (SPVs) where the
substance of the relationship between a sponsor and its SPV, determined in
accordance with the Interpretation of Financial Reporting Standard 12, indicates
that the SPV is controlled by that sponsor.
Short-term deposits
2.2 The group limit does not apply to placements of eligible deposits arising from:
a) subscription monies received at any point in time pending the commencement of

investment by the scheme; or
b) liquidation of investments prior to the termination or maturity of a scheme, where

the placing of these monies with various institutions would not be in the interests
of participants.

Benchmark limit
2.3 Where the scheme and its reference benchmark comply with sections 4 and 5 of
Appendix 5: Index Funds, the scheme may invest in a transferable security that is
a constituent of the reference benchmark, up to a single entity limit as specified
in paragraph 2.1(a) of this Appendix or two percentage points above the
benchmark weight, whichever is higher. Where the foregoing single entity limit is
in excess of the limit in paragraph 2.1(a) of this Appendix, the group limit of 20%
may be raised to 25% of the scheme’s NAV.
Government and other public debt securities / money market instruments

2.4 The single entity limit of 10% may be raised to 35% of the scheme’s NAV where:
a) the issuing entity or trust is, or the issue is guaranteed by, either a government,
government agency or supranational, that has a minimum long-term rating of BBB
by Fitch, Baa by Moody’s or BBB by Standard and Poor’s (including such sub-
categories or gradations therein); and
b) except for schemes with a fixed maturity, not more than 20% of the scheme’s
NAV may be invested in any single issue of transferable securities or money
market instruments by the same entity or trust.
2.5 If there is a downgrade in rating to that below the minimum rating as stated in
paragraph 2.4(a), or if the rating agencies no longer rate the entity or the
guarantor, the single entity limit should revert to 10%.
2.6 The single entity limit of 10% does not apply where:
a) the issuing entity or trust is, or the issue is guaranteed by, either a government,
government agency or supranational, that has a minimum long-term rating of AA
by Fitch, Aa by Moody’s or AA by Standard and Poor’s (including such sub-
categories or gradations therein); and
b) except for schemes with a fixed maturity, not more than 20% of the scheme’s
NAV may be invested in any single issue of transferable securities or money
market instruments by the same entity or trust.
2.7 If there is a downgrade in rating to that below the minimum rating as stated in
paragraph 2.6(a) of this Appendix, or if the rating agencies no longer rate the
entity or the guarantor, the single entity limit as specified in paragraph 2.1(a) or
2.4 of this Appendix, as the case may be, should apply accordingly.
Unrated and non-investment grade corporate debt securities

2.8 The single entity limit of 10% in paragraph 2.1(a) for bonds and other securitised
debt instruments is lowered to 5% of the scheme’s NAV if the issuing entity or
trust:
a) is not rated; or
b) has a long-term rating below that of BBB by Fitch, Baa by Moody’s or BBB by
Standard and Poor’s (including such sub-categories or gradations therein).
2.9 Notwithstanding paragraph 2.8(a), the manager may rely on:

a) the rating of an unrated issuer’s parent company provided that an explicit

guarantee by the parent company for the issuer is in place; or
b) its internal rating of an unrated issuer if the manager has satisfied the trustee that
its internal rating is comparable to a rating issued by Fitch, Moody’s or Standard
& Poor’s.
Guidance
For the purpose of paragraph 2.9(b), the trustee may consider the manager’s internal
rating methodology
Commodity-backed debt securities

2.10 A scheme may invest in debt securities that are undated, secured by physical
commodities, listed for quotation and traded on an organised exchange, subject
to the limit in paragraph 2.13.
Investment in other schemes

2.11 A scheme may invest up to 100% of its NAV in another scheme only if the
underlying scheme satisfies paragraph 1.4(a) or (b).
2.12 Investments in an underlying scheme which does not satisfy paragraph 1.4(a) or
(b) but satisfies:
a) paragraph 1.4(c) and is invested in permissible investments or real estate should

not exceed 10% of the scheme’s NAV; or
Guidance
For example, investments in a real estate investment trust which do not satisfy
paragraph 1.4(a) or (b) but satisfy the requirements in paragraph 1.3(a) to (d) should
not exceed 10% of the scheme’s NAV.
b) paragraph 1.4(c) and is invested directly in commodities is subject to the limit in

paragraph 2.13.
Guidance
Investments in a commodity-backed exchange-traded fund which satisfies the
requirements in paragraph 1.3(a) to (d) will be subject to the limit in paragraph 2.13.
Alternative exposure limit

2.13 Investments in:
a) shares or securities equivalent to shares that are not listed for quotation or quoted,
and have not been approved for listing for quotation or quotation, on an organised
exchange;
b) debt securities which are undated, secured by physical commodities, listed for
quotation and traded on an organised exchange; and
c) underlying schemes which do not satisfy paragraph 1.4(a) or (b) but satisfy
paragraph 1.4(c) and are invested directly in commodities,
are subject to an aggregate limit of 10% of a scheme’s NAV.
Concentration limit
2.14 A scheme should not invest in more than:

a) 10% of the total outstanding shares, or securities equivalent to shares, of any

single entity or trust;
b) 10% of each individual issuance of debt securities of any single issuing entity or
trust, where such issuance is not part of a debt issuance programme; or where
debt securities are issued under a debt issuance programme, 20% of each tranche,
subject to a limit of 10% of the overall programme size; and
c) 10% of the money market instruments of a single issuing entity or trust.
3.1 Global Exposure
3.1 The global exposure of a scheme to financial derivatives or embedded financial

derivatives should not exceed 100% of the scheme’s NAV at all times.
3.2 The manager should calculate the global exposure of a scheme based on the:
a) Commitment Approach; or
b) Value at Risk (VaR) Approach (including any other variants of the VaR Approach),
subject to prior consultation with the Authority.
Commitment Approach
3.3 The global exposure of a scheme is calculated as the sum of:
a) the absolute value of the exposure of each individual financial derivative not
involved in netting or hedging arrangements;
b) the absolute value of the net exposure of each individual financial derivative after
netting or hedging arrangements; and
c) the sum of the values of cash collateral received pursuant to:
i) the reduction of exposure to counterparties of OTC financial derivatives; and

ii) EPM techniques relating to securities lending and repurchase transactions,
and that are reinvested.
Netting arrangements
3.4 Netting arrangements may be taken into account to reduce a scheme’s exposure
to financial derivatives.
3.5 A scheme may net positions between:
a) financial derivatives on the same underlying assets, even if the maturity dates are
different; or
b) financial derivatives and the same corresponding underlying asset, if those

underlying assets are transferable securities, money market instruments or units
in other schemes.
Hedging arrangements
3.6 Hedging arrangements may be taken into account to reduce a scheme’s exposure
to financial derivatives.

3.7 The marked-to-market value of transferable securities, money market instruments

or units in schemes involved in hedging arrangements may be taken into account
to reduce a scheme’s exposure to financial derivatives.
3.8 For the purposes of paragraphs 3.6 and 3.7 of this Appendix, the hedging
arrangement should:
a) not be aimed at generating a return;
b) result in an overall verifiable reduction of the risk of the scheme;
c) offset the general and specific risks linked to the underlying being hedged;
d) relate to the same asset class being hedged; and
e) be able to meet its hedging objective in all market conditions.
Guidance
Strategies which seek to offset the beta (market risk) but do not aim to offset the
specific risks linked to the underlying investment and keep the alpha would not comply
with the requirements in paragraph 3.8. Such strategies would include market neutral
or long/short strategies.
3.9 Notwithstanding paragraph 3.8, financial derivatives used for the purposes of
hedging currency exposure may be netted when calculating the global exposure.
Exposure arising from reinvestment of cash collateral

3.10 A scheme which reinvests cash collateral received from counterparties of OTC
financial derivatives, securities lending or repurchase transactions to generate a
return in excess of high quality 3-month government bonds should include in its
global exposure calculations the cash amount reinvested.
VaR Approach or its variants

3.11 The manager may apply to the Authority to use the VaR Approach or its variants
to calculate the global exposure of a scheme instead of the Commitment
Approach.
3.12 The global exposure of the scheme should also take into account exposures
arising from the reinvestment of cash collateral.
3.13 The manager should comply with guidelines in Annex 1B in lieu of paragraphs 4.9
to 4.14 of this Appendix. Risk management process
3.14 In its submission, the manager should provide the Authority with the following
information in the risk management process document:
a) details of all financial derivatives to be used in the scheme, the purpose of the use
and the risks the financial derivatives might pose to the scheme;
b) description of the valuation and pricing methodology for financial derivatives;
c) description of the risk management processes and systems used in relation to

financial derivatives;

d) description of the VaR methodology (including whether the model has been
verified by an independent party such as a financial supervisory authority) and any
other risk measures used;
e) details of the entities, units and personnel responsible for risk management;
f) description of systems and technology used, including description of stress testing

and backtesting methodologies;
g) details of the manager’s policies on expertise required to trade financial derivatives

as well as manage their related risks including how they are monitored and
validated; and
h) description of how the relevant guidelines in the Code are adhered to.
C. Use of Financial Derivatives
9.5 The following contents in regard to “Use of Financial Derivatives” has been
website:
4 Use of Financial Derivatives
Spread of underlying assets

4.1 The exposure of a scheme to the underlying assets of financial derivatives should
be sufficiently diversified on a portfolio basis.
4.2 In the case where the underlying assets are:
a) transferable securities, money market instruments, eligible deposits or units in other

schemes, the limits in section 2 of this Appendix, except for the concentration
limits, apply;
b) commodities, the limits in section 4 of Appendix 5: Index Funds apply; and
Guidance
In determining whether the underlying assets of financial derivatives are sufficiently
diversified, exposures to commodities through investments referred to in paragraph 2.10
and paragraph 2.12(b) of this Appendix should also be included.
c) indices, paragraphs 4.2(a) and (b) of this Appendix apply to each constituent of
the index, where applicable, on a portfolio basis.
Embedded financial derivatives

4.3 Where a transferable security or money market instrument embeds a financial
derivative, the requirements in sections 3 and 4 apply to the embedded financial
derivative.

4.4 Where the counterparty risk of the embedded derivative is or may be transferred
to the scheme, the requirements in section 5 also apply to the embedded financial
derivative.
4.5 A transferable security or money market instrument is considered to be embedding

a financial derivative if it contains a component which fulfils the following criteria:
a) the component results in some or all of the cash flows that otherwise would be
required by the transferable security or money market instrument which functions
as host contract to be modified according to a variable including but not limited to
a specified interest rate, price of a financial instrument, foreign exchange rate,
index of prices or rates, credit rating or credit index, and therefore vary in a way
similar to a stand-alone financial derivative;
b) the component’s economic characteristics and risks are not closely related to the
economic characteristics and risks of the host contract; and
c) the component has a significant impact on the risk profile and pricing of the
transferable security or money market instrument.
4.6 A transferable security or a money market instrument should not be regarded as

embedding a financial derivative where it contains a component which is
contractually transferable independently of the transferable security or the money
market instrument. Such a component should be deemed to be a separate financial
instrument.
4.7 Where an instrument is structured as an alternative to an OTC financial derivative

or tailormade to meet the specific needs of a scheme, the instrument should be
deemed as embedding a financial derivative.
Cover
4.8 A transaction in financial derivatives which gives rise, or may give rise, to a future
commitment on behalf of a scheme should be covered as follows:
a) in the case of financial derivatives which will, or may at the option of the scheme,
be cash settled, the scheme should hold, at all times, liquid assets sufficient to
cover the exposure;
Guidance 1
The term “exposure” refers to any transaction in financial derivatives that may give rise
to a future commitment by the scheme to make contractually required payments. As
such, exposure would include, among others, any cash settlement of contracts, margin
calls, and interest payments.
Guidance 2
Liquid assets refer to cash or permissible investments that can satisfy the requirements
in chapter 1.2(i) of the Code. The quantity of such liquid assets held as cover should
however be determined after the application of appropriate safeguards such as haircuts.
b) in the case of financial derivatives which will, or may at the option of the
counterparty, require physical delivery of the underlying assets, the scheme should
hold the underlying assets in sufficient quantities to meet the delivery obligation at
all times. If the manager deems the underlying assets to be sufficiently liquid, the
scheme may hold as coverage other liquid assets in sufficient quantities, provided

that such alternative assets may be readily converted into the underlying asset at
any time to meet the delivery obligation.
Exposure to financial derivatives – Commitment Approach

4.9 The exposure of the scheme to financial derivatives under the Commitment
Approach in paragraph 3.3 of this Appendix is described below. Exposure is
determined by converting the positions in financial derivatives into equivalent
positions in the underlying assets.
Calculation methods
4.10 Table 1 below sets out the methods for calculating the exposure of various financial
derivatives under the Commitment Approach.
4.11 The exposure to financial derivatives under the Commitment Approach should be
converted into the base currency of the scheme by using the spot rate.
4.12 Where a currency financial derivative has two legs that are not in the base currency
of the scheme, the exposure to both legs should be accounted for under the
Commitment Approach.
4.13 For financial derivatives not covered in Table 1 below or where the methods do not
provide an adequate and accurate assessment of the risks relating to the financial
derivatives, the manager should inform and justify to the Authority of the
alternative method applied.
4.14 The calculation methodology of the alternative method referred to in paragraph

4.13 should be based on the market value of the equivalent position in the
underlying asset, although the notional value or price of the financial derivative
may be used if it is more conservative. Where a more conservative calculation is
used, hedging and netting arrangements, as set out in paragraphs 3.4 to 3.9,
should not be taken into account to reduce the exposure to the financial derivative
involved if it results in an underestimation of the global exposure.
Guidance
Financial derivatives which do not qualify for the standard conversion method are, for
instance, digital options, barrier options, or more complex options with a highly volatile
delta.

Types of financial Method for calculating exposure

derivatives
Plain Vanilla Options (Include bought/sold puts and calls)
Bond option No. of contracts x face value x underlying price x delta
Currency option Contract’s notional value (of currency leg) x delta
Equity option No. of contracts x no. of equity shares x underlying price x delta
Index option No. of contracts x contract’s notional value x index level x delta
Interest rate option Contract’s notional value x delta
Warrant and Rights No. of shares/bonds x market value of underlying referenced
asset x delta
Futures
Bond future No. of contracts x contract’s notional value x market value of
the future; or
No. of contracts x contract’s notional value x market price of the

cheapest bond to deliver, adjusted by the conversion factor
Currency future No. of contracts x contract’s notional value
Equity future No. of contracts x contract’s notional value x market price of
underlying equity share
Index future No. of contracts x value of 1 point x index level
Interest rate future No. of contracts x contract’s notional value
Types of financial Method for calculating exposure

derivatives
Commodity future No. of contracts x contract’s notional value
Swaps
Contract for differences No. of shares/bonds x market value of underlying
referenced instrument
Credit default swap Protection buyer: market value of the underlying
reference asset
Protection seller: the higher of the market value of the

underlying reference asset or the notional value of the
credit default swap
Currency swap Notional value of currency leg(s)
Interest rate swap Market value of underlying; or
Notional value of the fixed leg
Total return swap Underlying market value of reference asset(s)
Forwards
Forward rate agreement Notional value
FX forward Notional value of currency leg(s)
Table 1 : Calculation Methods
End of Paragraph 9.5 of this chapter

D. Counterparty of Financial Derivatives
9.6 The following contents in regard to “Counterparty of Financial Derivatives” has

been entirely extracted from the “Code On Investment Schemes” from the MAS
website:
5 Counterparty of Financial Derivatives
OTC financial derivatives

5.1 The counterparty of an OTC financial derivative should be subject to prudential
supervision by a financial supervisory authority in its home jurisdiction.
5.2 Subject to the group limit in paragraph 2.1, the maximum exposure of a scheme to
the counterparty of an OTC financial derivative may not exceed:
a) in the case of an eligible financial institution described in paragraph 5.3, 10% of

the scheme’s NAV; or
b) in any other case, 5% of the scheme’s NAV
(“counterparty limits”).
5.3 For the purpose of paragraph 5.2 of this Appendix, an eligible financial institution
should have a minimum long-term rating of A by Fitch, A by Moody’s or A by
Standard and Poor’s (including subcategories or gradations therein). Alternatively,
where the financial institution is not rated, the scheme should have the benefit of
a guarantee by an entity which has a long-term rating of A (including subcategories
or gradations therein).
5.4 The exposure to a counterparty of an OTC financial derivative should be measured

based on the maximum potential loss that may be incurred by the scheme if the
counterparty defaults and not on the basis of the notional value of the OTC financial
derivative.
Calculation method
5.5 The exposure to a counterparty of an OTC financial derivative should be calculated
as follows:
a) Stage 1: Determine the current replacement cost of each OTC financial derivative
by carrying out a valuation at market price.
b) Stage 2: Derive the “add-on factor” by multiplying the notional principal amount or
the market value of the underlying asset of the OTC financial derivative, whichever
is more conservative, by the percentages in Table 2 to reflect the potential credit
risk:
Residual Term Interest rate Exchange rate Equity derivative Other

contracts contracts contracts contracts
1 year or less 0% 1% 6% 10%
> 1 year and 0.5% 5% 8% 12%
< 5 years
> 5 years 1.5% 7.5% 10% 15%
Table 2: Add-on Factors

i) For total return swaps and credit default swaps, the relevant percentage is
10% regardless of the residual term.
ii) In the case of credit default swaps where the scheme acts as protection
seller, the relevant percentage may be set at 0% unless the credit default
swap contract incorporates a provision on closeout upon insolvency. In the
latter case, the amount to be taken into account for the add-on factor will be
limited to the premium or interest to be received (i.e. unpaid premium at the
time of the calculation).
c) The counterparty exposure arising from an OTC financial derivative contract is the
sum of the positive replacement cost computed in Stage 1 and the add-on factor
computed in Stage 2.
d) The total exposure to a single counterparty, or group of counterparties, is

calculated by summing the exposures arising from all OTC financial derivative
transactions entered into with the same counterparty or group. Recognition of
collateral
5.6 The exposure to a counterparty may be construed as being lower if collateral is

tendered to the scheme. The collateral should meet the following requirements:
a) it is marked-to-market daily;
b) it is liquid;
c) it is taken into account, on a portfolio basis, for the purposes of the requirements
on spread of investments in section 2 of this Appendix;
d) it is not issued by the counterparty or its related corporations;
e) it is held by a custodian which is:

i) a financial institution subject to prudential supervision by a financial
supervisory authority in its home jurisdiction; and
ii) independent of the counterparty;
f) it is legally secured from the consequences of the failure of the custodian,

counterparty and their related corporations; and
g) it cam be fully enforced by the trustee at any time;
h) it is free from all prior encumbrances; and
i) it cannot be sold or given as security interests
Guidance 1
Security interests include, among others, charges, pledges or hypothecations.
Guidance 2
For the purpose of paragraph 5.6(i) of this Appendix, the collateral cannot be sold or
given as security interests except where it is required by applicable laws and regulatory
requirements in the jurisdiction where the collateral is held.

