M5 Chap 1 To 14 Slides

Welcome to
Module 5
Rules & Regulations for
Financial Advisory
Services
Accurate as at 1st June 2022 Training materials are for training purpose only
(CMFAS M5 5th Edition Version 1.4)
Good to Know
Exam Format : Computer Screen

• Duration – 2 hours
• Questions – 100 MCQs
• Pass Mark – 75%
• No marks deducted for wrong or blank answers
Disclaimer
• Slides are strictly for internal training. It cannot be
reproduced, amended or circulated in whole or in part to
anyone for whatever purpose or reason
• Information presented are not exhaustive. For details refer
to CMFAS Module 5 Fifth Edition Version 1.4 Textbook
• The presentation if for information only and does not
have regard to the specific investment objectives, financial
situation and particular needs of any persons.
• Information is correct as of 1st June 2022
CMFAS Module 5
Chapter 1
The Regulatory Bodies &
Associations
RIBS
Monetary Authority of Singapore (MAS)
The mission of the MAS is to sustain non-inflationary economic
growth & promote a sound and progressive financial service
sector
Principal Objectives
• To act as a Central Bank of Singapore
• To conduct integrated supervision of financial services
• To manage the foreign reserve of Singapore
• To develop Singapore as an international financial centre
Accurate as at 1st June 2022 Training materials are for training purpose only 2
Classification of Instruments Issued
Acts
Subsidiary
Policy
Legislation
Statement
(Regulation)
Various Directions
Circulars
Instruments (Notices)
Practice
Guidelines
Notes
Codes
E-Book 24 of 731
Tenets of Effective Regulation
Supervision Principles
1 2 3 4
Tenet 1 Outcome Focused
Tenet 2 Shared Responsibility
Tenet 3 Risk Appropriate
Tenet 4 Responsive to Change & Cycles
Tenet 5 Impact Sensitive
Tenet 6 Clear & Consistence
* 1- Risk Focused * 3 – Disclosure-Based
* 2 – Stakeholder Reliant * 4 – Supportive of Enterprise

Singapore Exchange Limited (SGX)
Issuer To review Listing applications, monitor ongoing
Regulation compliance with listing requirements
Member To process membership applications & permits,
Supervision monitor members’ compliance
Market
To maintain surveillance of all trading activities
Surveillance
Enforcement To investigate suspected infractions & complaints
Risk To monitor & manage the SGX’s counterparty
Management risk exposure
Catalist To promote a high standard of disclosure &
Regulation corporate governance by listed companies
Clearing To develop & enhance the risk frameworks for
Risk product & service offerings
E-Book 27 of 731
Investment Mgt Association of Spore
(IMAS)
Objectives
• To promote professionalism in investment management
• To provide a forum for members to discuss
• To represent members collectively in discussion
• To promote the education of investing public on investments and
the investment management industry
• To improve professionalism and standards of research & fund
management expertise in Singapore
• To promote investment and fund management industry
Investment Mgt Association of Spore
(IMAS)
Code of Ethics
• To conduct themselves with integrity and professionalism
• To act with competence and strive to maintain and improve their
competence
• To exercise due diligence and professional judgement with proper
care in the conduct of the business
Standard of Professional Conduct covers the following areas

➢ Investment Manager ➢ Business Conduct
➢ Client Relations ➢ Investment Conduct
Life Insurance Association of Singapore
(LIA)
➢ To deliver innovative solutions to meet
Unified
individual’s needs
➢ In conducting themselves & the counsel
Values Underpinning LIA
Professional
they give
➢ In ensuring Policy Owners’ interests
Ethical
are managed with utmost integrity
Fair ➢ To provide favourable outcome to both
Open & ➢ To build an environment of trust &

Honest transparency
➢ To give their people the skills & knowledge to
Proactive
provide sound solutions at all times
CMFAS Module 5
Chapter 2
Financial Advisers Act &
Financial Advisers Regulations
Financial Advisers Act (FAA)
✓ Regulate the sale of investment products
✓ Consolidates 3 different Acts into a Single Legislation
✓ Provides a consistent set of requirements & regulations for
intermediaries engaging in similar activities across investment
products
✓ Governs Financial Advisory Activities in respect of investment
products & the business conduct of persons providing
Financial Advisory Activities
Financial Advisers Regulations (FAR)
• A subsidiary legislation that serves to give effect to the
provisions of the FAA.
• Outlines rules on the application of FAA :

• Exemptions from the requirements relating to licensing
• Approval Requirements
• Registration Requirements
• Application of the provisions
• Revocation or variation of conditions or restrictions
Principles of the FAA & FAR
Customer Interest Consistency
Accountability Independence
E-Book 37 of 731
E-Book 37 of 731
E-Book 38 of 731
E-Book 38 of 731
E-Book 38 of 731
Need for Financial Adviser’s Licence
Sec 18(1) of FAA
No person shall hold himself as a Financial Adviser unless he is a

licensed financial adviser, an exempt Financial Adviser or a person
specified in the 1st Schedule of the FAA
Sec 2(1) of FAA
“Financial Adviser” means a person who carries on the business

of providing any Financial Advisory Services. “Person” mentioned
above refers to a corporation and not an individual
E-Book 387 to 391 of 731 (Ch 9A) (Pg 39)