5.7 Collateral may only consist of:
a) cash;
b) money market instruments; or
c) bonds.
5.8 For the purpose of paragraph 5.7 of this Appendix, money market instruments and
bonds should be issued by, or have the benefit of a guarantee from, a government,
government agency or supranational, that has a long-term rating of AAA by Fitch,
Aaa by Moody’s or AAA by Standard and Poor’s (including sub-categories or
gradations therein).
5.9 Notwithstanding paragraph 5.7 of this Appendix, securitised debt instruments as

well as money market instruments or bonds with embedded financial derivatives
are not eligible as collateral.
5.10 The manager should ensure that it has the appropriate legal expertise to put in
place proper collateral arrangements, as well as appropriate systems and
operational capabilities for proper collateral management.
5.11 Additional collateral should be provided to the scheme no later than the close of
the next business day if the current value of the collateral tendered is insufficient
to satisfy the counterparty limits in paragraph 5.2.
Guidance
A marked-to-market shortfall on day T should be rectified by the receipt of additional
collateral by T+1 business days. For the purpose of this guidance, business days should
be based on those of the counterparty’s.
Reinvestment of collateral
5.12 Collateral obtained in the form of cash by the scheme may be reinvested subject to
the following requirements:
a) it is invested in financial instruments consistent with paragraphs 5.7 and 5.8 of

this Appendix;
b) the investments are taken into account, on a portfolio basis, for the purposes of
the requirements on spread of investments in section 2 of this Appendix;
c) the investments are held by a custodian which is:
i) a financial institution subject to prudential supervision by a financial supervisory

authority in its home jurisdiction; and
d) the investments are legally secured from the consequences of the failure of the
custodian, counterparty and their related corporations;
e) the investments cannot be sold or given as security interests; and
f) the manager is reasonably satisfied that any investment of cash collateral by the
scheme will enable the scheme to meet its redemption obligations and other
payment commitments.

5.13 Notwithstanding paragraph 5.12 of this Appendix, the cash collateral obtained
should not be invested in transferable securities issued by, or placed on deposit
with, the counterparty or its related corporations.
5.14 Non-cash collateral obtained by the scheme may not be reinvested.
Recognition of netting
5.15 For the purpose of paragraph 5.2 of this Appendix, a scheme may net its OTC
financial derivative positions with the same counterparty through bilateral contracts
for novation or other bilateral agreements between the scheme and its counterparty
provided that such netting arrangements satisfy the following conditions:
a) in the case of a bilateral contract for novation, mutual claims and obligations are
automatically amalgamated in such a way that this novation fixes one single net
amount each time novation applies and thus creates a legally binding, single new
contract extinguishing former contracts;
b) the scheme has a netting arrangement with its counterparty which creates a single
legal obligation, covering all included transactions, such that, in the event of the
counterparty's failure to perform owing to default, bankruptcy, liquidation or any
other similar circumstance, the scheme would have a claim to receive or an
obligation to pay only the net sum of the positive and negative mark-to-market
values of the individual included transactions;
c) the manager obtains written and reasoned legal opinions to the effect that, the
netting arrangement is legally enforceable by the scheme against its counterparty,
and in particular, in the event of a legal challenge, the relevant courts and
administrative authorities would find that the scheme's claims and obligations
would be limited to the net sum, as described in paragraph 5.15(b), under:
i) the law of the jurisdiction in which the counterparty is incorporated and, if a

foreign branch of an entity is involved, also under the law of the jurisdiction in
which the branch is located;
ii) the law that governs the individual included transactions; and
iii) the law that governs the netting agreement;
d) the manager has procedures in place to ensure that the legal validity of the netting
arrangement is kept under review in the light of possible changes in the relevant
laws; and
e) the manager is reasonably satisfied that the netting arrangement is legally valid
under the law of each of the relevant jurisdictions.
Exchange-traded financial derivatives

5.16 Financial derivatives which:
a) are transacted on an exchange where the clearing house performs a central

counterparty role; and
b) have trades which are characterised by a daily marked-to-market valuation of the

financial derivative positions and subject to at least daily margining,
would not be subject to the counterparty limits in paragraph 5.2 of this Appendix.

Margins
5.17 Any exposure arising from initial margin posted and the variation margin receivable
from a counterparty relating to OTC or exchange-traded financial derivatives, which
is not protected against insolvency of the counterparty, is to be included in the
counterparty limit.
Guidance
The exposures from margins held with brokers need not be included if the margins are
maintained in trust accounts.
E. Efficient Portfolio Management Techniques
9.7 The following contents in regard to “Efficient Portfolio Management Techniques”

has been entirely extracted from the “Code On Investment Schemes” from the
MAS website:
6 Efficient Portfolio Management Techniques
Securities lending and repurchase transactions

6.1 A scheme may carry out the following activities for the sole purpose of EPM:
a) securities lending; and

b) repurchase transactions.
6.2 The scheme may lend transferable securities and money market instruments:
a) directly;
b) through a standardised lending system facilitated by a clearing house which

performs a central counterparty role; or
c) through securities lending agents, who are recognised as specialists in securities

lending.
6.3 Securities lending and repurchase transactions should be effected in accordance

with good market practice.
Counterparty
6.4 The counterparty to a securities lending agreement or repurchase transaction
should:
a) be a financial institution subject to prudential supervision by a financial supervisory

authority in its home jurisdiction; and
b) have a minimum long-term rating of A by Moody’s, A by Standard and Poor’s or A

by Fitch (including sub-categories or gradations therein). Alternatively, where the
counterparty is not rated, it is acceptable if an entity which has and maintains a
rating as stated above indemnifies the scheme against losses suffered as a result
of the counterparty’s failure.

6.5 Where the manager engages in securities lending and repurchase transactions with
any of its related corporations, the manager should have effective arrangements in
place to manage potential conflicts of interest.
6.6 The agreement between the scheme and the counterparty, either directly or
through its agent, should require the counterparty to provide additional collateral
to the scheme or its agent no later than the close of the next business day if the
current value of the eligible collateral tendered is insufficient.
Guidance
A marked-to-market shortfall on day T should be rectified by the receipt of additional
collateral by T+1 business days. For the purpose of this guidance, business days should
be based on those of the counterparty’s.
Recognition of collateral
6.7 The collateral should meet the following requirements:
a) it is marked-to-market daily;
b) it is liquid;
c) it exceeds the value of the transferable securities or money market instruments
transferred;
Guidance
Eligible collateral provided should take into consideration exchange rate or market risks
inherent to the eligible collateral.
d) it is taken into account, on a portfolio basis, for the purposes of the requirements
on spread of investments in section 2 of this Appendix;
e) it is not issued by the counterparty or its related corporations;
f) it is held by a custodian or agent which is:

g) it is legally secured from the consequences of the failure of the custodian,

counterparty or agent and their related corporations;
h) it can be fully enforced by the trustee at any time;
i) it is free from all prior encumbrances; and
j) it cannot be sold or given as security interests.
Guidance 1
Security interests include, among others, charges, pledges or hypothecations.
Guidance 2
For the purpose of paragraph 6.7(j) of this Appendix, the collateral cannot be sold or
given as security interests except where it is required by applicable laws and regulatory
requirements in the jurisdiction where the collateral is held.

6.8 For the purposes of securities lending and repurchase transactions, collateral may
only consist of:
a) cash;
b) money market instruments; or
c) bonds.
6.9 For the purpose of paragraph 6.8, money market instruments and bonds should be
issued by, or have the benefit of a guarantee from, an entity or trust that has a
minimum long-term rating of A by Fitch, A by Moody’s or A by Standard and Poor’s
(including sub-categories or gradations therein) (collectively, “eligible collateral”).
6.10 Notwithstanding paragraph 6.8, securitised debt instruments as well as money

market instruments or bonds with embedded financial derivatives are not eligible
as collateral.
Settlement
6.11 The scheme or its agent should receive eligible collateral before, or simultaneously
with, the transfer of ownership of the transferable securities lent.
6.12 Upon termination of the securities lending or repurchase transaction, the eligible
collateral may be remitted by the scheme or its agent after, or simultaneously with
the restitution of the transferable securities lent.
Reinvestment of collateral
6.13 Collateral obtained in the form of cash by the scheme or its agent may be reinvested
subject to the following requirements:
a) it is invested in financial instruments consistent with paragraphs 6.8 and 6.9;
b) the investments are taken into account, on a portfolio basis, for the purposes of
the requirements on spread of investments in section 2 of this Appendix;
c) the investments are held by a custodian which is:

d) the investments are legally secured from the consequences of the failure of the
custodian, counterparty or agent and their related corporations;
e) the investments cannot be sold or given as security interests; and
f) the manager is reasonably satisfied that any investment of cash collateral by the
scheme or its agent, will enable the scheme to meet its redemption obligations and
other payment commitments.
6.14 Notwithstanding paragraph 6.13, the cash collateral obtained should not be
invested in transferable securities issued by, or placed on deposit with, the
counterparty or its related corporations.
6.15 Non-cash collateral obtained by the scheme or its agent may not be reinvested.

Liquidity
6.16 The manager should ensure that:
a) the volume of securities lending or repurchase transactions is kept at an appropriate

level; and
b) the scheme or its agent is entitled to terminate the securities lending or repurchase
transaction and request the immediate return of its transferable securities lent
without penalty, in a manner which enables the scheme to meet its redemption
obligations and other payment commitments.
F. Borrowings
9.8 The following contents in regard to “Borrowings” has been entirely extracted from
7 Borrowings
7.1 The scheme may borrow, on a temporary basis, for the purposes of meeting
redemptions and bridging requirements.
7.2 The scheme may only borrow from banks licensed under the Banking Act (Cap.
19), finance companies licensed under the Finance Companies Act (Cap. 108),
Authority of Singapore Act (Cap. 186) or any other deposit-taking institution
licensed under an equivalent law in a foreign jurisdiction.
7.3 The borrowing period should not exceed one month.
7.4 Aggregate borrowings for the purposes of paragraph 7.1 should not exceed 10%
of the scheme’s NAV at the time the borrowing is incurred.
Guidance
Credit balances (e.g. cash) may not be offset against borrowings when determining the
percentage of borrowings outstanding.
G. Disclosure Requirements
9.9 The following contents in regard to “Disclosure Requirements” has been entirely
extracted from the Code On Investment Schemes” from the MAS website:
8 Disclosure Requirements
8.1 The use of back-testing or simulated past performance data for disclosure of
performance figures in the prospectus, reports and marketing materials is
prohibited.

8.2 Where the scheme’s NAV is likely to have a high volatility due to its investment
policies or portfolio management techniques, a prominent statement drawing
attention to this possibility should be included in the marketing material of the
scheme.
Prospectus
8.3 Where a scheme intends to use or invest in financial derivatives, the prospectus
should include the following:
a) whether financial derivatives employed in the scheme are used for the purposes of
hedging, EPM, optimising returns or a combination of all three objectives;
b) the method used to determine the scheme’s exposure to financial derivatives (i.e.
commitment approach, relative VaR or absolute VaR), a description of the method
and:
i) if the VaR Approach is used, the expected level of leverage, based on the
sum of the notional of the derivatives used, and the possibility of higher
leverage levels should be included;
ii) if the relative VaR Approach is used, the reference portfolio (or benchmark)
and the rationale for using the reference portfolio (or benchmark) should be
included; and
iii) if the absolute VaR Approach is used, the absolute VaR limit and the rationale
for the absolute VaR limit should be included; and
c) a statement that the manager will ensure that the risk management and compliance
procedures are adequate and has been or will be implemented and that it has the
necessary expertise to manage the risk relating to the use of financial derivatives.
Semi-annual and annual report

8.4 Where a scheme uses or invests in financial derivatives, the semi-annual and annual
reports should include the following:
a) the method and a description of the method used to calculate the global exposure;
Guidance
The description of the VaR Approach should include at least the lowest, highest and
average utilisation of the VaR limit calculated during the relevant period, as well as the
model and inputs used for calculation.
b) information on the reference portfolio (or benchmark) where the relative VaR
Approach is used; and
c) the level of leverage employed, based on the sum of the notional value of the
derivatives used, during the relevant period where the VaR Approach is used.
Marketing material
8.5 Where a scheme intends to use or invest in financial derivatives, a prominent
statement drawing attention to this intention should be included in the marketing
material of the scheme.

Counterparty of financial derivatives

8.6 Where collateral is used to mitigate the scheme’s exposure to the counterparty of
OTC financial derivatives, the scheme’s semi-annual and annual reports should
provide a description of the collateral holdings, including the:
a) nature of the collateral;
b) identity of the counterparty providing the collateral;
c) marked-to-market value of the non-cash collateral with a breakdown by asset class

and credit rating (if applicable); and
d) value and types of investments made with the cash collateral with a breakdown by
asset class and credit rating (if applicable).
EPM techniques
Prospectus
8.7 Where the scheme intends to carry out securities lending or repurchase
transactions, the prospectus should contain disclosures on:
a) all the securities lending or repurchase transactions that the scheme may
participate in;
b) the purpose of the securities lending or repurchase transactions, as well as the

conditions and limits within which they are conducted;
c) any conflicts of interest and how they are mitigated, as well as whether the
manager intends to lend the securities of the scheme to its related corporations;
d) the inherent risks of the securities lending or repurchase transactions; and
e) the revenue sharing arrangement between the scheme and the manager if any of
the income from securities lending also accrues to the manager.

8.8 Where the scheme carries out securities lending or repurchase transactions, the
scheme’s semi-annual and annual report should contain disclosures on the:
a) total value of the transferable securities lent;
b) amount of securities on loan as a proportion of total lendable assets and of the

scheme’s assets under management, and the absolute amounts of the repurchase
transactions;
c) description and nature of the collateral holdings;
d) top 10 collateral securities received by the scheme, and the top 10 counterparties
of securities lending and repurchase transactions;
e) marked-to-market value of non-cash collateral with a breakdown by asset class and

credit rating (if applicable);

f) value and types of investments made with the cash collateral with a breakdown by
asset class and credit rating (if applicable);
g) breakdown of securities lending and repurchase transactions by (i) collateral type,

(ii) currency, (iii) maturity tenor, (iv) geographical location of counterparty, (v)
proportion of cash versus noncash collateral, (vi) maturity of non-cash collateral
and (vii) settlement/clearing (tri-party, bilateral or central clearing party, where
applicable);
Guidance
Collateral type should be disclosed at an appropriate level of detail. For example, for
fixed income securities, the breakdown would give the share of government bond,
investment grade non-financial corporate bonds, sub-investment grade non-financial
corporate bonds, investment grade financial corporate bonds, sub-investment grade
financial corporate bonds, covered bonds etc.
h) share of the collateral received that is re-used or re-hypothecated, compared to the

maximum authorised amount if any, and information on any restrictions on the type
of securities;
i) identity of the counterparty providing the collateral;
j) number of custodians and the amount of assets held by each custodian;
k) way the securities received by the counterparty are held (i.e. in segregated
accounts or pooled accounts);
l) revenue earned by the scheme and the manager arising from securities lending for
the scheme’s financial year (if applicable); and
m) split between the return from securities lending and repurchase transactions and
the return from cash collateral reinvestment.
Commodity exposures
Prospectus
8.9 Where the scheme will have exposures to commodities through financial
derivatives or investments referred to in paragraph 2.10 or 2.12(b) of this
Appendix, the prospectus should include a description of the commodities which
would be highly correlated and therefore treated as giving exposure to the same
commodity when applying the limits in section 4 of Appendix 5: Index Funds, and
how such correlation is determined.

ANNEX 1A
ILLUSTRATION OF BENCHMARK LIMIT
For the purpose of paragraph 2.3 of this Appendix, suppose companies A and B are both
subsidiaries of Company X (X and its subsidiaries to be collectively known as a “Group”)
and the scheme as well as the reference benchmark comply with sections 4 and 5 of
Appendix 5.
Example 1: Assume that both A and B are not included in the reference benchmark
A scheme may invest up to 10% of its NAV in transferable securities issued by A and
another 10% of its NAV in transferable securities issued by B. The scheme may invest
up to 20% of its NAV in transferable securities issued by companies in this Group.
Example 2: Assume that A and B are included in the reference benchmark with weights
of 2% and 5% respectively
A scheme may invest up to 10% of its NAV in transferable securities issued by A and
another 10% of its NAV in transferable securities issued by B. The scheme may invest
up to 20% of its NAV in transferable securities issued by this Group.
Example 3: Assume that A is included in the reference benchmark with weight of 20%
and B is a deposit-taking institution with which the scheme has placed deposits
A scheme may invest up to 22% [20+2] of its NAV in transferable securities issued
by A and another 3% [25-22] in deposits with B.
ANNEX 1B
ALTERNATIVE APPROACH FOR CALCULATING GLOBAL EXPOSURE – VAR APPROACH
1 Scope
1.1 These guidelines apply to a scheme which elects to use the VaR Approach for
calculating the scheme’s exposure to financial derivatives arising from all the
positions of the scheme’s portfolio. For the avoidance of doubt, all EPM exposures
as a result of reinvestment of cash collateral are to be included in the calculation
of VaR.
1.2 Where an internal VaR model is used by the manager, there should be verification
by an operationally independent party of its VaR model at an appropriate frequency.
1.3 The manager should consult the Authority on any material changes to the risk
management process document referred to in paragraph 3.14 of Appendix 1 at
least one month in advance.