FAA-G01 Criteria For Grant Of A FA’s
Licence
A FA’s license will only be granted to a Corporation
with a physical presence in Singapore
Criteria for CEO, Directors &
✓ Appoints at least 2 Appointed Representatives

✓ CEO & ED have 5 years relevant working experience
Representatives
✓ In addition 3 years of managerial capacity

✓ Board of Directors with minimum 2 members with at least
one member being resident in Singapore
✓ CEO is a resident in Singapore
✓ CEO or EDs are placed in a position of conflict of interest
E-Book 387 of 731
E-Book 438 of 731
E-Book 390 of 731
Criteria For Grant Of A FA’s Licence
Track Record
• 3 years proven Shareholding
track record • CEO must own more than
Fit & Proper 20% shareholding of the co
• CEO & EDs must own more
than 50% shareholding of the
Other Criteria co
Systems & Processes Supervision by Home

• Adequate Internal Regulatory Authority
Control • Proper Supervision by
recognised home
regulatory authorities
BMI CFOS
Exempt Financial Advisers
Sec 20(1) of FAA The following persons shall be
exempted from holding a financial adviser’s license to act as a
FA in respect of any financial advisory service.
• Licensed Bank (Banking Act)

• Merchant Bank (MAS Act)
• Company registered (Insurance Act)
• Holder of Capital Markets Services license
• Finance Company which has been granted an exemption
• Approved Exchange, Recognised Market Operator
• Any company whose provision of any
financial advisory is solely incidental
• Any persons as may be prescribed
Excluded Financial Advisers (1st Schedule)
• Advocate, Solicitors, or Law Corporation (Legal Profession
Act)
• Public Accountant (Accountants Act)
• Companies providing financial advisory services (Trust
Companies Act)
• Proprietor of newspaper (Newspaper & Printing Presses
Act)
• Provider of information services through electronic,
broadcasting or telecommunication medium
LAR
Types Of Financial Advisory Service
• Advising others concerning any investment product, other

than advising on corporate finance
• Issuing or promulgating research analyses or research

reports
• Arranging any life policy other than a contract of reinsurance

in respect of life policies
Product Regulated Under The FAA
Investment product means
a. Any Capital markets product
b. Spot Foreign Exchange contracts
c. Any life policy
c. Any others product as may be prescribed
Structured Deposits has been classified as an investment

product with effect from 2 December 2005
The following products are EXCLUDED from the definition of

investment products
• General insurance, Deposit-taking products, Loans &

Mortgage
Application for Grant Of Financial Adviser’s
Licence
Sec 7(1) of FAA Reg. 6 & 7 FAR
• Track record, management expertise & financial

soundness of the applicant
Application Criteria
• Ability to meet the minimum financial requirements &

professional indemnity
• Strength of internal compliance systems
• Business plans & projections
• Fitness and Propriety

Application for Grant Of Financial Adviser’s
Licence
Wef 26 Nov 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
• The licence lapses due to winding-up of the licence holder
• The licence is revoked or suspended
E-Book 44 of 731
Additional Criteria
Professional Indemnity Insurance Policy
Grounds for Refusal to Grant FA’s Licence
Without Opportunity to Be Heard
Minimum Financial Requirements
Professional Indemnity Insurance Policy
Sec 8(2)(b) of FAA
• Maintain such minimum financial requirements
• Have in force a Professional Indemnity Insurance policy.

The cover of which is consistent with such limit and
deductible requirements as may be prescribed
Grounds For Refusal To Grant FA’s Licence
Sec 8(1) of FAA
Applicant is
• Not a corporation
• Unable to meet or continue to meet such minimum financial
requirements
• Does not have in force a Professional Indemnity Insurance
Policy
• Applicant has not furnished documents relating to
the purposes of its business
• Any false or misleading information furnished by Applicant
• Applicant is the process of wound up or dissolved
• A receiver has been appointed
Grounds For Refusal To Grant FA’s Licence
Sec 8(1) of FAA
• Applicant enters into a compromise or scheme of arrangement
• A judgement debt
• MAS is not satisfied as to the educational qualification of the
officers or employees
• Any officers or employees will not perform the functions of a
financial adviser
• A Prohibition Order
• An Offence involving Fraud or Dishonesty
• Fails to satisfy the Fit & Proper Person
• May not act in the best interest of its clients
Without Opportunity To Be Heard
Sec 8(4) of FAA
The Authority may refuse the grant of a FA’s Licence without

giving the applicant an opportunity to be heard if :
• The Applicant is in the course of being wound up
• A receiver has been appointed in respect of any property of the

applicant
• A Prohibition Order has been made by the MAS
• Convicted of an offence involving fraud or dishonesty
Reg. 15 FAR
Paid-up Capital
Concerning Future Other Case

Contracts
Local  $300,000 Local  $150,000
Foreign  $300,000 Foreign  $150,000
Offence: Fine not exceeding $25,000
Continuing Financial Requirements
Reg. 15 FAR 1/4 of relevant
annual expenditure
Yes Higher
Immediate
Local FA
Preceding 3/4 of Min.

Financial Paid Up Capital
Net Asset Value
Year
No 3/4 of Min. Paid Up Capital
1/4 of relevant
annual expenditure
Yes Higher
Immediate
Foreign FA
Preceding Min. Paid Up

Financial Capital
Year
No Min. Net Head Office funds
Exempt Persons (Third Schedule Of FAA)
The FAA provides for a category of persons to be exempted
from holding a Financial Adviser’s licence.
In the case of an Exempt Fund Managers, the total number

of qualified investors and accredited investors served should
not exceed 30 in total
E-Book 51 of 731.
Prerequisites To Be Met By Exempt
Persons
• Criteria:
Fit & Proper Maintain Minimum

Operations in Financial Viability
Singapore &
have adequate
resources
Accredited & Qualified Investors
• An Individual whose personal assets > $2 million or whose
financial assets exceed in value of $1m or whose income in
the preceding 12 months is not less than $300,000
Accredited Investors
• A Corporation with net assets > $10 million

• A Trust of all property and rights of any kind > $10 million
• An Entity with net assets >$10 million
• A Partnership in which each partner is an accredited investor
• A corporation the entire capital share capital of which is
owned by one or more persons, all of whom are accredited
investors
Accredited & Qualified Investors
• An Accredited Investor
• A Collective Investment Scheme whose units are subject of an
Qualified Investors
offer or invitation for subscription only to accredited investors

• A Closed-End Fund whose units are subject of an offer or
invitation for subscription only to accredited investors
• An institutional Investor
• A Limited Partnership, where the limited partners comprise
solely of accredited investors
Use Of The Term FA or Life Insurance
Broker
Only Licensed or Exempt Financial Advisers shall use the

words “Financial Adviser” or “Life Insurance Broker” or
any of its derivatives in any language or any other word
and make any representation in any bill head, letter,
notice, advertisement etc
Use Of The Term Independent
Guidance to the use of “Independent”

• in the name, description or title under which it carries on business
in Singapore,
• promote or advertise its services,
• in respect of their provision of any Financial Advisory Service
Guidance adopt a principle-based approach
E-Book 423 of 731 (C9E) ( Pg 54)

E-Book 424 of 731
Basic Test Of Independent
“Independent” can be used if FA
• Does not receive commission/benefits from product

provider which may create product biases
• Operates free from restrictions (direct/indirect)
• Operates without any conflict of interest

$
E-Book 424 of 731 (C9E) (Pg 54)

Product Restriction
 Direct Restriction
e.g. Contractual agreement to sell a range of
products
 Indirect Restriction
e.g. Specified Sales Targets
 Not Independent if represent less

than 4 product providers for each
class of investment products
Representative Notification Framework
Wef 26 Nov 2010
Financial Institutions intending to appoint a Representative will

have to lodge with MAS
• A Notice of Intent and
• A “Fit & Proper” certification
Onus is with Principal to

➢ Accept only Fit & Proper Individuals as their Representatives
➢ Places a heavier emphasis on the role and responsibilities of
principals to ensure that their Representatives are Fit & Proper
E-Book 57 of 731.
Public Register Of Representatives
• Name
• Name of Current Principal & Past Principal
Public Register
• Current & Past Financial Advisory Service Provided

• Business of his Principal
• Disciplinary Proceedings
• Other Information as may be prescribed by MAS
To promote greater transparency within the Financial Sector

Objectives
To encourages consumers to verify the status of Representatives

whom they are dealing with.
Who Are Representatives?
Sec 2(1) of FAA
Representatives are individual who perform on behalf of the

financial adviser any financial advisory service whether or not
he is remunerated by way of salary, wages, commission or
otherwise
Representative to Act For Only One
Principal
Sec 27(1) of FAA
No Appointed Representative or Provisional Representative shall at

any one time be a representative of more than one principal.
Objectives
• To secure clarity for the Investors about the status of the
representatives and financial advisers that they represent
• To ensure that the FA closely monitor & supervise their
Representatives at all times
Types Of Representatives
3 Months
Grace
Appointed Period
Rep Provisional Rep
Meet in full the Meet the Entry Requirements

Entry & but who have not yet passed
Examination the relevant Examinations.
Requirements
21 “A” FOE
Criteria To Be A Representative
Individuals must fulfil the following requirements :

▪ 21 years old and above
▪ satisfy the minimum academic qualification & examination
requirements
▪ satisfy “Guidelines on Fit and Proper Criteria”
▪ any other criteria stipulated by the MAS
Acting As Representative
No Individual will be allowed to act as a Representative unless
• he meets the entry and examination requirements
• his name is entered in the Public Register
Penalty - Individual Penalty - Principal
Fine < $25,000 or Fine < $50,000