2 Calculation Methodology
2.1 The exposure of a scheme to financial derivatives may be determined using the
VaR Approach described below. The exposure of the scheme should be limited as
follows:
a) where a reference portfolio (or benchmark for the scheme) can be determined, the
scheme should use a relative VaR calculation where the VaR of the scheme should
not be more than 1.5 times the VaR of the reference portfolio. The manager should
explain the rationale for the reference portfolio (or benchmark) used in the risk
management process document submitted to the Authority.
b) where there is no reference portfolio (or benchmark for the scheme), an absolute
VaR limit should be used. The global exposure of a scheme based on the absolute
VaR Approach should generally not exceed 20% of its NAV. The choice of the
absolute VaR limit should be commensurate with the investment objective,
approach and investment universe of the scheme. The manager should explain the
rationale for the absolute VaR limit used in the risk management process document
submitted to the Authority.
2.2 Under the VaR Approach, the following parameters should be used:
• One-tailed confidence level: 99%
• Holding period: one month (20 business days)
• Observation period: one year (250 business days), unless a shorter period is
justified by a significant increase in volatility
• Update of the data: quarterly
• Calculation frequency: daily
A different confidence interval or holding period may be used with prior approval of the
Authority provided a conversion is made to bring the VaR to an equivalent value.
3 Stress Tests
3.1 The manager should perform a rigorous program of stress tests on the scheme at
a frequency which is in line with the scheme’s risk profile, but at a minimum,
monthly.
3.2 The program should:
a) cover all the risk factors having a non-negligible influence on the scheme’s NAV;
and
b) take into account correlation changes between risk factors.
4 Back-Tests
4.1 The manager should back-test its VaR model, with a frequency which is in line with
the scheme’s risk profile, but at a minimum, monthly.
4.2 Back-testing is the comparison of daily profit or loss (“trading outcomes”) with
model-generated risk measures. The back-testing policy should conform to the
following standards:

a) the back-tests to be applied should compare whether the observed percentage of

outcomes covered by the risk measure is consistent with a 99th percentile, one-
tailed confidence interval calibrated to a one-day holding period;
b) trading outcomes used for back-testing should be based on the hypothetical

changes in the scheme’s NAV which would occur if end-of-day positions were to
remain unchanged over the one-day holding period. This hypothetical profit and
loss does not account for other factors such as fees, commissions, bid-ask spreads,
net interest income and intra-day trading;
c) computation of VaR for the purpose of back-testing should be performed on a daily

basis using at least 250 business days of observed results. On a quarterly basis,
the manager should analyse the back-testing exceptions and submit a report to
senior management;
d) the results of back-testing and any follow-up action taken should be clearly
documented. All back-testing exceptions, i.e. where trading outcomes are not
covered by the risk measure, should be investigated and accounted for on a timely
basis;
e) back-testing exceptions generated should be classified as follows:

i) basic integrity of the model;
ii) model accuracy can be improved;
iii) market moved in a fashion unanticipated by the model;
f) back-testing exceptions relating to the basic integrity of the risk measurement

model should be reported to the manager’s board of directors and senior
management immediately and rectified as soon as practicable; and
g) a back-testing report should be prepared for the manager’s board of directors and
senior management on a quarterly basis, incorporating an analysis of the back-
testing results and exceptions and any implications for the scheme.
4.3 The manager should perform back-tests using actual trading outcomes. If there are
significant back-testing exceptions using actual trading outcomes, the manager
should implement additional risk measures to monitor its intra-day trading risk in
line with sound risk management practices.
4.4 The following are some examples which may be classified under the three
exception categories described in paragraph 4.2 (e):
a) Basic integrity of the model:

i) the systems of the scheme are not capturing the market risk of the positions;
or
ii) model volatilities or correlations are calculated incorrectly.
b) Model accuracy can be improved: the risk measurement model is not assessing the
risk of some instruments with sufficient precision (e.g. too few maturity buckets
or an omitted spread); and
c) Market moved in a manner unanticipated by the model:

i) random chance (i.e. a very low probability event);
ii) markets moved by more than the model predicted was likely (i.e. volatility
was significantly higher than expected); or

iii) market did not move together as expected (i.e. correlations were significantly
different than what was assumed by the model).
4.5 The manager should classify its back-testing outcomes into three zones depending
on the number of exceptions arising from back-testing.
Zone Number of exceptions Cumulative probability

0 8.1%
1 28.58%
Green Zone
2 54.32%
3 75.81%
4 89.22%
5 95.88%
6 98.63%
Yellow Zone
7 99.60%
8 99.89%
9 99.97%
Red Zone 10 or more 99.99%
The table defines the Green, Yellow and Red Zones used to assess back-testing results
of the scheme. The boundaries shown in the table are based on a sample of 250
observations. For other sample sizes, the Yellow Zone begins at the point where the
cumulative probability equals or exceeds 95%, and the Red Zone begins at the point
where the cumulative probability equals or exceeds 99.99%. The cumulative probability
is the probability of obtaining equal or less than a given number of exceptions in a sample
of 250 observations when the true coverage level is 99%. For example, the cumulative
probability shown for four exceptions is the probability of obtaining between zero and
four exceptions.
4.6 The manager should notify the Authority within three business days whenever
exceptions arise. In the event that the scheme enters the:
a) Green Zone [4 or less exceptions]: the manager need not make any changes to its
VaR model;
b) Yellow Zone [5 - 9 exceptions]: the manager is to investigate and propose to the

Authority the remedial actions; or
c) Red Zone [10 or more exceptions]: the manager should stop adding new positions
and wind down existing positions in order to reduce market risks.
Where the scheme enters the Red Zone, the Authority may require the scheme to revert
to the Commitment Approach.
Guidance
Although results within the Green Zone are preferred, a market risk measurement model
which constantly yields little or no back-testing exceptions may suggest that the model
is too conservative. If the model shows no exceptions for long periods of time, the
manager should reassess its model to determine if it overstates risk.

4.7 Where the market risk measurement model is found to be inadequate for modeling
the risks involved, the manager may continue investing in such financial
instruments only if the manager is reasonably satisfied that it is prudent to do so.
If the problem with the model is significant, the manager should cease trading in
those financial instruments immediately.
10. APPENDIX 3 OF THE CODE - HEDGE FUNDS
10.1 The following contents in regard to “APPENDIX 3 OF THE CODE - HEDGE

FUNDS” has been entirely extracted from the “Code On Investment Schemes”
APPENDIX 3
INVESTMENT: HEDGE FUNDS
1 Scope
1.1 This Appendix applies to hedge funds. A hedge fund generally refers to a scheme
which aims to achieve a high return through the use of advanced investment
strategies. In assessing whether a scheme falls within this Appendix, the Authority
would consider, among other aspects, the following:
a) the use of advanced investment strategies which may involve financial instruments
which are not liquid, financial derivatives, concentration of investments, leverage
or short selling; and
Guidance
Advanced investment strategies include market directional, corporate restructuring,
convergence trading or opportunistic strategies.
b) the use of alternative asset classes.
Guidance
This Appendix would also apply to a fund which invests all, or substantially all, of its
NAV in a hedge fund (i.e. feeder schemes).
1.2 For the purposes of this Appendix, a Fund-of-Hedge-Funds (“FOHF”) refers to a

scheme which the manager makes strategic or tactical asset allocations across a
range of hedge funds.
1.3 The guidelines in sections 1 to 8 of Appendix 1 do not apply to a hedge fund.
1.4 Notwithstanding chapter 4.2(d), a hedge fund may carry out short selling provided
that the transaction is covered.
2 Name of Scheme
The name of the scheme should reflect the nature of a hedge fund or FOHF, where
appropriate.

3 Prime Broker
3.1 The prime broker of a hedge fund should be subject to prudential supervision by a
financial supervisory authority in its home jurisdiction.
3.2 Where the prime broker is a related corporation of the manager, the manager should
have effective arrangements in place to manage potential conflicts of interest.
4 Single Hedge Funds
Minimum subscription requirement

4.1 A single hedge fund should be offered with a minimum initial subscription of
S$100,000 per participant. The minimum holding at any one time should be the
lesser of S$100,000 or the number of units purchased for S$100,000 at the time
of subscription.
Manager
4.2 The manager should have expertise in managing such schemes. Where investment
decisions are outsourced to a sub-manager or adviser, the sub-manager or adviser
should have expertise in managing such schemes.
4.3 In assessing the manager’s expertise, the Authority would consider the professional
experience, qualifications, assets under management and performance history of
the manager or its sub-manager or adviser.
4.4 The manager, or where investment decisions are outsourced to a sub-manager or

adviser, the sub-manager or adviser, should have at least two executives who each
have at least five years of experience in the management of hedge funds.
Investment in other hedge funds
4.5 A single hedge fund may only invest directly in another single hedge fund which is
not a feeder scheme. No further layer of feeding is allowed.
Risk management, monitoring procedures and internal controls

4.6 The manager should have in place proper risk management and monitoring
procedures as well as internal controls.
4.7 The manager should certify annually to the Authority that the procedures and
controls for monitoring the management and risk of the fund are as set out in the
prospectus.
Borrowings
4.8 A single hedge fund may be leveraged to the extent disclosed in the prospectus.
Dealing
4.9 There should be at least one regular dealing day per month.
4.10 Redemption proceeds should be paid to the participant (who is the beneficial owner
of the units) within 90 days from the dealing day the redemption request is
accepted.

5 Fund-of-Hedge-Funds
Minimum subscription requirement

5.1 A FOHF should be offered with a minimum initial subscription of S$20,000 per
participant. The minimum holding at any one time should be the lesser of S$20,000
or the number of units purchased for S$20,000 at the time of subscription.
Investment in other FOHFs

5.2 A FOHF may only invest in an underlying FOHF only if the latter scheme invests
directly in other single hedge funds (i.e. not through another FOHF or a feeder
scheme). No further layer of feeding is allowed.
Diversification
5.3 A FOHF should be sufficiently diversified as follows:
a) it invests in at least 15 hedge funds; and
b) it does not have more than 8% allocated to a single hedge fund.
Guidance
In submitting an application to the Authority for authorisation of a FOHF, the manager
should set out the:
a) method of diversification or intended diversification (in the case of new schemes)

e.g. by investing in various strategies or investment styles;
b) objective criteria which the manager would adhere to in ensuring that diversification
is achieved e.g. not more than x% of the scheme’s NAV will be invested in any
one strategy or investment style; and
c) for existing funds, past data demonstrating the said diversification.
Manager
5.4 The manager should have expertise in managing such schemes. Where investment
decisions are outsourced to a sub-manager or adviser, the sub-manager or adviser
should have expertise in managing such schemes.
5.5 In assessing the manager’s expertise, the Authority would consider the professional
experience, qualifications, assets under management and performance history of
the manager or its sub-manager or adviser.
5.6 The manager, or where investment decisions are outsourced to a sub-manager, the
submanager, should have at least two executives who each have at least five years
of experience in the management of hedge funds, of which at least three years
should be in the management of FOHFs.
Guidance
The managers of the underlying hedge funds of a FOHF should similarly have at least
two executives who each have at least five years of experience in the management of
hedge funds.
Risk management, monitoring and internal controls

5.7 The manager should have in place proper risk management and monitoring
procedures as well as internal controls, including:
a) having a due diligence process for the selection of the underlying hedge funds; and

b) ongoing monitoring of the underlying hedge funds and its activities.
5.8 The manager should certify annually to the Authority that the procedures and
controls for monitoring the management and risk of the FOHF are as set out in the
prospectus. Where the FOHF invests in other FOHFs, the manager of the underlying
FOHF should submit a similar certification.
Borrowings
5.9 The underlying hedge funds of the FOHF may be leveraged to the extent disclosed
in the prospectus.
5.10 An FOHF may only borrow, on a temporary basis, for the purposes of meeting
redemptions and bridging requirements.
5.11 The borrowing period should not exceed three months.
5.12 Aggregate borrowings for such purposes should not exceed 25% of the FOHF’s
NAV at the time the borrowing is incurred.
Dealing
5.13 There should be at least one regular dealing day per month.
5.14 Redemption proceeds should be paid to the participant (who is the beneficial owner
of the units) within 90 days from the dealing day the redemption request is
accepted.
6 Capital Guaranteed Single Hedge Funds and FOHFs
6.1 The minimum subscription requirement for a single hedge fund or FOHF is waived
where the guarantor and guarantee meets the requirements for capital guaranteed
funds set out in Appendix 4: Capital Guaranteed Funds.
6.2 In the case of a capital guaranteed FOHF, the borrowing limit set out in paragraph
5.12 does not apply.
Prospectus
7.1 The prospectus of a hedge fund or FOHF should include:
a) a statement that the manger will ensure that the risk management and monitoring
procedures as well as internal controls are adequate;
b) a statement that the manager has the necessary expertise to control and manage
the risk; and
c) the profile and role of the prime broker, if applicable.
7.2 Appendix 4 of the Third Schedule of the SFR requires the prospectus to state the
material differences between the hedge fund and other types of collective
investment schemes. Examples of material differences that should be highlighted,
if applicable, include:
a) some of the underlying investments may not be actively traded and there may be
uncertainties involved in the valuation of such investments;

b) compared to other types of schemes, relatively little information on how the hedge
fund and underlying hedge funds are managed will be available;
c) there is limited liquidity;
d) the redemption price may be affected by fluctuations in value of the underlying

investments from the time a redemption request is submitted and the date the
redemption price is determined;
e) the underlying hedge funds may be subject to minimal regulation;
f) the performance of the hedge fund may be heavily dependent on the skill of the
individual fund manager(s); and
g) the fact that the manager of a FOHF receives compensation from the managers to
which it is allocating.
Accounts and reports
Frequency of reporting
7.3 The manager should prepare:
a) annual audited accounts and reports;
b) semi-annual accounts and reports; and
c) quarterly reports for each of the four quarters of each financial year.
7.4 The manager should prepare and furnish to the trustee the accounts and reports in
sufficient time for the trustee to cause them to be audited (where an audit is
required) and sent to participants within the periods stipulated in paragraph 7.7.
7.5 Notwithstanding paragraph 7.3, the requirement to prepare quarterly reports does
not apply to capital guaranteed hedge funds or FOHFs.
7.6 Where the manager incorporates the required contents for quarterly reports set out
in paragraph 7.10:
a) in the monthly report, the manager need not prepare separate quarterly reports; or
b) in the semi-annual report, the manager need not prepare a separate quarterly report
for the second quarter of the financial year.
7.7 The trustee should send, or cause to be sent, to participants:
a) the annual audited accounts and report within three months from the end of each
financial year of the scheme;
b) the semi-annual accounts and report within two months from the end of the period
covered by the accounts and report; and
c) the quarterly report within one month from the end of the period covered by the
report. For the avoidance of doubt, where the quarterly report for the second
quarter of the financial year is incorporated in the semi-annual report in accordance

with paragraph 7.6(b), the timeframe within which the semi-annual report should
be sent to participants continues to be two months.
Guidance
For an FOHF, the quarterly report should be sent within 45 days from the end of the
period covered by the report.
Contents of accounts and reports

7.8 The manager should prepare the semi-annual accounts and the annual audited
accounts, for the semi-annual report and annual report respectively, in the manner
prescribed by the Institute of Singapore Chartered Accountants in Statement of
Recommended Accounting Practice 7: Reporting Framework for Unit Trusts.
7.9 The semi-annual report and annual report, based on a scheme’s financial year,
should (where applicable) contain the disclosure items listed in chapter 7, subject
to the following modifications to the disclosure of portfolio statement and top 10
holdings:
a) the manager need not disclose the portfolio statement and top 10 holdings where
the manager and trustee are of the view that such disclosure is prejudicial to the
interest of the scheme;
b) where the portfolio statement and top 10 holdings are not disclosed, the aggregate
exposure for the scheme categorised according to country, industry, asset class or
credit rating of debt securities should be disclosed. Such exposures should be
broken down into gross long and short positions. For a FOHF, the number of
underlying schemes or managers and the percentage of the scheme’s NAV under
each hedge fund strategy should also be disclosed; and
c) where the portfolio statement and top 10 holdings are disclosed, the portfolio
statement for a FOHF should list the investments of the scheme by hedge fund
strategy, market value and as a percentage of the scheme’s NAV as at the end of
the period under review. This is in addition to the classifications (where appropriate)
by country, industry, asset class and credit rating of debt securities.
Contents of quarterly reports

7.10 The quarterly report should include the following:
a) a qualitative report by the manager providing appropriate information to give

participants an overview of the management and investments of the scheme for
the past quarter and an investment outlook for the next quarter. The report should
include the scheme’s financial performance, style drifts, market outlook, changes
in key investment personnel and factors that contributed to them;
b) performance of the scheme and where applicable, the performance of the

benchmark, in a consistent format, covering the following periods of time: 3-
month, 6-month, 1-year, 3-year, 5- year, 10-year and since inception of the
scheme. Returns should be calculated on a bid-to-bid basis with dividends
reinvested at the bid price. Where there has been a change in the benchmark used,
this fact should also be disclosed;
c) Sharpe ratio for each of the past three years and since inception;
d) annualised standard deviation for each of the past three years and since inception;

e) highest and lowest NAV per unit each year for each of the past three years and
since inception;
f) amount of borrowings and other sources of leverage as at the end of the period
under review;
g) fund size and NAV per unit as at the end of the period under review;
h) aggregate exposure for the scheme classified by country, industry, asset class or
rating of the debt security (if applicable) as at the end of the period under review.
For a FOHF, the number of underlying schemes or managers and the percentage of
NAV under each hedge fund strategy should also be disclosed;
i) holdings which are not liquid as at the end of the period under review;
j) amount of seed money as at the end of the period under review; and
k) the basis of calculation, definition and any assumptions used, wherever

appropriate.
7.11 For the purposes of paragraph 7.10 of this Appendix:
a) the “annualised standard deviation” is defined as the square root of the sum of the
squared deviations of the actual returns from the simple average return based on
the dealing days of the scheme, divided by the number of observations, shown on
an annualised basis;
b) the “Sharpe ratio” is defined as the annual return in excess of the risk free return
divided by annualised standard deviation; and
c) “seed money” is defined as the percentage of scheme’s NAV contributed by the

manager or its related corporations.
Guidance
Paragraphs 7.3 to 7.11 are the minimum disclosure standards for periodic reporting by
hedge funds and FOHFs to participants. Additional information may be disclosed to
enable participants to better understand the nature, risks and performance of the hedge
fund or FOHF.
Marketing material
7.12 All marketing material for a single hedge fund or FOHF should state:
a) the fees and charges payable;
b) that an investment in the hedge fund carries risks of a different nature from other
types of collective investment schemes and that the hedge fund may not be
suitable for persons who are averse to such risks;
Guidance
Examples of such risks may include capacity constraints, use of excessive leverage,
ability to engage in covered short-selling, limited liquidity and reliance on the skill of a
particular individual.

c) that in the case where the hedge fund is:
ii) not capital guaranteed, participants may lose all or a large part of their
investment in the hedge fund; or
iii) capital guaranteed, participants are subject to the credit risk of the guarantor;
d) that an investment in the hedge fund is not intended to be a complete investment

programme for any participant and prospective participants should carefully
consider whether an investment
in the hedge fund is suitable for them in the light of their own circumstances, financial
resources and entire investment programme; and
e) any other inherent risks of investing in the hedge fund
11. APPENDIX 4 OF THE CODE – CAPITAL GUARANTEED FUNDS
11.1 The following contents in regard to “APPENDIX 4 OF THE CODE – CAPITAL

GUARANTEED FUNDS” has been entirely extracted from the “Code On
APPENDIX 4
INVESTMENT: CAPITAL GUARANTEED FUNDS
1 Scope
1.1 This Appendix applies to a scheme which guarantees the return of capital invested
by participants at a pre-determined date in the future. For the avoidance of doubt,
the provisions in this Appendix apply in addition to other relevant Appendices to
this Code which the scheme is subject to.
Guidance
For example, a capital guaranteed hedge fund should comply with the requirements in
this Appendix and Appendix 3 on hedge funds.
2 Name of Scheme
2.1 Where a scheme does not comply with the provisions in this Appendix, it should
not adopt the word “guarantee”, “assured”, “insured” or “warranty” in its name or
in its promotion and description. Such a scheme should not hold itself out as a
capital guaranteed fund in any communication relating to the scheme.
Guidance
A scheme which guarantees income only or which relies solely or largely on investments
to meet a guaranteed return of capital are not deemed to be capital guaranteed funds.
3 The Guarantor
3.1 A capital guaranteed fund should have an eligible guarantor.