Imprisonment < 1 year or Both
Further fine not exceeding Further fine not exceeding
$2,500 for each consecutive day $5,000 for each consecutive day
Criteria To Be An Appointed Rep
Sec 23(1) of FAA
✓ Satisfies Entry & Examination requirements

✓ Name is entered in Public Register of Representatives
✓ Status as Appointed Rep. has not been revoked
✓ Appointed to provide that Type of FA services
✓ Whose Principal is licensed to provide that Type of FA service
Cessation Of Status Of Appointed Rep.
Sec 23(4) of FAA
Cease to be an Appointed Representative on the date

➢ He ceases to be Principal’s Representative
➢ His Principal ceases to provide that type of FA Service
➢ His Principal’s licence is revoked or lapses or a prohibition order
➢ The individual dies
➢ Other circumstances as prescribed by MAS
Cessation Of Status Of Appointed Rep.
Reg. 8A FAR
An Individual shall cease to be an appointed representative if

a) Before the end of the period of 6 months
• Starting on the date his 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
b) The appointed representative has
• ceased to act as a representative and
• has not resumed acting as a representative for continuous
period of 1 month from the date of cessation
Inform MAS not later than the Next Business Day
after the date of cessation
Criteria To Be A Provisional Representative
Sec 24(1) of FAA An Individual who
• Satisfies the Entry Requirements
• Intends to undergo an Examination in order to satisfy the
Examination Requirements
• Whose Name is entered in the Public Register
• Whose Status as Provisional Rep. has not been revoked
• Whose Principal is licensed to provide that Type of Financial
Advisory Service
• Who has Not previously been appointed as Provisional
Representative
• Who has Not Disqualified from acting as Provisional Representative
An Individual Shall only a Provisional Representative for a period

not exceeding 3 months from Date his name is entered in the
public register
Cessation Of Status Of Provisional Rep.
Sec 24(3) of FAA
• Upon expiry of the period of time

• Fails to comply with any condition or restriction imposed
• Satisfaction of Examination Requirements
• On the occurrence of such other circumstances prescribed by MAS
Differences Between AR & PR
To satisfy the Minimum Entry & Examination

Requirements
Status valid until it ceases to be Appointed
Appointed Rep.
Rep
Enter name Allow to
in Public provide FA
register services
Objectives 3 Months Period
To facilitate the relocation of experienced

professionals to Singapore & allow them to
Provisional begin working as soon as possible
Rep
E-Book 66 of 731
Documents to be Lodged with the MAS
Sec 26(1) of FAA
Notice of
Notice of
Intent
Intent
Certificate of
Certificate of Fit & Proper
Appointed Provisional
Fit & Proper
Rep Rep Undertaking by
Principal
E-Book 68 of 731
T MAST
E-Book 36 of 837
Refuse Entry Or Revoke Status of Rep
• He fails or ceases to act as a Representative
• Has provide Incomplete Information to MAS
Appointed & Provisional Rep.
• Be an Undischarged Bankrupt
• Under Judgement Debt
• Under a Compromise with Creditors
• Convicted of an offence involving fraud or dishonesty
• Fail to meet the Fit & Proper Criteria
• Unsatisfactory Past Performance or Expertise
• Unable to Perform financial advisory service Efficiently, Honestly or
Fairly
Refuse Entry Or Revoke Status of Rep
Provisional
Rep
False Statements In Relation To
Notification
Sec 23L(1) of FAA
Principal or an Individual
• makes a statement which is false or misleading
• omits to state any material matter without which the
document is misleading
• Offence : Fine not exceeding $50,000
Any Person who is aggrieved may appeal to Minister within 30

days after he is notified of the decision of the MAS
CMFAS Module 5
Chapter 3
Conduct of Business, Powers
of Authority & Offences
Obligation To Disclose Product Information
To Clients
Sec 34(1) of FAA
Licensee shall disclose all material information relating to designated
investment product to every client including
• The Terms & Conditions

• The Benefits of the Product
• The Premiums, Costs, Expenses etc
• Name of the Manager of the CIS Scheme
• Name of the Licensed insurer under the life policy
• Other information as prescribed by MAS
Statements By Licensed FA
Sec 35 of FAA
a) No licensee shall, with intent to deceive, make a false or misleading
statement as to
✓ Any amount payable
✓ The effect of any provision of a contract in respect of any investment
product
✓ The connection with the provision of any financial advisory service
b) Making a misleading statement includes a reference to omitting to
disclose material facts
c) Offence: Fine not exceeding $50,000
Imprisonment not exceeding
12 months Or to both
Recommendation By Licensed FA
Sec 36(1) of FAA
Licensed FA must have a Reasonable Basis for making a
Recommendation to a person
Otherwise, Licensed FA is liable to pay damages to that person in
respect of that loss or damage
E-Book 76 of 731
Receipt Of Client’s Money or Property
Sec 37 of FAA
• Determine the manner advisers receive/deal with client’s

money
• Prohibit the licensed financial adviser from receiving or
dealing with client’s money in specified circumstances
S 37(2) of FAA states that a lien or claim on client’s money or

property shall be void unless the moneys in the account are for
fees due & owing to the licensed financial adviser
Insurance Broking Premium Account
Sec 41(1) of FAA
Every licensed financial adviser which receive any insurance

money shall establish and maintain a separate account with bank
licensed under the Banking Act (Cap. 19) for its life insurance
broking premium.
Insurance Broking Premium Account
Reg. 20(1) FAR
Financial advisers shall pay into the bank account the following :
+ -
2 Situations 4 Situations
E-Book 78 of 731 (C3).

E-Book 78 of 731 (C3).
Refund Of Loss On Investment
Financial advisers shall pay moneys received from the realisation

of any investment made into the bank account an amount equal
to the difference between the amount invested and the amount
realised
Negotiation & Placement Of Risk With
Unlicensed Insurers
Sec 42(1) of FAA
• MAS prohibit the negotiation & placement of risk with

unlicensed insurers
⚫ 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
• Contract of insurance does not apply to reinsurance, or
business risk outside Singapore
Representation By Licensed FA
Sec 43 of FAA
No Licensed FA shall intend to deceive in relation to a
Proposed Contract of
Insurance
Claim Under a Contract of

Insurance
Licensed FA To Disclose Certain Interest
Sec 45 of FAA Conflict Of Interest
• Financial adviser shall act in best interest of the client.

• Where conflicts of interest occur, FA must ensure clients are
treated fair & equitable.
• Financial adviser has duty to disclose potential conflicts of
interest prior to establishing client relationship
✓ disclose all material information that may comprise its
objectivity or impair its ability to make unbiased
recommendations
✓ disclose to the clients its relationship with the financial
institutions in respect of the products which it is providing
advice on or recommending
Penalty for Contravening Conflict of Interest
Sec 45(7) of FAA Conflict Of Interest
Licensed financial adviser who contravene “Conflicts of
interest” section be liable for conviction:
• Fine < $25,000
• Imprisonment <12 months or
• Both
Register of Interests In Securities
Reg. 20A(1) FAR
• Maintain a register of his interest in Listed Specified Products

• Enter in the register within 7 days after the date that he
acquires any interest in Listed Specified Products
• Retain that entry for a period of not less than 5 years after
the date on which such entry was first made
• Ensure a copy of the register is kept in Singapore
Unsecured Advances, Loans & Credit
Facilities
Reg. 18(1) FAR
No financial adviser shall grant unsecured advance, unsecured loan,

or unsecured credit facility to:
1.Director EXCEPT the director is an employee

2.To any other officer or an employee or any of its representatives
Which in the aggregate and outstanding at any one time exceeds

$3,000.
Director includes the spouse, father, step-father, mother, step-mother, son, adopted son, step-son,
daughter, adopted daughter, step-daughter, brother, step-brother, sister, of step-sister
Approval Of CEO & Director of Licensed FA
Licensed FA are required to seek prior approval from MAS
before the appointment of its CEO or Director (Form 11)
Criteria to be appointed as CEO and Director

• An undischarged bankrupt
• The educational or other qualification Reg. 13(2) FAR
• A Fit & Proper person
• The financial standing of the appointee
Duties of CEO and Director Reg. 14 FAR

Go thru Page 189 of 731 (C3)
MAS may direct the company to remove any

officer from his office if the MAS thinks it Sec 57(1) of FAA
necessary in the public interest
E-Book 90 of 731(C3).
MRS CLAP
E-Book 90 of 731(C3).
Prohibition Orders
Objectives
To keep unfit persons from engaging in any or all of the financial

advisory services regulated under the FAA. An order will be issued
only in cases where very serious offences have been commitment.
MAS has the power to issue a PO to prohibit a person from

➢ providing any financial advisory services
➢ taking part in the management
➢ acting as a director
➢ becoming a substantial shareholding of FA
Penalty
Fine < $50,000
Power Of Authority To Publish Information
Sec 77 of FAA
MAS may publish information relating to

➢ Lapsing, Revocation or Suspension of Licence of any person
➢ Removal of any Officer
➢ Making of Prohibition Order against any Person
➢ Compound of an Offence
➢ Reprimand by any Person
➢ Revocation of any exempted granted under the FAA
➢ Conviction of any Licensed FA
➢ Other action taken against any Person
Offence By Officers
Sec 112(1) of FAA
If an officer of a Licensed FA who fails to take all reasonable steps
to secure
a) compliance with any provision of the FAA
b) the accuracy & correctness of any statement submitted
shall be guilty of an Offence Under S111(6) of the FAA, an “officer”, in relation to a body
corporate, means a director, member of the committee of mgt,
chief executive, manager, secretary, or other similar
Penalty officer of the body, & 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,
Fine < $100,000 secretary & members of the committee of the association or a
person holding a position analogous to that of president,
Imprisonment <2 years or secretary, or members of a committee, & includes a person
purporting to act in any such capacity
Both
An officer shall not be sentenced to imprisonment for any
offence unless he has committed the offence wilfully
Falsification Of Records By Officers
Sec 113(1) of FAA