3.2 For the purposes of paragraph 3.1 of this Appendix, an eligible guarantor should:
a) in the case of a financial institution, have a minimum long-term rating of AA by

Fitch, Aa by Moody’s or AA by Standard and Poor’s (including such sub-categories
or gradations therein); or
b) in all other cases, have a minimum long-term rating of AAA by Fitch, Aaa by
Moody’s or AAA by Standard and Poor’s (including such sub-categories or
gradations therein).
3.3 For the purposes of paragraph 3.2 of this Appendix, where the long-term rating of
the guarantor:
a) falls but the minimum long-term rating is A by Fitch, A by Moody’s or A by Standard

and Poor’s (including such sub-categories or gradations therein), no action needs
to be taken; or
b) falls below those specified in paragraph 3.3(a) or if the guarantor ceases to be

rated, except as provided for in paragraph 4.8, the manager should within six
months, or sooner if the trustee considers it to be in the best interest of the
participants, enter into a new agreement with a new guarantor which satisfies the
rating criterion specified in paragraph 3.2. For this purpose, such new guarantee
should, in the opinion of the trustee, provide the same level of guarantee to the
participants as the original guarantee.
3.4 An eligible guarantor should not be the issuer of transferable securities and money
market instruments which constitute more than 10% of the scheme’s NAV. For
this purpose, the issuer, its subsidiaries, fellow subsidiaries and holding company
is regarded as one entity.
4 The Guarantee
4.1 A written agreement should be entered into between the guarantor and the trustee
for an unconditional guarantee to be provided by the guarantor. The guarantee
should be a first-demand guarantee and should be legally enforceable in Singapore
against the guarantor by the trustee on behalf of the participants. In addition,
provision should be made in the agreement for the guarantee to ensure that the
accrued rights of the trustee, on behalf of the participants, are not affected or
prejudiced by the termination of such guarantee. Where the agreement is governed
by foreign law, the trustee should ensure and be satisfied that the agreement is
legally enforceable in Singapore against the guarantor by the trustee on behalf of
the participants.
4.2 The guarantee should be in respect of not less than 100% of the capital invested
by the participants. For this purpose, a guarantee:
a) in respect of 100% of the capital invested less initial sales charges or front-end
loads; or
b) that applies only on any particular date(s) or after a specified period of time would
be acceptable subject to the prominent disclosure in the prospectus of such
limitation.

4.3 The quantum and duration of the guarantee given by the guarantor should
correspond to that stated in the prospectus and marketing material.
Guidance
For example, if the scheme guarantees 100% of the amount invested by participants
(less front-end loads of 3%) upon redemption at 30 June 20X0, and the total
subscriptions received from the initial launch of the scheme were $30m, the manager
should have obtained after the close of the launch an unconditional guarantee for at least
$29.1m (i.e. $30m less 3% in front-end loads) and which provides for payment on 30
June 20X0.
4.4 There should be no variation to the agreement for the guarantee if, in the opinion
of the trustee, such variation is detrimental to the interest of existing participants.
Other changes to the agreement for the guarantee should be subject to the approval
of the trustee unless such changes are, in the opinion of the trustee, material, in
which case such changes should be made with the sanction of an ordinary
resolution at a meeting of the participants.
4.5 For the purposes of paragraph 4.4 of this Appendix, if the amount guaranteed is
reduced or increased due to the redemption of existing units or the subscription of
new units, this will not be considered a variation to the agreement for the
guarantee.
4.6 The guarantee may be terminated:
a) by the trustee, if the guarantor goes into liquidation (excluding a voluntary

liquidation for the purposes of reconstruction or amalgamation);
c) by the guarantor or trustee, if a new legal or regulatory requirement comes into

force which renders the agreement for the guarantee illegal or which, in the opinion
of the trustee, renders it impracticable to continue with the guarantee; or
d) by the guarantor or trustee, if the capital guaranteed fund is voluntarily terminated.
4.7 If, in the opinion of the trustee, the retirement, removal or replacement of the
manager affects the guarantee to the participants in a material way, a new
agreement for the guarantee may be entered into only if it provides the same level
of guarantee to the participants as the original guarantee.
4.8 For the purposes of paragraphs 3.3(b), 4.6(a), and 4.7 of this Appendix, where the
trustee is of the opinion that the cost of obtaining a new guarantee significantly
outweighs the benefit of such guarantee to existing participants, the trustee may,
with the sanction of an extraordinary resolution at a meeting of the participants:
a) terminate the scheme; or
b) allow the scheme to continue without a guarantee, in which case the scheme
should no longer:
i) use the word “guarantee”, “assured”, “insured” or “warranty” in its name,

promotion and description, or use a name that suggests that it is a capital
guaranteed fund or the equivalent of a guaranteed fund; or
ii) hold itself out as a capital guaranteed fund in any communication, whether
in the form of marketing material or otherwise, relating to the scheme.

5 Notification to Participants
5.1 Where the guarantee applies only on any particular date(s) or after a specified
period of time, the manager should notify the participants, by way of a notice sent
to the participants, of the guaranteed redemption value and the date(s) on or period
after which the guarantee applies.
5.2 For the purposes of paragraph 5.1 of this Appendix,
a) where the guarantee applies only on any particular date(s), the manager should
notify participants at least 30 days before such date(s); or
b) where the guarantee applies after a specified period of time, the manager should
notify participants at least 30 days before the first day that the guarantee applies.
If the scheme imposes a minimum period for the participants to submit their
requests for redemption of units at the guaranteed value, the manager should notify
the participants of the guaranteed redemption value at least 30 days before the
start of such period.
6.1 Where a scheme offers a guarantee which is not in accordance with this Appendix,
all communication relating to the scheme should carry a prominent statement that
it is not a capital guaranteed fund.
6.2 A scheme which complies with this Appendix but offers a guarantee covering less
than 100% of capital invested by the participant may state that the scheme has a
guarantee, provided that:
a) it is stated clearly and prominently that the guarantee covers only x% of the capital
invested; and
b) the scheme’s name does not contain the words “guarantee”, “assured”, “insured”,
or “warranty”, nor does the scheme hold itself out as a capital guaranteed fund in
any other way.

CHAPTER 13
CENTRAL PROVIDENT FUND (CPF)
CHAPTER OUTLINE

2. Five Pillars Of Financial Security Under The CPF
3. Other Schemes Under The CPF
Appendix 13A- Updated Rules on CPF Usage and HDB Housing Loan
KEY LEARNING POINTS

 explain the objectives and uses of CPF Accounts
 understand the five pillars of financial security and other schemes under the CPF

1. CENTRAL PROVIDENT FUND (CPF)
A. Background
1.1 The Central Provident Fund (CPF) started on 1 July 1955, as a national old age
savings plan, with the simple objective of ensuring that every worker in Singapore
would have sufficient income to meet basic expenses during their retirement
years. The CPF is administered by the Central Provident Fund Board (CPF Board),
a statutory board under the Ministry of Manpower.
1.2 Over time, as Singapore’s economy progressed, changes were made to the CPF
system, to enable CPF members to have adequate savings for their retirement. In
September 2009, the CPF LIFE Scheme was introduced to realise the ideal of a
lifelong retirement income for CPF members.
1.3 The CPF has evolved into a comprehensive and unique social security savings
system providing not only for retirement needs, but also for healthcare and
housing needs of Singaporeans. Today, the CPF system in providing for the social
security of Singaporeans comprehensively encompasses the five pillars of
financial security – retirement adequacy, home ownership, healthcare, family
protection and asset enhancement. We will cover these pillars later in the chapter.
B. CPF Contributions
1.4 The CPF covers all employees who are Singapore citizens or permanent residents.
Both the employer and employee are required by law to contribute a certain
percentage of their monthly income and bonuses to the CPF.
1.5 For self-employed Singapore citizens and permanent residents, the law requires
them to contribute only to the Medisave account to provide for the healthcare
needs of their families and themselves. To help them save for their retirement,
the government has a voluntary CPF contribution scheme in place (similar to that
for employed staff).
B1. Exceptions To Payment Of CPF By Employers
1.6 Employers are exempted from making mandatory CPF contributions for the
following classes of employees:
(a) Foreigners on Employment Pass, S Pass, Miscellaneous Work Pass or Work
Permit;
(b) Persons registered as partners, sole proprietors or self-employed; and
(c) Employees working overseas.
C. CPF Accounts
1.7 Every Singapore citizen or permanent resident who is economically engaged in

Singapore is required to open a CPF account. Most residents open their accounts
when they are employed for the first time. Their employers are legally obliged to

report their employment to the CPF Board. A person with a CPF account is
referred to as a CPF member.
1.8 The employer’s and employee’s contributions for each CPF member are allocated
into three separate accounts, namely Ordinary Account, Special Account and
Medisave Account.
1.9 The bulk of the total CPF contribution for each CPF member is credited into the
Ordinary Account. As a CPF member gets older, the percentage of his wage
credited into the Ordinary Account decreases. Contributions to the Ordinary
Account earn a lower interest rate than savings in other accounts. However, a
CPF member can withdraw his Ordinary Account savings to be used in a number
of ways, subject to various CPF rules and restrictions as specified, and provided
that he has sufficient funds in the Ordinary Account.
1.10 The CPF Special Account was introduced in 1977 with the objective of enabling
the CPF member to have adequate savings for his retirement. Savings in the CPF
Special Account are used for old age and investment in selected financial
products. He can transfer savings from his Ordinary Account to his Special
Account. The transfer is irreversible. He cannot transfer his Special Account
savings back to his Ordinary Account.
1.11 The CPF Medisave Account, introduced in 1984, helps the CPF member to build
up savings for his healthcare needs.
1.12 The CPF Retirement Account was introduced in 1987 to meet the CPF member’s
basic needs during his old age. When he reaches the withdrawal age (currently
set at the age of 55 years), the CPF Board will combine his CPF Ordinary Account
with his Special Account to form the Retirement Account. He needs to set aside
a stipulated minimum sum, using the savings in his Special and Ordinary
Accounts, in the Retirement Account.
1.13 For details of the CPF contribution rates and how CPF contributions are
apportioned, do refer to the CPF website at: www.cpf.gov.sg
C1. Uses Of CPF Savings
1.14 Savings in the Ordinary Account can be used to buy a residential property, pay
for certain insurance premiums, invest in certain financial instruments, and
provide for education for the CPF member or his children.
1.15 Savings in the Special Account are primarily reserved for old age and investments
that are subject to stringent restrictions.
1.16 Savings in the Medisave Account can be used to pay for the CPF member’s and
his dependants’ hospitalisation expenses. These include certain outpatient
treatment expenses (e.g. renal dialysis, chemotherapy, radiotherapy and Hepatitis
B vaccinations). From 1 July 2011, Medisave savings can be used to pay for
mammogram and colonoscopy, subject to certain withdrawal limits. Medisave

savings can also be used to pay premiums for MediShield Life or other approved
medical insurance plans under the Private Medical Insurance Scheme, subject to
certain withdrawal limits and other terms and conditions as specified. Medisave
usage has also been extended for overseas hospitalisation referred to by any
Medisave-accredited healthcare provider.
1.17 Funds in the Retirement Account will be administered according to any one of
the selected options below:
(a) To be left in the CPF member’s Retirement Account;
(b) To be used to buy a deferred life annuity from an approved life insurer; or
(c) To participate in the CPF LIFE scheme.
1.18 In a nutshell,
Ordinary Account
- to buy a residential
property
- to pay for insurance
- for investment Retirement Account
Employee - for education - can choose to be left
in Account
- to purchase deferred
Special Account life annuity from a
CPF - for old age participating insurer
Fund - for selected - to participate in the
investments CPF LIFE scheme
Monthly
Contributions
Medisave Account
- for hospitalisation
expenses
Employer
- to pay for medical
insurance
as specified
2. FIVE PILLARS OF FINANCIAL SECURITY UNDER THE CPF
A. Retirement Adequacy
2.1 The main priority for each CPF account is the accumulation of savings to fund
retirement expenses. At the specified withdrawal age (currently set at the age of
55 years), a CPF member can withdraw his CPF savings after setting aside a
stipulated minimum sum under the CPF Retirement Sum Scheme (for more details
of the Retirement Sum Scheme, do read the later section).
2.2 From the payout eligibility age as specified, the CPF member will receive monthly
payout from his CPF Retirement Sum to help meet his basic needs in retirement.
With the CPF LIFE scheme in place, he has another option to consider. If he
participates in this new scheme, he can receive a monthly payout for life.

A1. Retirement Sum Scheme (RSS)
2.3 Before 1987, a CPF member was entitled to withdraw the entire balance from his
CPF account, except from his Medisave Account, when he reached the specified
withdrawal age. However, since 1987, the rules and regulations have been
changed, and a CPF member must now retain a minimum balance in his account
(not including the balance in his Medisave Account) upon reaching the specified
withdrawal age.
2.4 The Retirement Sum Scheme provides the CPF member with a monthly income
to support a basic standard of living during retirement for about 20 years.
2.5 From 1 January 2016, a CPF member who attains the age of 55 years will need
to set aside in his Retirement Account a Basic Retirement Sum (BRS), replacing
the Minimum Sum, in accordance with the table below.
CPF Member who Estimated Monthly Retirement Account Savings
Payouts for Life* from Required at Age of 55 Years
Age of 65 Years
(a) owns a property and S$730 to S$790 Basic Retirement Sum (BRS)
choose to withdraw (S$88,000 in 2019)
Retirement Account
savings above Basic
Retirement Sum (subject to
sufficient CPF property
charge/pledge)
(b) does not own a property or S$1,350 to S$1,450 Full Retirement Sum (FRS)
choose not to withdraw (S$176,000 in 2019)
their Retirement Account
savings above their Basic The FRS is 2 x BRS.
Retirement Sum
(c) wishes to put more savings S$1,960 to S$2,110 Enhanced Retirement Sum
in CPF LIFE (ERS)
(S$264,000 in 2019)
The ERS is 3 x BRS.

*Payouts are estimates based on CPF LIFE Standard Plan parameters in 2019.
2.6 However, the BRS for each new cohort to account for long-term inflation and
rising standards will increase for any CPF member who attains the age of 55
years from 2017 to 2020. The BRS will increase by 3% for each successive
cohort as shown in the table below.
The CPF Member’s Age of 55 Years in Basic Retirement Sum

2016 S$80,500
2017 S$83,000
2018 S$85,500
2019 S$88,000
2020 S$90,500

2.7 A CPF member will have the option of deferring his payout start age up to 70
years to enjoy higher monthly payouts.
2.8 From 1 January 2016, a CPF member will need to choose his CPF LIFE plan only
at the point when he wishes to start the monthly payouts from CPF LIFE from
the Payout Eligibility Age (previously known as Draw Down Age), instead of
making the choice at the age of 55 years.
A2. CPF LIFE
2.9 The CPF Lifelong Income scheme For the Elderly (CPF LIFE) is a scheme that will
provide the CPF member with a lifelong monthly payout starting from his payout
eligibility age (previously known as the draw-down age).
2.10 The CPF member will be placed on CPF LIFE if he is a Singapore Citizen or
Permanent Resident born in 1958 or after, and have at least:
1. S$40,000 in his Retirement Account upon reaching the age of 55 years; or
2. S$60,000 in his Retirement Account upon reaching the age of 65 years.
2.11 If a CPF member is not placed on CPF LIFE, he can apply to join CPF LIFE. He can
make his application anytime between the time he wishes to start his monthly
payout (which will be from his payout eligibility age onwards) and before he
attains the age of 80 years.
(a) Types of CPF LIFE Plans

Under CPF LIFE, there are three plans, namely:
▪ CPF LIFE Standard Plan;
▪ CPF LIFE Basic Plan; and
▪ CPF LIFE Escalating Plan.
Each CPF LIFE plan provides a different combination of trade-offs between

the amount of monthly payouts which a CPF member will receive, and the
bequest1 which he will leave for his beneficiaries.
For a CPF member attaining the age of 55 years before 1 July 2015, the CPF
Board will send him a letter to choose his CPF LIFE plan one month after his
55th birthday. He has six months to choose his plan. If he does not choose
a plan, the CPF Board will place him on the CPF LIFE Standard Plan.
From January 2016, a CPF member will need to choose his CPF LIFE plan
from his payout eligibility age only at the point when he wishes to start his
CPF LIFE payouts.
1
There may not be a bequest if the CPF member passes away after the savings used to join CPF
LIFE have been fully paid out in monthly payouts.

In view of this change, a CPF member who is attaining the age of 55 years
from 1 July 2015 to 31 December 2015 will also have the option to choose
his CPF LIFE plan at the point when he wishes to start his CPF LIFE payouts,
from his payout eligibility age. The CPF Board will write to him nearer to his
payout eligibility age, to further explain the options that he has and the
choices that he has to make.
While stable, the monthly payouts are not fixed. The payout amount will be
reviewed annually. The CPF Board may adjust the payout owing to changes
in the mortality experience, interest rate and transactions which affect a CPF
member’s Retirement Account balance. This will ensure that the CPF LIFE
annuity fund is sustainable in the long run.
(b) Allocation & Description Of CPF LIFE PLANS Before 1 January 2013
There were four plans, of which three were refundable plans. The allocation
of the four different types of CPF LIFE plans is shown below.
Refundable Plan Monthly Payout Bequest

LIFE Plus Plan High Low
LIFE Balanced Plan Medium Medium
LIFE Basic Plan Low High
Non-Refundable Plan Monthly Payout Bequest

LIFE Income Plan Highest No bequest2
After 1 January 2013, a CPF LIFE member on any of these four previous
plans can continue to stay on his existing plan. Before 31 December 2013,
the CPF Board would allow him to switch to the new Standard Plan if it would
better meet his retirement needs.
B. Healthcare Financing
2.12 The financing philosophy of Singapore's healthcare delivery system is based on

individual responsibility and affordable healthcare for all. To help Singaporeans to
pay for their medical expenses, the Government has put in place a financing
framework which consists of the following:
(a) Medisave;
(b) Medifund;
(c) MediShield;
(d) Private Medical Insurance Scheme;
(e) ElderShield; and
(f) CareShield Life (applicable from 2020 onwards).
2
No bequest means that no refund will be made to the CPF member's beneficiaries upon the
death of the CPF member, even if monthly payouts under the plan have not started.

2.13 The monthly contributions that a CPF member makes to his Medisave Account
help to build up savings for his healthcare needs. For older CPF members, there
is also ElderShield, an affordable severe disability insurance scheme that provides
insurance coverage to those who require long-term care.
2.14 To ensure that all Singaporeans have access to medical care, Medifund is
available to help the poor and needy with their medical bills.
2.15 For more detailed information, please refer to the Health Insurance textbook
published by the Singapore College of Insurance Limited.
B1. Medisave
2.16 Introduced in April 1984, Medisave is a national medical savings scheme which
helps individuals put aside part of their income in their Medisave Accounts to
meet their future personal or dependants' hospitalisation, day surgery and certain
outpatient expenses, especially during retirement. Dependants refer to spouse,
children, parents and grandparents. Grandparents must be Singaporeans or
Singapore Permanent Residents.
2.17 To ensure that CPF members have sufficient savings for their healthcare needs
during retirement, they will need to set aside the Medisave Minimum Sum when
they qualify to withdraw their CPF savings.
2.18 From 1 January 2016, the Medisave Minimum Sum will be removed, so that a
CPF member will no longer be required to top up his Medisave Account (MA)
when withdrawing his CPF savings from the age of 55 years.
2.19 Also from 1 January 2019, the Medisave Contribution Ceiling, which is the
maximum balance that a CPF member can save in his MA, will be renamed as the
Basic Healthcare Sum (BHS) raised to S$57,200 for every CPF member below 65
years old in 2019. If the CPF member is of the age of 65 years and above in
2019, this sum will be his BHS for life. However, if he is below the age of 65
years, the BHS applicable to him will be adjusted yearly until he has reached the
age of 65 years. The Medisave contributions will go into the MA to build up the
Medisave balance until it reaches the BHS, and there is no minimum amount
required in the MA. Any amount above the BHS will be automatically transferred
to the member’s other CPF accounts as specified, to boost his monthly payouts
in retirement.
2.20 The BHS will be adjusted annually to keep pace with the growth in Medisave use
by the elderly. For each cohort turning 65 years old, the applicable BHS will be
fixed at that year’s amount for the rest of that CPF member’s life. Any CPF
member below the age of 65 years can voluntary top-up his MA after each annual
adjustment of the BHS. If he is aged 65 years and above, he can top-up his MA
at any time if his Medisave balance falls below the BHS applicable to him. For
more information, refer to the CPF Website.

2.21 The BHS in the MA can also be used to pay for the ElderShield and MediShield
premiums of CPF members and their dependants, as well as to pay for certain
approved outpatient treatment expenses. MediShield will be renamed as
MediShield Life by end of 2015.
2.22 The various uses of Medisave savings are already mentioned in an earlier section.
B2. Medifund
2.23 Medifund is an endowment fund set up by the Government in April 1993, to act
as a safety net to help needy Singapore citizens who are unable to pay their
medical expenses. This is also a safety net for patients who face financial
difficulties with their remaining bills after receiving Government subsidies and
drawing on other means of payments, including MediShield Life, private
Integrated Shield Plans (IPs), Medisave and cash.
2.24 Patients who fulfil the eligibility criteria can apply for Medifund assistance through
the Medical Social Workers (MSWs) at the Medifund-approved institutions. They
can also apply through any of the Community Development Councils. The MSWs
will investigate the cases and submit their recommendations to the respective
Hospital Medifund Committee of each Medifund-approved institution for approval.
A list of Medifund accredited hospitals and medical institutions is available on the
Ministry of Health (MOH) website at: www.moh.gov.sg.
B3. MediShield Life
2.25 Since 1 November 2015, MediShield Life has replaced the MediShield Scheme.
MediShield Life, administered by the CPF Board, is an individual basic universal
healthcare insurance scheme which helps to pay for large hospital bills and
selected costly outpatient treatments, such as kidney dialysis, chemotherapy and
radiotherapy for cancer. It targets Class B2 / C wards and subsidised treatments
in public hospitals.
2.26 Those who choose to stay in Class A / B1 wards in public hospitals or private
hospitals can still benefit from MediShield Life. However, the payouts are
calculated based on a percentage of the hospital bill, so that the payouts are at
about the same level as someone who seeks treatment in a Class B2 / C ward of
a public hospital.
2.27 MediShield Life provides better protection for all Singapore Citizens and Singapore
Permanent Residents for life, regardless of age or health condition.
B4. Private Medical Insurance Scheme
2.28 This scheme allows CPF members to use their Medisave savings to buy Medisave
approved Integrated Shield Plans (IPs) for themselves and their dependants.
Dependants refer to a member’s parents, spouse, children and grandparents.

2.29 IPs comprise of two parts, a MediShield Life component managed by the Central
Provident Fund (CPF) Board, and additional benefits offered by private insurers.
2.30 From 1 November 2015, since MediShield Life has replaced MediShield, the
MediShield Life component has also replaced the MediShield component in IPs.
The MediShield Life component of the CPF member’s IP covers them for life,
including their pre-existing conditions. This is the case even if their pre-existing
conditions are not covered under the additional coverage from their private
insurer.
2.31 Singaporeans Citizens and Permanent Residents can pay for their MediShield Life
premiums fully using MediSave. For those with IPs, there are Additional
Withdrawal Limits (AWLs) to enable Singaporeans to use MediSave, up to a cap,
to pay the additional premium for the private insurance component of IPs. The
AWLs apply on top of the amount of MediSave used for MediShield Life
premiums:
▪ S$300 if the CPF member is 40 years old or younger on their next birthday.
▪ S$600 if the CPF member is 41 to 70 years old on their next birthday.
▪ S$900 if the CPF member is 71 years or older on their next birthday
2.32 Each insured person can only have one Integrated Shield Plan paid with MediSave.
B5. ElderShield
2.33 Launched by the MOH in September 2002, ElderShield is an affordable severe

disability insurance scheme which provides basic financial protection to those
who need long-term care. It provides a monthly cash payout for a limited period
to help pay out-of-pocket expenses for the care of severely disabled persons.
2.34 Under the basic ElderShield plan, the CPF member will receive a monthly benefit
if he is unable to perform at least three out of six of the specified activities of
daily living, namely washing, dressing, feeding, toileting, mobility and
transferring. Over and above the basic ElderShield plans, ElderShield
supplementary plans are offered by participating insurers to enhance the benefits
payable under the basic plans.
2.35 All Singaporeans and Singapore Permanent Residents who are CPF members are
automatically covered under ElderShield when they turn 40 years old, unless they
opt out of the scheme. Premiums for ElderShield are payable annually until the
age of 65 years and can be made in cash or deducted from the CPF members’
Medisave savings. A CPF member can also use his Medisave savings to pay the
ElderShield premiums for his spouse, children, parents and grandparents.
2.36 The MOH has appointed three insurers to offer ElderShield and ElderShield
Supplements. Currently, they are Aviva Ltd, Great Eastern Life Assurance Co Ltd
and NTUC Income Insurance Co-operative Ltd.

B6. CareShield Life
2.37 The Government has accepted the recommendations of the ElderShield Review
Committee to enhance the ElderShield scheme into the new “CareShield Life”
scheme, implementation from 2020.
2.38 CareShield Life will feature higher payouts that increase over time with no cap
on payout duration, to provide better protection against the uncertainty of long-
term care costs if you become severely disabled.
2.39 CareShield Life will provide better protection and assurance in 4 ways:
▪ Lifetime cash payouts for as long as one is severely disabled
▪ Payouts increase over time, starting at $600 per month in 2020 and
increasing until age 67, or when one makes claims, whichever is earlier.
▪ Government Subsidies to make it affordable, so no one will lose coverage if
they cannot pay the premiums.
▪ Premiums can be fully payable by MediSave.
2.40 For more details on premium and coverage, do refer to the MOH website at:
https://www.moh.gov.sg
C. Property Ownership
2.41 To give Singaporeans an asset to call their own, the Singapore Government
makes it easy to buy and own a flat by allowing the use of CPF savings to aid
housing payments.
2.42 CPF Ordinary Account savings can be used to buy a residential property under
the CPF housing schemes. A CPF member can buy a HDB flat under the Public
Housing Scheme, or a private property under the Residential Properties Scheme.
CPF savings can be used for full or part payment of the property, and to service
the monthly housing payments.
2.43 Those who already own a property (HDB or private property) bought with their
CPF savings and wish to buy second or subsequent property with their CPF
savings after 1 July 2006 may use their CPF savings, up to the Valuation Limit
(defined to be the lower of the purchase price or the market value of the property
at the time of purchase), but will be subject to conditions based on their age.
(a) If they are below 55 years old, they need to set aside the current Basic
Retirement Sum (BRS) in their Special account (including the amount used
for investments), and Ordinary Account before they can proceed to use their
CPF savings.
(b) If they are 55 years and above, they need to set aside their BRS in their
Retirement Account, Special Account (including the amount used for
investments), and Ordinary Account before they can proceed to use their CPF
savings.

(c) Regardless of age, if one currently owns a HDB flat and wish to purchase a
second HDB flat, HDB will require the owner to sell off their existing HDB flat
within 6 months upon receiving the keys to their second HDB flat.
2.44 For more information, please visit the CPF website: https://www.cpf.gov.sg
C1. Public Housing Scheme
2.45 The objective of this scheme is to help CPF members buy flats in Singapore for
occupation. Introduced in 1968, this scheme applies only to government-built
Housing and Development Board (HDB) flats, either new or resold. The majority
of the resident households in Singapore live in HDB flats. CPF members using
their CPF savings to service their housing loans under this scheme are also
covered by the CPF Board’s Home Protection Scheme (HPS). The rules of the
Public Housing Scheme (PHS) are discussed in the following sections.
(a) CPF Usage For HDB Flat

When buying a flat directly from the HDB, all the savings in the CPF Ordinary
Account can be used to pay the initial deposit, as well as the balance of the
purchase price. For a resale flat bought in the open market, CPF savings may
be used to pay up to the Valuation Limit (VL). The VL refers to the market
value of the flat at the time of purchase or the purchase price, whichever is
lower.
If a housing loan is taken, future monthly CPF contributions may be used to

pay the monthly instalments. For a resale flat, a CPF member who has applied
for the HDB loan will be subject to credit assessment by the HDB. In addition,
the HDB requires the CPF member to exhaust all his savings in the CPF
Ordinary Account before the loan is granted.
The CPF Ordinary Account savings may also be used to pay for the stamp
duty, survey and legal fees incurred in the purchase of a HDB flat. However,
monthly service, conservancy and other charges relating to the use of the
property, including taxes, cannot be paid with the CPF savings.
Rules on CPF usage and HDB housing loans have been updated to provide
more flexibility for Singaporeans to buy a home for life, while safeguarding
their retirement adequacy. The rules will now focus on whether the remaining
lease of the home can cover the youngest buyer until at least the age of 95.
If so, home buyers will be allowed to obtain maximum CPF usage and HDB
housing loan (for HDB flat buyers). Those who do not meet this criteria will
still be able to use CPF and take up an HDB housing loan, but the amount
will be pro-rated. The updated rules will take effect from 10 May 2019.
Majority of home buyers will not be affected as they are already purchasing
a property which lasts them to the age of 95. Please refer to Appendix 13A
on the “Updated Rules on CPF Usage and HDB Housing Loan” extracted from
the MOM website at www.mom.gov.sg

Consequential changes to purchase of multiple properties using CPF:

Previously, CPF members needed to set aside the Basic Retirement Sum
(BRS) before excess Ordinary Account (OA) monies could be used to
purchase second or subsequent properties. From 10 May 2019, members
who do not have any property bought using CPF monies that covers them
until at least the age of 95 will need to set aside the Full Retirement Sum
before using excess OA monies to purchase second or subsequent properties.
Members who have a property with remaining lease that covers them until at
least the age of 95 will not be affected (i.e. previous rules apply). Members
in a buy-first-sell-later situation are not affected if they dispose of their
previous property within the six-month grace period.
Consequential changes to CPF usage after age 55: For purchases from 10
May 2019, the remaining lease of the property needs to cover the buyer until
at least the age of 95 for the buyer to use Retirement Account (RA) savings
above the BRS to pay for the property. Members approaching age 55 can ask
CPF Board to reserve their OA savings so that they may continue servicing
their mortgage payments after the age of 55. Those facing difficulty servicing
their housing loans can approach HDB or CPF Board for assistance.
For terms and conditions relating to the use of CPF savings to purchase HDB
flats, do refer to the CPF website at: www.cpf.gov.sg
(b) Bank Loans

Since 1 January 2003, a flat buyer (CPF member) who is not eligible for a
HDB loan has to take a loan from a bank / financial institution that is licensed
by the Monetary Authority of Singapore to provide housing loans. HDB flat
purchasers / transferees are advised to check with the banks / financial
institutions on the granting of such housing loans. For any such CPF member
taking a bank loan, a Letter of Offer must be obtained from the bank /
financial institution before he can exercise the Option to Purchase for the
HDB flat.
(i) CPF Charge

In accordance with the regulations as laid out in Section 21 of the CPF
Act (Cap. 36), a CPF charge on the flat is effected immediately upon the
release of CPF moneys for the flat. The charge shall be in force until all
the moneys secured by the charge, including the interest accrued, are
refunded into the CPF member’s account as required by the CPF Board,
or when the CPF member is eligible to withdraw under Section 15 of the
CPF Act (Cap. 36). The CPF Board may, where it deems fit, accept an
application and release information on the CPF Board’s charge on a flat
to any public authority and / or CPF member. An administration fee of
S$21.00 (including GST) will be imposed for the release of such
information.

(ii) Notification Of Changes To Loan Details

A CPF member who has used his CPF savings for the purchase of a flat,
as well as his financier (if any), are required to notify the CPF Board of
the following:
 Full redemption of the housing loan;
 Refinancing or re-mortgaging of the flat;
 Increase in loan quantum approved by the financier (Note: If the
quantum exceeds the CPF Withdrawal Limit, the CPF Board may
require the CPF member and his financier to maintain a separate loan
account for the excess sum); and
 Any change in loan term (applicable if using the CPF for monthly
instalment payment).
(iii) Notification Of Sale And Refund Of CPF Moneys

A CPF member who has used his CPF savings to purchase a flat, and his
financier (if any), are required to notify the CPF Board of the intended
sale, transfer, assignment and otherwise disposal of the flat one month
before the completion of the transaction. The CPF member and / or his
financier are to furnish the CPF Board with the redemption statement of
the housing loan four weeks before the completion of the sale, transfer,
assignment or otherwise disposal of the flat.
Under the regulations, the CPF member is required to refund the CPF
savings withdrawn plus accrued interest to his CPF account upon the
sale, transfer, assignment or otherwise disposal of the flat, if he has not
yet qualified for the withdrawal of his CPF savings under Section 15 of
the CPF Act (Cap. 36). If the CPF member is aged 55 years or above, he
is required to refund to his account the CPF Minimum Sum deficiency, or
the principal CPF withdrawn for the property plus the accrued interest,
whichever is lower. The CPF Minimum Sum deficiency is the CPF
Minimum Sum applicable to the CPF member when he attains the
specified withdrawal age, less the balance in his Retirement Account
(excluding interest earned). For any CPF member attaining the specified
withdrawal age before 1 July 1995, the required CPF refund will be the
principal amount pledged for part of the CPF Minimum Sum plus the
accrued interest on the pledge.
(iv) Penalty For False Declaration And Misuse Of Property

Any CPF member who has purchased a property under the Public Housing
Scheme by making a false statement or declaration, or by furnishing any
information or document which he knows to be false in material, or who
allows such property to be used for any immoral, illegal or unauthorised
purposes, or who contravenes any of the conditions under the PHS, shall
be guilty of an offence under the CPF Act (Cap. 36). The CPF Board shall,
in such circumstances, be entitled to seize the property and sell it to
recover the amount of CPF savings that has been withdrawn plus accrued
interest.

C2. Lease Buyback Scheme (LBS)
2.46 The LBS was launched on 1 March 2009, with enhancements to the scheme
made on 1 April 2015. It is an additional monetisation option to help elderly
households living in 4-room and smaller HDB flats (including those who previously
owned and downgraded from 5-room or bigger HDB flats) to unlock part of their
housing equity while continuing to live in their homes, and receive a lifelong
income stream to supplement their retirement income.
2.47 The eligibility criteria of the LBS are as follows:

(a) All owners should be at CPF Payout Eligibility Age (currently set at age 65)
or older;
(b) At least one owner must be a Singapore Citizen;
(c) Gross monthly household income of S$12,000 or less;
(d) All flat types (Excluding short-lease flats, HUDC, and Executive Condominium
units);
(e) No concurrent ownership of second property;
(f) All owners have been living in the flat for at least 5 years; and
(g) Have at least 20 years of lease to sell for proceeds.
2.48 The scheme involves the HDB buying back the tail-end of the lease of the flat
(each HDB flat has a 99-year lease from date of completion), leaving the elderly
flat owner with a shorter lease. Enhancement had been made to allow the option
to choose the length of the lease to be retained, depending on qualifying criteria.
In addition to the value of the housing equity unlocked from the shorter lease,
the government will top up the amount up to S$20,000. Only Singapore Citizens
(SCs) can receive the bonus. If there is more than one SC flat owner, the bonus
will be apportioned among them based on their top-up received.
2.49 After you have topped up the Retirement Account to the requirements stated,
any excess proceeds can be withdrawn in cash, up to a maximum of S$100,000.
The full Retirement Account will be used to purchase an immediate annuity under
the CPF LIFE scheme from the CPF Board, to provide a monthly stream of income
for life.
2.50 The annuity payout is in addition to whatever source of income that the elderly
flat owner already has, e.g. CPF savings, investments, insurance, rent from
subletting of rooms, etc. The shorter 30-year lease term is non-transferable in the
open market. If it needs to be terminated prematurely, the lessee or his
beneficiaries will receive a pro-rated refund on the residual lease.
2.51 For the precise terms and conditions of the LBS, do refer to the HDB website at:
www.hdb.gov.sg

C3. Private Properties Scheme
2.52 This scheme allows CPF members to use their CPF savings to buy private
residential properties in Singapore that are built on freehold land or leasehold land,
with a remaining lease of at least 30 years (the remaining lease must last the
owner up to at least 80 years old). It allows CPF members to use their savings
to pay for land and construction costs, as well as the legal and stamp fees,
relating to the purchase of the property. It also allows CPF members to buy more
than one property at any one time. However, down-payments, as well as
renovations, improvements and repairs to the property, are not covered under the
scheme. The CPF Board places a “charge” on the property to ensure that the CPF
savings used in the purchase are recovered when the property is sold.
2.53 CPF savings can be used to pay the purchase price of a property after a CPF
member has paid the first 5% of the purchase price of the property with his own
funds. In the case of purchase of a property under the Executive Condominium
Housing Scheme Act, a CPF member can use the housing grant to pay the down
payment at the time of signing the Sale and Purchase Agreement and after he
has paid the 5% cash payment. Further CPF savings, if any, can only be released
after he has paid all the cash difference.
2.54 For a complete list of conditions for use of CPF savings for multiple properties
and the additional conditions for use of CPF savings for purchase of land and
construction of house, do refer to the CPF website.
D. Asset Enhancement
D1. CPF Investment Scheme (CPFIS)
2.55 CPF members can invest their Ordinary and Special Accounts savings under the
CPF Investment Scheme to enhance their retirement savings. Leaving money with
the CPF carries no risks of capital loss, but the interest payable may not, at times,
be as attractive as the rate of return of other investment instruments. However,
CPF members need to be informed of the potential risks of their investment
instruments, as most investments carry risks of capital loss, and may at times
generate investment returns lower than the interest guaranteed on funds held in
the CPF accounts.
2.56 Investment objectives and goals differ from person to person. The CPFIS reflects
this by making different types of investments available to CPF members. Under
the CPFIS, CPF members can invest their CPF savings in shares and loan stocks,
unit trusts, government bonds, statutory board bonds, bank deposits, fund
management accounts, endowment insurance policies, investment-linked
insurance policies (ILPs), exchange traded funds (ETFs) and gold.
2.57 The CPFIS comprises the CPF Investment Scheme-Ordinary Account (CPFIS-OA)
and CPF Investment Scheme-Special Account (CPFIS-SA). These schemes give
CPF members more options in investing their CPF savings, while meeting the
long-term objective of financial security in old age.