Any officer, auditor, employee or agent of a Licensed FA who
wilfully makes a false entry or omits, alters, etc shall be guilty of
an Offence
Penalty
Fine < $100,000
Imprisonment <2 years or
Both
Chapter 4A
Notice On Recommendations On Investment
Products
Chapter Summary
Chapter 4B
Notice On Information To Clients & Product
Information Disclosure
Chapter 4C
Notice On Dual Currency
CMFAS Module 5
Chapter 4A
Notice On Recommendations
On Investment Products
FAA-N16 Notice On Recommendations On
Investment Products
Under the new measures, FA must conduct a CKA to assess whether
a customer has the relevant knowledge or experience to understand
Wef 28//07/11
the risks and features of an unlisted SIP.

In the case of listed SIPs, FA must conduct a Customer Account
Review to ascertain whether the customer has the relevant
knowledge or experience to understand the risks & features of
derivatives, before approving the customer’s account to trade such
products.
FA 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.
Circumstances where Notice No FAA-N16
does not Apply
1. Any recommendation made with respect to
Simple life insurance sold as an ancillary
products to loans with a simple payment
basis for the insurance cover
e.g. Personal loans, Car loans & credit card
balance but exclude MRTA
2. To any transaction where

✓ Only factual information is provided to
any EIP.
✓ No advice or recommendation is made
EIP – Excluded Investment Product

Recommendations On Investment Products
Sec 27 of FAA
Licensed financial advisers is required to have a reasonable

basis for any recommendation made with respect to any
investment product
1) Know Your Client
2) Needs Analysis
3) Documentation & Record Keeping
E1. Know Your Client
Financial Adviser shall take reasonable steps to collect & document
the following information from the client
a. The financial objectives
b. The Risk Tolerance
c.The Employment Status
d. The Financial Situation
e. The Source and Amount of Regular Income
f. The Financial Commitments
g. The Current Investment Portfolio
h. Substantial portion of client’s Assets
i. Any recommendation made in respect of life policies, the
number of Dependents etc
Financial Adviser who makes a recommendation on investment
products to a client through a digital advisory platform, may choose
not to collect & document any of the above information if the entire
process is
a. Electronically automated in the Digital Advisory Platform
b. Programmed with Compulsory Questions
c. Able to detect any inconsistent responses
d. Recommendation is accompanied by a risk disclosure
statement
e. Recommendation is limited to units in a CIS
Financial Adviser should highlight in writing to client that
a. the information provided by him will be the basis on which
the recommendation is made
b. any inaccurate or incomplete information provided by him
may affect the suitability of the recommendation
E2. Customer Knowledge Assessment
Customer Assessed Not Validity of Reliance Joint
Knowledge to Possess Outcome on a 3rd Transacting
Assessment Knowledge of CKA party
Provide Recommended Valid for 1 year Comply with the Assess
Information Unlisted SIP Conduct a new criteria individually
CKA Not precluded by
Authority
Yes No Yes No Able to provide
information
without delay
Deemed to FA to Buy another unlisted SIP FA is responsible
NOT to have provide Inform CKA’s outcome for CKA outcome
Knowledge on advice Client’s written confirmation
unlisted SIP to client Client’s responsibility
Obtain Sr Mgt’s Approval
E-Book 102 of 731(C3).

E3. Customer Account Review Assessment
Customer Assessed Not Reliance Validity of Joint
Knowledge to Possess on a 3rd Outcome Transacting
Review Knowledge party of CKA
Provide Recommended Comply with the Valid for 3 yrs Assess
Information listed SIP criteria Conduct a individually
Not precluded by new CK
Authority Review
Yes No Yes No Able to provide
information
Deemed to without delay
FA to Buy another FA is responsible
NOT to have provide unlisted SIP
Knowledge on for CKA outcome
advice Inform CKA’s
listed SIP to client outcome
Client’s written
confirmation
Client’s
responsibility E-Book 107 of 731(C3).
Obtain Sr Mgt’s
Approval
4. Needs Analysis
Financial Adviser is required to analyse the information
provided by the client and identify the product that is suitable
for the client based on the information obtained
Where the Financial Adviser is unable to identify a suitable

product, it shall inform the client accordingly
Where the client does not want
i.To provide any information requested
ii.To accept the recommendation of the financial adviser and
chooses to transact 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
5. Documentation & Record Keeping
The financial adviser shall make reasonable efforts to
document the basis for the recommendation and such
documentation shall include
i. The client’s statement of his investment objectives,
financial situation and particular needs
ii. The financial adviser’s reasonable basis for making the
recommendation to the client having regard to the
information obtained from the client
iii. The financial adviser’s assessment of the disadvantages
of the investment product based on circumstances of the
client
Investment Product
FA should furnish to its client a document containing the
following when making a recommendation in respect of an
investment product
• A summary of information gathered by the FA

• Any recommendation made to the client & the basis for the
recommendation
• Furnish a statement to client if he does not want to
➢ Provide any information requested by FA
➢ Accept the recommendation of the FA & has chosen to
procced with the transaction in another investment
product which is not recommended
➢ Receive any recommendation from the FA
E-Book 113 of 731
Collective Investment
Scheme
• Copy of prospectus or Life Policy

profile statement.
and /or other documents that
• Cover Page
may be prescribe by relevant
• Product Summary
laws
• Benefit Illustration
• Supplementary
• Bundled Product Disclosure
prospectus/
• Product Highlights Sheet (ILP)
profile statement.
• Replacement
prospectus/profile statement.
Benefit Illustration
Appendix Ha – Product Highlights Sheet
E-Book 437 of 731

Excluded Investment Products (EIP)
• Unable to contact
EIP-CIS or • Refuses to undergo a
EIP-ILP sub CRA/CKA
fund • Do not to possess the
FA adequate knowledge
SIP
FA may
a. allow the RP to continue holding on to his existing position
b. to reduce RP’s existing position based on his instruction
CRA – Customer Review Account SIP – Sale of Investment Products

CKA – Customer Knowledge Assessment RP – Relevant Participant
Overseas-Listed Investment Products
The financial adviser shall
✓ Client’s acknowledgment of the risk warning statement in
writing (Annex 4 Page 122 of 731)
✓ Maintain records for a period of not less than 5 years
✓ May implement a system to identify that the Overseas-listed
Investment product is to be classified as an EIP
✓ Has classified an Overseas-listed Investment product as an
EIP, it shall ensure the classification remains accurate and
current
✓ May outsource the identification & classification of Overseas-
listed Investment product as an EIP to another party
EIP – Excluded Investment Product
E-Book 122
of 731
STPB
Switching Of Designated Investment
Products
Detrimental Switch
a. Client suffers any penalty for terminating the original
product.
b. Client incurs any transaction cost without gaining any
benefit from the switch.
c. Replacement product’s benefits same or lower level at
a higher cost to the client.
d. Replacement product less suitable.
FA to disclose to client any fee or charges incurred

for switching
E-Book 118 of 731
CMFAS Module 5
Chapter 4B
Notice On Information To
Clients & Product Information
Disclosure
FAA-N03 Notice On Information To Clients
& Product Information Disclosure
Sec 25 of FAA
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 financial advisers including form and manner in which the
information shall be disclosed.
Sec 26 of FAA
No 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
E-Book 128 of 731

FAA-N03 Notice On Information To Clients
& Product Information Disclosure
Sets the general principles that apply to all disclosures and
specific requirements as to the form & manner of disclosure
that financial advisers have to comply with in relation to S
25 &26 as well as to the following matters.
• General information about the financial adviser
• Remuneration
• Conflict of interest
• Designated investment product
• Illustration of Past & Future performance
• Marketing materials
General Disclosure Principles
Not False Or
Misleading
Clear Adequate
E-Book 129 of 731

CAN
E-Book 130
of 731
Remuneration Of The FA
FA is required to disclose, in writing, to client
➢ All remuneration, including any commission, fee & other
benefits received
➢ Details of charges at the outset
➢ Commission received from Product Provider
➢ Trailer Commission
➢ Description of how it will be remunerated when amount is
not quantifiable
➢ Estimate the rate likely to apply when precise rate of
remuneration is unknown
➢ Distribution Cost in the Benefit Illustration
Designated Investment Products
a. Nature & Objective of product
Disclose the following information
b. Details of the product provider

c. Contractual rights
d. Client Profile
e. Commitment required from Client
f. Benefits of the product
h. Pricing of the product
g. Risks of the product
i. Fees & Charges to be borne
j. Reports to the client
k. Free-Look period
l. Cancellation period for UT
m. Withdrawal, surrender or claim
n. Warnings, exclusions & disclaimers
Designated Investment Products
Contractual Rights
FA shall disclose 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 CIS, his rights may only be enforced through
the nominee company if the units are held under nominee’s
name
FA is required to disclose and explain to client in the case of

a life policy that
➢ the risk factors that may result in the benefits payable to
Risks
be less than the illustrated values

➢ the alternative scenarios as indicated in the policy
illustration
Illustration Of Past & Future Performance
• FA shall not disclose any matter in respect of the future
performance of a collective investment scheme
• FA shall advise clients that economy forecast and economic
trends are not necessarily indicative of future performance
• FA shall advise clients that past performance are not necessarily
indicative of future performance
• FA shall make reference to Policy Illustration when advising
clients on Life policy
• FA shall not make any prediction or forecast on the future
performance when advising clients on collective investment
scheme
E-Book 137 of 731