(a) CPFIS Eligibility Requirements

Any CPF member who meets the following requirements is allowed to
participate in the CPFIS:
(i) He is at least 18 years old;
(ii) He is not an undischarged bankrupt; and
(iii) He has more than S$20,000 in their Ordinary Account (for investment
under CPFIS-OA) and / or more than S$40,000 in his Special Account
(for investment under CPFIS-SA).
From 1 October 2018, as a new CPFIS investor, CPF members will need to
take the Self-Awareness Questionnaire (SAQ) from the CPF website before
they can start investing under CPFIS.
Any CPF member who is overseas is allowed to participate in the CPFIS.

However, there are some investments which will require the CPF member to
be personally present. The CPF member may have to authorise someone to
act on his behalf by way of a Power of Attorney3 if he is not able to handle
the transactions personally.
(b) Different Application Procedures For Use Of Ordinary Account (OA) and
Special Account (SA) Savings
The procedure for applying for the use of one’s OA or SA savings for
investment under the two investment schemes varies.
(i) CPFIS-OA
In order to use one’s OA savings for investment, a CPF member must
open a CPF Investment Account with one of the following CPFIS agent
banks:
 Development Bank of Singapore Ltd (DBS);
 Overseas-Chinese Banking Corporation Ltd (OCBC); and
 United Overseas Bank Ltd (UOB).
The agent banks are appointed by the CPF Board to maintain the CPF
members’ CPF Investment Accounts under the CPFIS-OAs. They will
liaise with the CPF Board and the various product providers to settle the
purchases and sales of CPF members’ investments, and keep track of
their investment holdings and transactions in their CPF Investment
Accounts.
Each CPF member is allowed to maintain only one CPF Investment

Account at any one time. However, he may transfer his CPF Investment
Account from one agent bank to another, without selling his investments,
except for investments in gold. All the investments and cash balances
will be transferred along with the CPF Investment Account. All that the
3
An instrument in writing by which one person, as principal, appoints another as his agent and confers upon
him the authority to perform certain specified acts on behalf of the principal. The principal in this case is
the CPF member.

CPF member needs to do is to apply at the bank to which he intends to

transfer his account.
(ii) CPFIS-SA
Unlike the CPFIS-OA, the CPFIS-SA does not require a CPF member to
have an investment account in order to carry out his investment
transactions. All that the CPF member needs to do is to approach the
product provider who will then liaise with the CPF Board. Under this
scheme, the CPF Board will liaise with the various product providers to
settle the CPF members’ purchases and sales of investments, as well as
to keep track of their investment holdings and transactions.
(c) Top-Up Feature

A CPF member is not allowed to top-up his CPF Investment Account under
the CPFIS-OA scheme with cash for purchasing any form of investments,
other than the taking up of entitlements or the conversion of entitlements. In
such a case, the CPF member may top-up his CPF Investment Account
through his agent bank, if he has insufficient CPF savings or stock limit to
subscribe for the entitlements or conversion. However, any such top-up is
not withdrawable or refundable, even if the application is unsuccessful.
(d) Treatment Of Investment Profits And Losses

Profits made from investments under the CPFIS-OA and CPFIS-SA are not
withdrawable, as the purpose of investing is to grow savings for retirement.
However, the profits can be used for other CPF schemes, subject to the terms
and conditions of those schemes.
(e) Withdrawal Of CPFIS Investments When The CPF Member Reaches The
Specified Withdrawal Age
The CPF member can apply to the CPF Board to withdraw his CPFIS-OA and
CPFIS-SA investments, as well as the cash balance in his Investment
Account, as long as he has aside the Full Retirement Sum or the Basic
Retirement Sum with sufficient property charge/pledge in his Retirement
Account. The CPF Investment Account will be closed once the CPF member
withdraws all his investments.
(f) Treatment Of CPFIS Investments Upon CPF Member’s Death

When a CPF member passes away, the CPF investments4 and any cash held
in his CPF investment account under the CPFIS-OA, as well as investments
held under the CPFIS-SA, form part of the deceased CPF member’s estate
and will be distributed according to the applicable laws. These investments
are not protected from the deceased CPF member’s creditors under the CPF
laws and may be used to satisfy creditors’ claims in accordance with the
Probate and Administration Act (Cap. 251). This applies whether or not the
deceased CPF member is an undischarged bankrupt.
4
In the case of NTUC Income insurance policies, such policy owners may have the choice to nominate their
beneficiaries to receive the insurance proceeds.

E. Family Protection
E1. Dependants’ Protection Scheme (DPS)
2.58 The DPS is an affordable term insurance scheme that provides insured CPF
members and their families with some money to get through the first few years,
should the insured CPF members die or become permanently incapacitated.
2.59 Currently, the DPS is administered by two insurers, Great Eastern Life and NTUC
Income. This scheme is automatically extended to CPF members who are
Singapore Citizens or Permanent Residents, between the ages of 21 and 60
years, when they make their first CPF contributions.
2.60 The DPS is an optional term insurance which covers the CPF member for a
maximum sum assured of S$46,000 up to the age of 60 years. The coverage is
worldwide. The DPS benefit will be paid out if the insured CPF member passes
away or becomes permanently incapacitated such that he or she can no longer
work.
2.61 The premium for 12 months varies according to the age of the CPF member. The
older the CPF member, the higher the premium rate will be. The premium will first
be deducted from the CPF member’s Ordinary Account. If the Ordinary Account
does not have enough money, the premium will be deducted from the Special
Account. If the CPF member does not have enough CPF savings to pay the
premium for the maximum cover, he can either do a top-up to his insurer directly
or be insured for a lower amount (the minimum sum assured is S$5,000).
2.62 The cover will be automatically renewed every year with the premium
automatically deducted from the Ordinary Account of the CPF member, unless
one of the following events occurs to him:
(a) He has reached the age of 60 years (current maximum age for coverage), or
has become physically / mentally incapacitated, or has died;
(b) He does not have enough CPF savings to pay the premium for a minimum
sum assured of S$5,000;
(c) He has instructed the CPF Board not to renew his coverage; or
(d) He has no contribution paid to his CPF account for a continuous period of
three years.
E2. Home Protection Scheme (HPS)
2.63 The HPS is a mortgage reducing term insurance which insures CPF members and
their families against losing their homes should members become physically /
mentally incapacitated or pass away before their housing loans are paid up.
2.64 A CPF member is required to declare his health condition when applying or
adjusting his HPS cover. If a CPF member is using his CPF savings to pay his
housing instalment payment, he must apply for the HPS cover. Otherwise, his
housing instalment payment using his CPF savings will not commence. The CPF

member has to fully disclose all information regarding his health condition,
including the following:
(a) All past and current illnesses;
(b) Any surgery that he had previously undergone or would be undergoing; and
(c) Any physical or mental impairment.
2.65 The CPF Board would not consider claims or refund premiums to a CPF member
who had given false or misleading information, or withheld relevant information
in his health declaration.
2.66 A CPF member may be required to undergo a medical examination arranged by

the CPF Board to determine his eligibility under the HPS. The CPF Board may also
request a copy of the medical report on a CPF member’s health condition from
his attending physician. If a CPF member is not eligible for HPS cover owing to
his pre-existing medical condition(s), he may still use his CPF savings to pay his
monthly housing instalment or to make lump sum repayment.
2.67 The HPS is applicable only to public housing. HPS does not cover private
residential properties, such as executive condominiums (ECs) or privatised
Housing and Urban Development Company (HUDC) flats.
3. OTHER SCHEMES UNDER THE CPF
A. Education Scheme
3.1 The Education Scheme is a loan scheme which enables CPF members to use CPF
savings from their Ordinary Accounts to pay for their children's or their own
tuition fees. The student has to repay the amount withdrawn plus interest, in
cash subsequently. Only full-time subsidised courses at approved educational
institutions are included under this loan scheme.
3.2 Since November 2008, degree courses under the Polytechnic-Foreign Specialised
Institution framework and ITE’s Technical Engineer Diploma course have been
included under the CPF Education Scheme. These are Government subsidised
degree and diploma courses offered by approved educational institutions, where
the qualification is conferred by a reputable foreign specialised institution.
B. Workfare Income Supplement (WIS) Scheme
3.3 Workfare is paid to older low-wage workers to encourage them to work and to
improve their retirement adequacy. Employees will receive their Workfare in the
form of cash payments and contributions to their CPF accounts on a monthly
basis, while self-employed persons receive their Workfare in the form of cash
payments and contributions to their Medisave Account on a yearly basis. For
more details, please refer to the CPF website.

3.4 Workfare is a key to Singapore’s social security landscape that provides support
for low-wage workers, so that they have the best chance to progress. It
comprises the WIS scheme and the Workfare Training Support (WTS) scheme
(see next section below). While the WIS scheme encourages older low-wage
workers to work by supplementing their income and retirement savings, the WTS
scheme encourages them to upgrade their skills through training, so that they can
improve their employability, upgrade to better jobs and earn more.
3.5 The WIS scheme was first announced during the 2007 Budget Speech. It was
targeted at older low wage workers who were vulnerable to wage stagnation. Its
objective is to supplement the wages and CPF savings of older low-wage
workers, and to encourage them to stay employed.
3.6 The WIS scheme is tied to the CPF system. As CPF contribution rates for older
low-wage workers are lower than other CPF members, the WIS payments help to
increase their take-home pay and enhance their employability. The income
supplements more than make up for the lower CPF.
3.7 For the WIS eligibility criteria and maximum WIS payout for different age groups,
do refer to the CPF website.
C. Workfare Training Support (WTS) Scheme
3.8 The WTS scheme is to complement the WIS scheme by encouraging older low-
wage workers to undergo and complete training, so that they can take on more
productive work, improve their employability and move out of low-wage
employment.
3.9 Employers who send their low-wage workers for training can also claim higher
absentee payroll of up to 95%, to cover the salaries of their low-wage workers
when they are away for training.
D. Supplementary Retirement Scheme (SRS)
3.10 Introduced on 1 April 2001, the SRS (operated by the private sector) is part of
the government’s multi-pronged strategy to address the financial needs of a
greying population, by helping Singaporeans to save more for their old age. It is
a voluntary scheme that complements the CPF. A participant at his own discretion
can contribute a varying amount to SRS, subject to a cap as specified. The
contributions may be used to purchase various investment instruments. The SRS
offers attractive tax benefits. Contributions to the SRS are eligible for tax relief,
investment returns are accumulated tax-free (with the exception of Singapore
dividends), and only 50% of the withdrawals from the SRS are taxable at
retirement.
D1. SRS Participation
3.11 To be eligible, a participant must be a Singaporean, Singapore Permanent

Resident or foreigner, at least 18 years old, of sound mind, capable of managing

his own affairs and not being an undischarged bankrupt. To participate in the
SRS, a participant must first open an SRS account with any one of the current
SRS Operators, namely DBS, OCBC or UOB.
3.12 Each participant is not allowed to have more than one SRS account at any point
in time. However, the participant may transfer his SRS account between different
SRS Operators. Each SRS Operator is allowed to levy charges according to its
own schedule of charges. The charges will be deducted from the participant’s
SRS account.
3.13 If the participant previously had an SRS account, but had withdrawn all the
moneys in it after having attained the relevant retirement age5 or on medical
grounds, and then closed it, the participant would also not be permitted to open
a new account.
3.14 In a nutshell,
Participant Participant’s
(Singaporean/ Opens account SRS Invests participant’s choice of
Singapore PR/ with Operator money in investments
Foreigner)
D2. SRS Contributions
3.15 As mentioned earlier, the SRS participant may contribute any amount (in cash
only) to his SRS account up to the SRS contribution cap. The SRS contribution
cap is determined by multiplying the appropriate SRS contribution rate by an
absolute income base. For details on the absolute income base, SRS contribution
rate, please refer the CPF website, as well as the Ministry of Finance website at:
www.mof.gov.sg
3.16 An employer can contribute to the participant’s SRS account on behalf of the
participant, provided that the participant has given written instruction or
authorisation to his employer to do so. As the contributions made by the employer
to the participant’s SRS account on his behalf constitutes his remuneration, such
contributions are taxable in the hands of the participant and must be declared by
the employer in the participant’s Form IR8A for the relevant year. Based on the
information provided by the selected SRS Operator, the participant will then be
given a tax relief for such contributions in the subsequent year of assessment.
D3. SRS Withdrawal
3.17 Previously, all SRS withdrawals must be made in cash. Where savings in an SRS
account have been used to acquire investments, the investments must be
liquidated before the sales proceeds can be withdrawn in cash from the SRS
account. From 1 July 2015, SRS members will be able to apply to their SRS
5
The statutory retirement age that was prevailing when the participant made his first SRS contribution.

operators to withdraw investments from their SRS accounts, without having to

liquidate their investments, subject to the types of withdrawals as specified in
the SRS.
3.18 This change allows SRS participants to hold their SRS investments outside of the
SRS scheme, without having to incur the transaction costs to first liquidate their
SRS investments (so as to withdraw cash from their SRS accounts) and thereafter
to re-purchase the same investments outside of the SRS.
3.19 A participant can withdraw any amount of his SRS savings in his account at any
time. There is no specified minimum or maximum sum of withdrawal. However,
if the withdrawal is made before the statutory retirement age prevailing at the
time of the first contribution, 100% of the sum withdrawn will be subject to tax.
A 5% penalty for premature withdrawal will also be imposed, unless it is made
under exceptional circumstances, such as the following:
(i) Death;
(ii) Medical grounds;
(iii) Bankruptcy; or
(iv) The full withdrawal of the SRS balance by a foreigner who has maintained
his SRS account for at least ten years from the date of his first contribution.
3.20 A participant can withdraw his SRS monies over ten years from the date of his
first penalty-free withdrawal. Withdrawals are penalty- free only if they take place
after the statutory retirement age prevailing at the time of his first SRS
contribution. Spreading out the withdrawals will generally result in greater tax
savings, especially when the marginal income tax rates may be lower during the
retirement years. For details, do refer to the Inland Revenue Authority of
Singapore website at: www.iras.gov.sg
D4. SRS Investments
3.21 The SRS contributions may be invested in a wide range of financial assets,
including those offered by financial institutions (product providers) other than the
SRS operator. However, direct property investments are not allowed. As for life
insurance products, the following conditions shall apply:
(i) Only single premium products are allowed (including recurrent single premium
products, encompassing both annuity and non-annuity plans);
(ii) Life cover (including total and permanent disability benefits) will be capped
at three times the single premium;
(iii) Plans can allow for a contribution continuation feature / benefit upon
disability;
(iv) Other types of life insurance e.g. critical illness, health and long-term care
are excluded; and
(v) Trust nomination is not allowed for life insurance products purchased using
SRS funds.

Appendix 13A
Updated Rules on CPF Usage and HDB Housing Loan
Property Use of CPF Funds HDB Housing Loan

Covers (private & public housing) (public housing)
Youngest
Buyer To Age
≥ 95 years Allowed, subject to: Allowed, subject to:

• Valuation Limit (or applicable • Loan-to-Value (LTV) limit of
withdrawal limits if higher); 90%; and
and • Loan tenure is the shortest of
• Remaining lease at the point 25 years, 65 years minus the
of purchase^ is more than 20 average age of the buyers, or
years. remaining lease at the point of
purchase^ minus 20 years.
< 95 years Allowed, subject to: Allowed, subject to:

• Valuation Limit pro-rated • LTV limit of 90% is pro-rated
according to the extent that the based on the extent that the
remaining lease can cover the remaining lease can cover the
youngest buyer using CPF to youngest buyer to the age of 95;
the age of 95; and and
• Remaining lease at the point • Loan tenure is the shortest of
of purchase^ is more than 20 25 years, 65 years minus the
years. average age of the buyers, or
remaining lease at the point of
purchase^ minus 20 years.
^For HDB flats, the point of purchase refers to the flat application date. For private
properties and Executive Condominium units, the point of purchase refers to the Option
to Purchase or the Sale & Purchase Agreement exercised date.
Source : www.mom.gov.sg

14. Needs Analysis
CHAPTER 14
NEEDS ANALYSIS
CHAPTER OUTLINE
1. Introduction
2. Benefits Of Conducting Needs Analysis
3. Stages Of Needs Analysis
4. Stage One – Establish And Define Client-Representative Relationship
5. Stage Two – Gather Data, Including Goals
6. Stage Three – Analyse And Evaluate Financial Status
7. Stage Four – Develop And Present Recommendations
8. Stage Five – Implement Recommendations
9. Stage Six – Review With Client Periodically
Appendix 14A – Risk Tolerance Questionnaire
KEY LEARNING POINTS

 briefly explain the benefits of conducting needs analysis
 describe the six stages of the sales advisory process

1. INTRODUCTION
1.1 In the earlier chapters, we have learnt that the Financial Advisers Act (FAA) (Cap.
110), as well as the MAS Notices and Guidelines in relation to the FAA require
representatives to have a reasonable basis for recommending investment
products to clients. In order to satisfy this requirement, you are required to know
the client and perform a proper needs analysis before recommending products to
the client. This chapter aims to show you how a needs analysis can be done.
2. BENEFITS OF CONDUCTING NEEDS ANALYSIS
2.1 The benefits of conducting needs analysis are as follows:

(a) It helps to discover the client’s needs and to advise the most suitable product
to buy and how much to buy;
(b) It enables more time to spend on the client’s situation than on the product.
You, as the adviser, are not pushing a product, but providing a service to
identify and meet the client’s needs. Your client will not feel that your main
concern is to make a sale and give him pressure to buy the product from you;
(c) If you sell the client additional products based on his needs and objectives,
he will be able to see how the products fit into his overall plan. As such, the
client will be more committed to keeping to his plan, since he understands
the rationale for his purchases; and
(d) It also enables you to establish a long-term relationship with your client.
3. STAGES OF NEEDS ANALYSIS
3.1 Needs Analysis is a process that is designed to assist a prospective client in

identifying his financial needs and goals, so that he can make better informed
decisions on the purchase of the types of investment products that will meet his
needs. The six stages of the sales advisory process as listed below will satisfy a
well-delivered needs analysis:
3.2 Establish and define client-representative relationship;

(a) Establish and define client-representative relationship;
(b) Gather data, including goals;
(c) Analyse and evaluate financial status;
(d) Develop and present recommendations;
(e) Implement recommendations; and
(f) Review with client periodically.
3.3 Needs analysis is developed based on information that the client provides in the
Life Insurance Advisory Form specially designed for this purpose.

14. Needs Analysis
3.4 Needs analysis is not a financial plan although it can result in one. It should be
construed as a guide for the representative to use in deciding how best to attain
the client’s financial goals.
3.5 We will now discuss the six stages of the sales advisory process in greater detail.
4. STAGE ONE – ESTABLISH AND DEFINE CLIENT-REPRESENTATIVE

RELATIONSHIP
4.1 In this first stage of the sales advisory process, you will meet the client to
introduce your company, disclose your status and explain your role and the types
of financial advisory services and investment products you can provide. You will
also need to explain the purpose of the meeting and the sales advisory process
to your client. This will help your client to understand the process and form his
expectations and understanding concerning your role and services. The aim is to
see a positive and dynamic mutual interaction that will enhance the quality of the
sales advisory to the client.
5. STAGE TWO – GATHER DATA, INCLUDING GOALS
5.1 In the second stage of the sales advisory process, you will need to identify the
client’s life stages, explore his needs and determine his concerns and financial
goals. You will also need to gather his financial information and his attitude to
risk, and update any changes where necessary. Such information can be gathered
using a Life Insurance Advisory Form where the client’s financial needs can be
identified. You can then use them to form the basis for suitable recommendations
to be proposed to the client later.
A. Client’s Financial Needs
5.2 Before we go into the details on how to conduct the needs analysis, you will need
to know the financial needs that your clients are likely to face. As the needs of
your clients are mostly related to their goals, we will look at them under the three
broad categories, namely accumulation, retirement and protection.
A1. Accumulation Needs
5.3 Your client may want to set aside a sum of money to meet a future need. The
most common reason for one to save money is to provide for one’s children’s
education. People may also want to save for other purposes, such as:
 starting a business;
 buying a bigger house;
 buying a car;
 retiring earlier; or
 donating to charity.

A2. Retirement Needs
5.4 Your client may want to provide a fund to support himself and his spouse (if the
spouse has not been working) after his retirement.
5.5 When a person retires (at the statutory retirement age), what happens is that:
 his CPF benefits begins BUT… ⎯ his earned income ceases;

(assuming CPF terms and
conditions are met)
 the expenses of working BUT… ⎯ the expenses of leisure rises;

decreases
AND… ⎯ there may be increased medical

costs of healthcare owing to
ageing.
5.6 Most people do not want a reduced standard of living at retirement. They want
to pursue their hobbies and leisure interests, travel to all the places which they
have only heard of or seen pictures of or visit their grandchildren who may be
overseas. Hence, there is a need to provide funds for their retirement.
A3. Protection Needs
5.7 Protection needs are for ensuring that financial obligations can be met under the
following circumstances:
 upon premature death;
 upon disablement; and / or
 upon contracting serious illness.
(a) In the event of untimely death, you need to ensure that your client is able to
meet and / or create income and cash for:
(i) Final Expenses: these include his funeral costs, outstanding bills,
accounting, legal, tax and trust costs (where applicable);
(ii) Interim Family Income: this refers to a cash reserve to allow the
deceased’s family to live on in the initial months after the death of the
breadwinner, until longer term income is arranged;
(iii) Long-Term Family Income: this refers to the income that your client’s
dependants will need after his death. (Here you have to consider making
provisions for children who are not financially independent yet. You also
need to help your client to make provisions for his spouse, including
retirement needs);
(iv) Education: this refers to the costs required to see your client’s children
through primary, secondary and tertiary education; and

14. Needs Analysis
(v) Estate Settlement: this refers to the money that needs to be set aside to
balance your client’s estate and ensure his assets are distributed
properly. Although estate duty has been abolished in Singapore since 15
February 2008, it is still relevant to know if your client has any asset in
overseas jurisdiction that imposes estate duty.
(b) In the event of serious injury and not being able to work, your client’s
financial needs will be:
(i) Current Income: while the employer of your client (if he is employed) may
continue to pay his income, it may be for a short period only. The income
may stop before your client can recover. However, his monthly
commitments do not cease because he is sick or disabled.
(ii) Current Expenses: daily living expenses such as food, clothing, hire-
purchase, loans, mortgages, rent, utility and conservancy charges will
still need to be paid.
(iii) Current Commitments: the highest cover that your client can get in the
event of an accident or illness is 75% of current income, if he has taken
up a Disability Income Insurance policy. Is he able to survive on 25% less
income?
(c) In the event of a permanent disability, your client’s career may end, but his
life has not. He will need an amount to repay debts, provide an income and /
or create a cash reserve for his family.
(d) In the event of a serious illness, your client’s financial needs are:
(i) Reduce Level Of Debt: serious illness such as heart attack, stroke or
cancer can cause financial drain on your client. It would be good for your
client to reduce debt or pay off all debts and settle all financial
commitments when such an event occurs.
(ii) Future Income: if your client does recover, then will his current or any
other employment opportunities be opened to him?
(iii) Peace Of Mind: while a lump sum payment may not bring back your
client’s health, it may ease monetary worries and assist the recovery
process.
Every client may have the above-mentioned needs in varying degrees. For a
young client with no dependant, his financial needs are likely to be less than
one who is married and has dependants. Thus, it is important that you
understand and know your client’s life stages adequately.
B. Main Sources Of Money To Meet The Client’s Needs
5.8 The main sources of money that may be available to meet the client’s financial
and protection needs are:
(a) Central Provident Fund (CPF);
(b) Supplementary Retirement Scheme (SRS);

(c) savings and investments, e.g. bank deposits, stocks and shares, bonds, unit
trusts, property etc.;
(d) client’s existing insurance policies such as life, accident, health and disability;
and
(e) employee benefits which may be provided by the client’s employer, e.g.
Group Term Insurance, Group Personal Accident Insurance, Group Hospital
and Surgical Insurance, Group Critical Illness Insurance etc.
5.9 Do take note that some of the above-mentioned sources of money may have
conditions and penalties attached to them if they are liquidated prematurely.
C. Fact-Finding
5.10 Before you can perform a proper needs analysis, you must first of all know your
client. To do this, you need to gather from your client (and his spouse if he is
married) relevant information which will include his:
(a) personal details;
(b) employment details;
(c) number of dependants (this piece of information is required for determining
protection needs);
(d) financial information (such as income and expenses, assets and liabilities);
(e) existing insurance policies (including annuities); and
(f) financial objectives and investment preferences (including personal priorities,
retirement needs, and savings goals).
5.11 The above-mentioned information is gathered through a Life Insurance Advisory

Form. Different companies will have different formats, and you are required to
use the Life Insurance Advisory Form provided by your financial adviser. A sample
copy of the LIA prescribed Life Insurance Advisory Form is available on the LIA
website at www.lia.org.sg
C1. Personal Details
5.12 The personal details that you need to obtain from your client (and his spouse, if
applicable) should include:
 name;
 NRIC or passport number (or unique identification number);
 nationality;
 address;
 date of birth;
 gender;
 marital status;
 smoking habit; and
 other relevant details, if any.

14. Needs Analysis
5.13 The above-mentioned information serves many purposes. Firstly, it is essential to

meet regulatory requirements, as well as for administrative purposes on the part
of the company. Secondly, information on the client’s personal profile and
relevant details can provide you with a preliminary assessment of the types of
products that will likely be suitable for him. For example, an elderly individual may
be more interested in purchasing retirement products such as annuities.
C2. Employment Details
5.14 You have to find out the client’s (and his spouse’s, if applicable) occupation, as
well as his employment status, i.e. whether he is employed or unemployed;
whether he is self-employed or employed on a full-time or part-time basis.
5.15 The client’s occupation is important, as it will reveal his income source and level,
and whether he is involved in any hazardous occupation. This is an important
consideration for income protection plans, because a person with a high risk job
has a higher chance of meeting an accident which may result in untimely or
sudden death or disablement. Therefore, he has a need to protect his income
against death or disability. If your client is self-employed, then perhaps a Medical
Expense Insurance policy is important, since he may not be as adequately covered
as in the case of a salaried employee.
5.16 On the other hand, the information on his employment status will enable you to
assess the nature of the client’s income and his ability to commit to a medium to
long-term investment product.
5.17 In addition, you should also find out your client’s intended retirement age.
Knowing this will help you to determine the number of years that he has from
now to accumulate sufficient funds for his retirement.
C3. Number Of Dependants (If Any)
5.18 A dependant is a person who relies on the client for financial support and
maintenance. Examples include spouse, children and parents.
5.19 The information to be obtained should include each dependant’s name,

relationship to the client, age, gender, and the number of years that your client
will have to support each of them financially. The more dependants that your
client has, and the greater the number of years that he has to support them will
mean that he needs more life insurance protection, as well as income protection.
5.20 How do you help your client to answer the question on “Years to Support” for
his dependants?
5.21 For children, you can roughly determine this figure by subtracting the current age
from age of 25 years for boys and age of 22 years for girls, i.e. the typical age
that they complete tertiary education.

5.22 For parents or other dependants, you can determine this figure by looking at the
life expectancy of a person. In addition, as a rule of thumb, you could add another
eight years to the life expectancy to arrive at the years needed to support them.
The average life expectancy of male and female lives as at December 2018 is 81
and 85.4 years respectively.
C4. Financial Information
5.23 You should obtain the following financial information from your client:
 monthly income and expenditure; and
 assets and liabilities.
C4A. Monthly Income And Expenditure

5.24 The information that you need to gather here should include the client’s salaries,
bonuses and other sources of income, such as rental income, interest earnings,
dividends, capital gains and director’s fees, if any.
5.25 The amount that is arrived at here will enable you to determine the continuing
income needed in the event of death, disability or retirement. It will also help you
to compare your client’s projected needs with the currently available sources of
income for meeting his needs.
5.26 Besides the income, you should also help the client to break down his
expenditures in order to assess his monthly financial commitments as follows:
Committed (or Fixed) Expenditure* Manageable (or Variable) Expenditure*

 housing;  food;
 education;  clothing;
 debt/loan repayments;  utilities;
 insurance premiums;  transportation;
 income/property taxes.  leisure and entertainment;
 household furnishings;
 investments;
 savings.
*Please note that the above lists may not be exhaustive.
5.27 The family’s current expenditure will enable you to calculate the level of income
needed for the family to survive in the event of the premature death of one or
both “breadwinners” in the family.
5.28 In addition, the information on the expenditure will help you identify the monthly
financial obligations of your client and to estimate the funds available for
investment.
5.29 Furthermore, you need to find out from your client whether he expects a
significant change to his current income / expenditure within the next 12 months,
e.g. whether he plans to switch jobs or have another child. Such information will

14. Needs Analysis
have an impact on your client’s cash flow within the next year and, thus, the
funds that he has available for investment.
5.30 Having gathered all the information, you need to sum up the monthly income and
subtract it from the total expenditure to arrive at your client’s net cash flow.
C4B. Assets And Liabilities

5.31 You need to ascertain the client’s (and his family’s, if applicable) assets and
liabilities for a number of reasons. Firstly, significant assets (e.g. the property)
need protection against the risk of loss or damage. Secondly, investment assets
can be a source of funds for the client or the dependants should the client die or
become disabled. Thirdly, financial liabilities (e.g. property mortgage) need to be
identified, so that appropriate insurance cover can be put in place.
5.32 Having found out the client’s total assets and liabilities, you need to subtract the
liabilities from his assets to arrive at his net worth. Net worth is the amount
remaining for your client after his assets are sold at their fair market values and
all debts are paid. A client whose liabilities exceed his net worth may have to
adjust his lifestyle, so as to reduce his liabilities and, perhaps, can even release
some funds for investment purposes.
C5. Existing Insurance Policies
5.33 You need to find out how far your client’s existing insurance plans (both individual
and group insurance) will go towards meeting his needs in the event of death,
disability and retirement. In other words, they will serve as a starting or reference
point for any further insurance recommendations.
C6. Client’s Objectives And Investment Preferences
C6A. Client’s Investment Preferences

5.34 It is important that you have a full understanding of the client’s attitude towards
investment risk, so that you can recommend products that are suitable for his
level of risk tolerance. The reason is that people react differently to risk. Some
are always ready to accept it, while others are always ready to reject it. The
diagram below is an illustration of an indication of the client’s risk-return profile.
Risk Classification
Low risk High risk

Low potential return High potential return
5.35 There are numerous risk tolerance questionnaires that you can use to gauge how
well a client is able to tolerate the risk of loss from an investment product. You
should familiarise yourself with the one that is provided in the Life Insurance
Advisory Form of your company. A sample questionnaire which the CPF Board

has provided for its members to determine their risk tolerance, when they decide
to use their CPF savings for investment, is in Appendix 14A at the end of this
chapter.
5.36 It is important that you explain the trade-off between risk and return to your client
in view of the different risk profiles. Clients invest their cash in various financial
instruments to seek returns. However, the higher the return, the greater will be
the risks and uncertainties. Risk is often associated with the volatility of return.
For example, the return on short-term government securities (or government
bonds) or bank deposits is almost certain, and therefore carries little or no risk.
On the contrary, investments in equities produce very uncertain results in the
short term or even face day-to-day price fluctuations. However, its potential
returns are higher, so as to compensate for the higher expected level of risk.
5.37 Investment in equities is, therefore, suitable for higher risk investors who are
prepared to accept substantial losses for the potential of higher returns. In
contrast, investments in bank deposits are suitable for clients who prefer a lower
risk. Apart from the risk of banks defaulting, bank deposits carry very little other
risks, with the returns being the interest compounded over the years.
5.38 Besides the risk and return of an investment, clients also make decisions based
on their investment time horizon. An investment time horizon is the length of time
between when the client invests and when the client withdraws from the
investments. This is an important concept when trying to decide what kind of
investments that you should recommend to your client in his portfolio. For
example, a client who does not need the money for 20 years can consider having
a riskier portfolio, as compared to another client who needs the money in a few
months’ time.
C6B. Areas Of Concern

5.39 Besides the risk tolerance, you also need to find out your client’s areas of
concern, namely:
 Does he want his investments to keep pace with inflation?
 Is he looking for investments that are easy to manage?
 Does he want capital growth on his investments?
 Does he need to have easy access to his money?
 Does he want an investment income each year?
5.40 Let us look at each of them in turn.
(i) Keep Pace With Inflation

If your client wishes his investments to “keep pace with inflation”, this means
that the purchasing power of money at the end of the investment term has
to be at least equal to what it is today. Explain to the client that, as inflation
erodes the purchasing power of money and in order to have the same
purchasing power, the rate of return on the investment will have to be equal
to or higher than the inflation rate. This will also mean that the risk will be
higher. Thus, unless the client is prepared to accept the risks involved,

14. Needs Analysis
otherwise, he may have to adjust his expectations on the rate of return on

investment.
(ii) Investment Is Easy To Manage

If your client’s concern is that the investment must be easy to manage, then
you may want to recommend him a product that has less risk or volatility, as
this will not require much attention from the client.
(iii) Capital Growth

Capital growth means that the amount that a person gets back at the end of
the investment term will be higher than the original capital that he has
invested. To enjoy capital growth, a person will have to be prepared to take
some form of risk. As we have explained earlier, the higher the return, the
higher will be the risk.
(iv) Easy Access To Cash

Explain to the client that, if he has a higher need for liquidity, he can only
consider investing in short-term low risk investment products, such as
savings account, fixed deposits and money market products, e.g. Treasury
Bills.
(v) Investment Income Each Year

Investments that provide yearly investment returns could be in the form of
coupons from bonds, interest from bank deposits or dividends from shares.
The latter however is not guaranteed. Companies that usually declare
dividends annually are usually blue-chip companies and Real Estate
Investment Trusts (REITs).
C6C. Personal Priorities

5.41 As your client may have more than one need, prioritising his needs will allow you
to better address his needs and recommend suitable products to him. The table
below illustrates an example on indicating the priority of the client’s needs.
Low Medium High

Protect income against sickness or accident
Protect family and / or assets in event of death
Provide against serious illness
Plan for retirement
Save for short term (e.g. deposit for home)
Save for medium term (e.g. early mortgage repayment)
Others (e.g. overseas education for children)

C6D. Retirement Needs

5.42 You need to find out how much is the monthly amount (in today’s dollars) that
your client and his dependants will need to live on in his retirement, and the
sources and amount of retirement income that he expects to rely on. This
information will provide an insight into the income needs for funding retirement
years. Research has shown that most singles in Singapore need about 50% to
60% of their pre-retirement income to maintain the same living standard after
retirement. The percentage increases to 60% to 70% for married couples with
one retiree. As the figure changes over time, adjustments can be made during the
periodic reviews of your client’s needs.
C6E Savings Goals

5.43 If your client wishes to establish a savings fund, you need to find out his objective
for establishing the fund, the amount needed and when the fund is needed. The
answers to these questions will help to determine the amount needed to be saved
and when the savings will be needed by the client to meet his goals. He may
indicate that he needs to save, among other things:
 for children’s tertiary education;
 to repay a mortgage;
 for a special occasion, such as a wedding;
 for a specific purchase, such as a new car or holiday.
5.44 This information is useful for you to find out if the funds earmarked for the client’s
various goals are adequate. In addition, it will help you to determine which
investment product can fill the gaps in reaching such goals.
5.45 Do take note that the information gathered during the fact-find stage should be
properly documented. This will ensure that you do not sell any product to your
client without a proper and / or reasonable basis and that you can justify to your
company, as well as the authorities, if you are queried on why you have
recommended that particular product to your client. In addition, it will help you
to convince the client of the need for the product(s) recommended. You should
also understand that the information gathered is strictly confidential and shall not
be used for any other purposes, except for the ones as mentioned above.
6. STAGE THREE – ANALYSE AND EVALUATE FINANCIAL STATUS
6.1 In the third stage of the sales advisory process, you should analyse the
information that you have gathered and evaluate your client’s financial situation
in relation to his financial objectives. This analysis and evaluation will help you to
establish the basis on which recommendations can be made.

14. Needs Analysis
A. Identify And Quantify Client’s Needs
6.2 During the analysis, you should pick up the weaknesses or potential problems
that can negatively affect the client’s ability to achieve his goals and objectives.
You should ask yourself questions such as:
 Does he have large debts to service?
 Does he have any existing insurance products?
 What is his investment portfolio?
 Has he already provided for his dependants?
 Does he have a need to protect his income?
 Does he intend to send his children for higher education? If yes, locally or
overseas?
 Does he have a need to accumulate his income, e.g. for retirement purposes
and, if so, how much?
 Are there any assets that need to be protected?
 Is he living within his means?
 Does his current financial position enable him to meet his goals?
 What is his investment time horizon?
 Does he have a liquidity need?
 What is his risk profile?
 Which of the financial objectives should be given higher priority?
A1. Analysis Of Goals And Objectives
6.3 An analysis of the client’s goals and objectives is important at this stage. This is
because the information, when used together with the other information gathered
during the fact-find stage, will enable you to assess your client’s needs more
accurately.
6.4 The client’s goals and objectives are not always so easily determined. It is
important that you understand the precise nature of each goal and objective, in
order that the need can be assessed accurately.
6.5 Here are three factors which should be considered when analysing your client’s
goals and objectives, as these will assist in the resulting assessment of needs:
(a) Firstly, it must be established whether the objective is short term or long
term. A short term objective may be appropriate for a retired person who
wishes to increase the income produced from the investment capital. A long-
term objective, on the other hand, may be illustrated by a client who wants
to have sufficient future funds to allow his newborn child to go to the
university. An objective can also be both short and long term, e.g. a client
may wish to ensure that he can meet the cost of medical treatment whenever
it is required. The period of time available for investment will affect the types
of products to be recommended.

(b) Secondly, you should establish whether the objective is for the benefit of the
client or for others, such as his children. The client may have the objective
of passing his estate to his grandchildren in the event of his death. On the
other hand, a client’s objective to be able to retire early is for his own benefit.
(c) Thirdly, you must take the importance of your client’s objectives into
account, as this will help you to assess the priority of the identified needs. A
client may have an objective of owning a second property in another country,
but to achieve this objective may be to the detriment of his other objectives,
such as a reasonable income in retirement.
6.6 It is also important that you do a detailed analysis of your client’s financial needs
and tackle each of the needs that you have uncovered, especially those that need
immediate attention. For example, there is an outstanding housing loan that is
not protected, or the client does not have an emergency fund.
6.7 Thus, you will have to help your client prioritise his needs. This is because the
client’s resources are usually limited, and they should be used to meet more
important needs first, such as provision for the dependants in the case of a young
family with children.
A2. Quantifying Needs
6.8 Besides helping your client to prioritise his needs, you also need to quantify them.
Each need must be quantified as to the amount of coverage required and the
current cost of providing for it. Abstract statements that clients like to give, such
as “I want to enjoy the same standard of living when I retire” will not help you
to quantify his retirement needs. More information is required from them. You
should ask questions to prompt your client into giving you specific information,
so that you can help them to determine the amount that he has to save now, in
order to meet his objectives. For example, assume that you are helping your client
to quantify his retirement needs, the questions that you should pose to him should
be along the following lines:
 When do you intend to retire?
 What percentage of your today’s income do you think you will need in your
retirement?
 What is your balance in your CPF accounts now?
 Will there be other sources of income during your retirement besides your
CPF?
 Have you started to save for your retirement?
 Would you have any dependants by then?

14. Needs Analysis
6.9 Having gathered information such as those shown above, your next step is to
quantify your client’s needs. The ways to quantify retirement, protection and
accumulation needs are different.
(a) Quantifying Retirement Needs

There are two methods of quantifying retirement needs, namely, the
replacement ratio method and the expense method.
(i) The replacement ratio method computes the amount of funds required,
based on a certain percentage of the client’s last drawn pay.
(ii) The expense method computes the amount of funds required, based on
the current level of the household expenses projected into the future at
the expected inflation rate.
(b) Quantifying Protection Needs

As for protection needs, you need to determine the sum of the client’s total
liabilities, his immediate expenses required at the time of death, as well as
the amount needed to provide for the dependants for as long as required.
There are two common methods used for quantifying the amount needed to
provide for dependants, namely the multiple approach and the needs
approach.
(i) The multiple approach computes the amount of funds required to meet
the client’s needs by multiplying the present value of the stream of the
client’s current yearly gross income (assumed to be constant until his
retirement) by a constant future investment rate.
(ii) The needs approach calculates the amount needed by taking into account
the specific position of the client. It involves estimating the income
needed by the dependants to maintain their standard of living and the
available funds that the client has to meet his needs. The difference
between the two is the shortfall that the client needs to provide for his
dependants.
(c) Quantifying Accumulation Needs

As for accumulation needs, you need to find the future value of the target
amount taking into consideration the effects of inflation.
When quantifying all the above three needs, you have to subtract whatever
sources of funds that the client has already set aside for each of the needs.
The CPF website has a series of financial calculators, such as Medisave /

MediShield Calculator, CPF Optimisation Calculator, CPF Retirement
Calculator, Insurance Estimator, etc., which may be useful for you to know
and use as an adviser.
After you have quantified the data, you may then proceed to draw up a
suitable programme comprising investment instruments and / or insurance
products to meet your client’s needs.

Please note that the needs analysis may not always result in sales. Needs-
based selling is different from product selling. Needs-based sales are based
on individual client’s needs. As such, there may be times when your needs
analysis reveals that your client’s needs are adequately met by existing
sources of funds or existing arrangements, and may not have any need for
additional products. There may also be clients who have tight budgets and
have no extra cash for insurance/investment products. As a representative,
you should not “push” for sales in these scenarios. You may, however, want
to maintain the relationship, as there may be future changes to your client’s
needs or existing arrangements.
7. STAGE FOUR – DEVELOP AND PRESENT RECOMMENDATIONS
7.1 In the fourth stage of the sales advisory process, you will need to explore relevant
alternatives to meet your client’s financial objectives. You will design a solution
and offer options that can reasonably meet your client’s financial objectives. It is
important to explain to your client at this stage the basis of your recommendation,
as well as the costs and charges involved and the features of the recommended
products. The client will expect you to provide a proper recommendation in
writing and that a copy of the Life Insurance Advisory Form, needs analysis and
recommendations be given to him as well.
A. Product Recommendations
7.2 There are two basic principles that you should be aware of before you start
making any product recommendation:
 you should only recommend products if your client needs them; and
 you should only recommend products which are the most suitable for your
client given his situation and circumstances.
7.3 Section 27 of the FAA requires that you to have a reasonable basis for any
recommendation made with respect to any investment product to your client or
prospective client who may reasonably be expected to rely on the
recommendation.
7.4 The financial industry is evolving at a very fast pace, and new products are
making their way to the product shelves regularly. Therefore you have to keep
yourself updated on such changes to better advise your client. The products in
this section are not limited to meeting the specific needs mentioned. It can also
be used to address other needs. There can also be other products in the market
to meet the client’s specific needs. When addressing the clients’ needs, you
should always remember to have a reasonable basis of recommendation on any
product or combination of products proposed.
7.5 Depending on your client’s financial situation and objectives, you can recommend
your client to use his CPF savings for investment purposes via CPFIS (also see
earlier chapter on CPF) other than using cash.

14. Needs Analysis
7.6 Below are factors which you should consider before making any recommendation
to your client.
A1. Product Suitability
7.7 In order to determine if any product is suitable for your client, you need to have
a good understanding of the available products and how they work.
A2. Client’s Objectives And Needs
7.8 Besides equipping yourself with good product knowledge, you need to ensure
that you have regard for your client’s objectives when short-listing suitable
products. The purpose of going through the needs analysis process is to ensure
that your product recommendation is suitable for your client, because it meets
his needs. The fact-finding process enables you to have a good understanding of
your client’s financial goals and objectives to ascertain his needs for now and the
future.
A3. Financial Situation - Affordability
7.9 The product that you intend to recommend to your client should also be affordable
to him. In the case of a life policy, a client who cannot afford the insurance
premiums will have to allow his policy to lapse. The life insurer, the representative
and the client do not benefit from such early lapsation. From the client’s
standpoint, he loses the coverage and the premiums paid if the policy lapses
before acquiring any cash value. The representative loses the goodwill of his
client and any commission payable under the policy. The life insurer has to absorb
the high initial costs of administering and underwriting such a policy.
A4. Tax Consideration
7.10 You should be cautious when making any recommendation based on tax positions
because:
 you may not be a tax specialist; and
 tax positions change frequently.
7.11 However, you can highlight the benefits of the existing tax regime (eg. tax reliefs)
to your client so that your client, can make an informed decision.
7.12 You may use the following tax relief and / or schemes to help your client save on
his income tax payment.
8. STAGE FIVE – IMPLEMENT RECOMMENDATIONS
8.1 In the fifth stage of the sales advisory process, you will select the appropriate
plans for implementation upon your client’s instructions.

A. Types Of Products Available To Meet Client’s Needs
A1. Main Types Of Products To Meet Accumulation Needs
8.2 Table 14.1 shows some main types of products and its corresponding risk of
capital loss that you can recommend to your client to meet his accumulation
needs.
A2. Main Types Of Products To Meet Retirement Needs
8.3 All the products mentioned in Table 14.1 can also be used to meet the client’s
retirement needs. Which product is more suitable for the client will have to
depend on each client’s circumstances. For example, a life annuity may be
suitable for a client who is in good health and wishes to have a income for life,
as the policy will pay him a regular income for as long as he is alive.
8.4 There are other products in the financial industry that can be included in Table
14.1, depending on the suitability of the product to the client, e.g.; REITs,
Exchange Traded Funds (ETFs), Foreign Exchange, Gold, Commodities etc. As
mentioned earlier, the financial landscape is evolving at a very fast pace, you will
have to keep yourself updated to better advise your client.
Table 14.1: Main Types Of Products To Meet Accumulation And Retirement

Needs
Types of Products Risk of Capital Loss

Annuities Lower
Endowment Insurance Policies Lower
Money Market Securities Lower
e.g. Treasury bills, banker’s acceptance
and certificate of deposit, commercial
paper, repurchase agreement and, bank
deposits etc
Whole Life Insurance Policies Lower
Fixed Income Securities, i.e. bonds Medium
Derivative Instruments, e.g. options and Higher
futures
Equity Investments, i.e. ordinary and Higher
preferred shares
Investment-linked Life Insurance Policies Low to High depending on the
(ILPs) underlying assets (i.e. whether the
fund consists of bonds or equities,
etc.)

14. Needs Analysis
Types of Products Risk of Capital Loss

Structured Products (including Low to High depending on the
Structured ILPs and Structured underlying mechanism (i.e.
Deposits) financial instruments used to
protect capital or generate returns)
and the underlying assets (i.e.
whether the fund consists of
bonds or equities, etc.)
Unit Trusts Low to High depending on the
underlying assets (i.e. whether the
fund consists of bonds or equities,
etc.)
Universal Life Insurance Low to High depending on the sum
assured chosen and the insurer’s
performance.
A3. Main Types Of Products To Meet Protection Needs
8.5 Insurance products are the most suitable type of products to meet a client’s
protection needs for family income, in view of their unique feature of creating an
immediate estate for the client. In other words, it will pay the full sum assured
stated in the policy upon the happening of the insured event, even if the client
has made only one premium payment. Other investment instruments, e.g. savings
take time to accumulate and may stop once the client dies, becomes disabled or
seriously ill. In such a case, the client will not be able to fulfil his goals.
8.6 There are many types of insurance products that can meet a client’s death,
disability and ill health needs. As a financial adviser’s representative, if you are
recommending any health insurance products to your client, do take note of the
disclosure and advisory process requirement cum training and competency
requirements under Notice No: MAS 120 Disclosure And Advisory Process
Requirements For Accident And Health Insurance Products” and Notice No: MAS
117 Training And Competency Requirement: Health Insurance respectively.
Notice No: MAS 120 and Notice No: MAS 117 can be found in the MAS website
at www.mas.gov.sg. Notice No: MAS 120 can also be found in the “Health
Insurance (6th Edition)” Study Text published by the Singapore College of
Insurance (SCI). Notice No: MAS 117 can be found in the “Health Insurance (7th
Edition)” Study Text to be published by SCI in second half of year 2020. Table
14.2 shows the different types of insurance products that meet the protection
needs of the client.

Table 14.2: Different Types Of Insurance Products To Meet Protection Needs
Product Type Purpose Served

Term Insurance Policies Provide death cover for a fixed term.
Whole Life Insurance
Provide death cover for whole of life.
Policies
Endowment Insurance Provide death cover for a fixed term and a
Policies lump sum at the end of the term.
Provide mainly for investing in unit trusts or
Investment-linked Life
similar investments with some insurance
Insurance Policies (ILPs)
protection.
Provides flexible death coverage, premium
Universal Life Insurance
and premium payment period.
Annuities Provide retirement income.
Protects against contracting one of the
Critical Illness Insurance
covered critical illnesses.
Protects against being unable to perform a
Long-Term Care Insurance specific number of Activities of Daily Living
(ADLs).
Protects against risk of ill health and
Medical Expense Insurance
hospitalisation.
B. Presenting Your Recommendations
8.7 You should ensure that your client understands the products recommended and
the reasons for your recommendations. Therefore, you should be able to explain
the features and benefits of the recommended products and how these could fit
into his current situation. Your basis of recommendations should be clearly
documented in the Life Insurance Advisory Form.
9. STAGE SIX – REVIEW WITH CLIENT PERIODICALLY
9.1 In this last stage of the sales advisory process, you will need to contact your
client to conduct periodic reviews of the plans to ensure continued
appropriateness. Monitoring of the plan ensures that the customer is achieving
his financial objectives. There is no hard and fast rule as to how frequently a
review should be done. It is normal to conduct a review annually. You should
advise your client to initiate a review whenever there is a change in their
objectives, personal or financial circumstances.
A. Benefits Of Periodic Client Review
9.2 The process of identifying and satisfying the client’s needs does not stop with
the implementation of the initial recommendations. Your client’s personal
circumstances are likely to change (e.g. the birth of a child) and new needs may
surface. These affect the initial product recommendations, as they may no longer

14. Needs Analysis
be adequate. Regular reviews will ensure that your client continues to receive
quality service from you and reinforces your relationship with him.
9.3 In addition, external developments, such as changes to the CPF rules or market
developments, may also indicate the need for a client review. For example, a
change in the employee’s and employer’s CPF contribution rates will be an
opportune time to review a client’s needs. A steep fall in the price of equities will
signal that a review of the client’s existing investments and savings products is
required, especially if you are aware that your client has invested substantially in
equities.
9.4 In conducting a client review, you will also have the opportunity to introduce new
products that meet the client’s needs.
9.5 As you can see, a client review is important, and as a professional, you should
not only ensure that the products recommended are meeting your client’s current
needs, but also seek to arrange meetings with your clients on a regular basis to
address his future needs. The needs of your clients should be a long-term concern
and your relationship with your clients, a continuing one.
9.6 As a representative, you must always uphold the highest standards of integrity
and professionalism, and give advice to your clients that is fair and objective, and
in the clients’ best interests at all times.

Appendix 14A
Risk Tolerance Questionnaire
Please answer the five questions below by circling the number next to the answer that best
represents your investment goals and circumstances. Add up the points from all five questions to
determine your score.
A Depending on the investment, the value of your assets can remain relatively
stable (generally increasing slowly but steadily) or may fluctuate (rising and
falling in response to market movements). In general, investments that
fluctuate have the potential to grow faster; however, they are more risky
than stable investments. How much fluctuation are you willing to accept
for your savings?
Points
1 I do not want to experience any falls, even if it means my investment returns
are relatively small.
5 I would be willing to accept occasional falls as long as my savings are in
sound, high-quality investments that could be expected to grow over time.
9 I am willing to take substantial risk in exchange for significantly higher
potential returns.
Some investments may keep your money "safe", but may not earn a high
B return. (Consider what S$100 would purchase both 10 years ago and
today.) Choose the statement that is most accurate for your investment
savings goal.
Points
1 My savings should be 100% safe, even if it means my investment returns
do not keep up with inflation.
5 It is important that the value of my investments keep pace with inflation. I
am willing to risk an occasional fall in the value of my original investment
(my principal) so my investments may grow at about the same rate as
inflation over time.
9 It is important that my investments grow faster than inflation. I am willing
to accept a fair amount of risk to try to achieve this.
C You understand the value of your investment portfolio will fluctuate over
time. This means it will rise and fall in response to market movements. What
is the maximum loss of value you could accept in any one-year period?
Points
1 0%
3 5%
5 10%
7 20%
9 30%
D Consider two hypothetical investments, A and B:

14. Needs Analysis
– Investment A provides an average annual return of 5% with a minimal

potential fall in the value of the original investment (the principal).
– Investment B provides an average annual return of 10% but the value
of the original investment (the principal) may decline 20% or more in
any year.
How would you choose to invest your retirement savings in these two
investments?
Points
1 100% in Investment A and
0% in Investment B.

25% in Investment B.


E The chart on the right represents hypothetical performance of four selected

investment portfolios (A,B, C and D) over a 20-year period. The chart
illustrates average annual total investment returns and the greatest one-year
gain and one-year loss that has occurred for each of the four portfolios. (For
example, Portfolio C achieved a 12% average annual return during the 20-
year period, gaining 55% in the best year and losing 40% in the worst year.)
Keep in mind that past performance does not guarantee future performance.
Range of Annual Returns 140%
150%
for Any Given year
125% During the 20-Year Period
100%
75%
55%
50% 40%
25% 15% 17.5%

5.5% 12.0%
3.5%
0%
0%
-25% -10%
-50%
-40%
-75% -60%
Portfolio A Portfolio B Portfolio C Portfolio D
Among these investments, would you prefer your primary investment to be:
Points
1 Portfolio A
3 Portfolio B
7 Portfolio C
9 Portfolio D
F The number of years you have to save and invest is your “investment time
horizon”. This is the amount of time between when you invest and when
you need to spend the proceeds of your investments.

What would your investment time horizon be?

Options
I Less than three years (short-term)
II Less than 10 years (short to medium-term)
III four or more years (medium to long-term)
IV 10 or more years (long-term)
YOUR TOTAL SCORE
(add numbers circled in questions A through E)
Possible range of scores: 5 to 45. In general, the higher your score, the more comfortable you
may be with taking greater risk in your investments to achieve greater returns over the long-
term.
Interpretation of Score
Risk Tolerance Investment Time Horizon

Equity Risk Category
5 to 19 points Short-term Lower Risk

(less than three years)
20 to 29 points Short-to-medium-term Low to Medium Risk
(less than 10 years)
30 to 37 points Medium-to-long-term Medium to High Risk
(four or more years)
38 to 45 points Long-term Higher Risk
(10 or more years)
Equity Risk
Category Bonds Stocks
Cash Equivalent
RISK TOLERANCE
Higher Risk
Medium to High Risk
Low to Medium Risk
Lower Risk TIME

HORIZON
short-term medium-term long-term
Source: CPF Handbook “CPF Investment Scheme Risk Classification System – Investing To Match Your Risk Profile”; 7
November 2002.

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(3) Click on the relevant links corresponding to the registered modules.
Version Control Record
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Date*
1.0 1 Apr 2020 1 Jul 2020 N.A. N.A. First release.
* The relevant amendments will be applicable to examinations conducted after the stated effective date.
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