Marketing Materials
A Representative should only use marketing materials
approved by FA for which he acts
Where a FA engages in the marketing of designated investment

products using direct response advertising communications, it shall
include prominent warning that
• the client may wish to seek advice from a FA before making a
commitment to purchase the product
• in the event the client chooses not to seek advice from a FA, he
should consider whether the product in question is suitable for him
CMFAS Module 5
Chapter 4C
Notice On Dual Currency
FAA_N11 Notice on Dual Currency
This Notice applies to any licensed or exempt financial adviser

or its representative, who advises on any dual currency
investment, except —
where advice is given to an accredited investor, expert
investor or institutional investor
E-Book 147 of 731

FAA-N11 Notice on Dual Currency
Cannot be Referred as
Deposit or Structured Deposit
as investors may misconstrue that the product is principal

guaranteed in terms of the base currency.
Therefore this term cannot be used in any marketing materials or

product disclosure document.
Additional Product Information Disclosure
This is an addition to Notice on Information to Clients and
Product Information Disclosure (FAA-N03)
• A description of the nature and mechanics of dual currency
investment.
• Appropriate illustrations to show how foreign exchange rate
could affect principal amount being paid in the alternate
currency which could in turn result in the client receiving less
than the principal amount initially invested
• The potential benefits of investing in the dual currency
investment and for whom such investments would be
appropriate.
• any minimum investment amount.
Additional Product Information Disclosure
• The currency & Investment duration.
• Whether the withdrawal of the principal is permitted prior to
maturity.
• A statement on whether the investment could be terminated by
the deposit taking institution prior to maturity.
• How foreign exchange control restrictions imposed by the home
country of a foreign currency could impact client’s investment.
• A summary of the foreign exchange control restrictions applicable
or how the client could obtain such information
• all other relevant risk factors.
Warnings
• The issuer has the right to repay you at a future date in an
alternate currency different from the currency of your initial
investment.
• Dual currency investments are subject to foreign exchange

fluctuations which may affect the return of your investment
• To seek advice from a licensed or an exempt FA before making

a commitment to purchase this product.
E-Book 150 of 731

Chapter 5A Notices On Appointment And Use
Of Introducers By Financial Advisers
Chapter 5B Notices On Prohibited Representations

Made by Persons Exempted
Chapter 5C Notices On Entry Requirements Of

Chapter Summary
Provisional Representative
Chapter 5D Notices On Minimum Entry And

Examination Requirements For Representatives
Chapter 5E Notices On Reporting of Misconduct of

Representatives by FA
Chapter 5F Notices On Cancellation Period For

Unlisted Debenture
Chapter 5G Notices On Requirements for

Remuneration Framework for Representatives &
Supervisors
CMFAS Module 5
Chapter 5A
Notices On Appointment And
Use Of Introducers By
Financial Advisers
FAA-N02 Notice on Appointment of
Introducers
Introducing Activity means introducing any client to an
introducee in relation to the provision of any type of financial
advisory service by the introducee by
Activity refers to
i. Recording & forwarding particulars of any client to the
introducee with the client’s consent.
ii. Providing factual information to any client on investment
products including name of investment product, the product
provider and any fee or charges which may be imposed
DR SCAM
Requirements For FA Appointing
Introducers
• If the introducer is a corporation, introducing should not be its
sole business activity, if it is a person; should not be his full-
time occupation.
• Institute adequate control systems & procedures to ensure

proper conduct of the Introducer
✓ Written agreement to spells out the introducing activities
✓ Disclosure By Introducer
✓ Provision of Script for use by introducers
✓ Prohibition on Handling of Client’s money by Introducers
✓ Maintenance of Register of Introducers
E-Book 153 of 731

CMFAS Module 5
Chapter 5B
Notices On Prohibited
Representations Made by
Persons Exempted
FAA-N10 Notice on Prohibited
Representations Made by Persons Exempted
Notice FAA-N10 sets out certain prohibitions in respect of
representations made by exempt persons and their representatives
regarding their exempt status.
a. Exempt persons are exempted from holding a FA licence.
b. Individuals providing Financial Advisory Services as a
representative of exempt persons are exempted from the
requirement to act as Appointed or Provisional Representatives
c. An exempt person and its representatives shall not represent
itself as being licensed.
CMFAS Module 5
Chapter 5C
Notices On Entry
Requirements Of Provisional
Representative
FAA-N12 Notice on Entry Requirements
Of Provisional Representative
The Provisional Representative Scheme is meant to facilitate the
relocation of experienced individuals who wish to provide
financial advisory service
Entry Criteria
• 21 years old and above

• in process of relocating or already located to Singapore
• 3 years of relevant working experience
• Bachelor’s degree or professional qualification
Grace Period of 3 months to pass relevant examination
CMFAS Module 5
Chapter 5D
Notices On Minimum Entry And
Examination Requirements For
Representatives
Application of CMFAS Exam Requirements
The CMFAS Exam, which commenced on 1st Dec 2002, comprises
of 14 modules, of which M5 to 9A are applicable under the Act
E-Book 168
of 731 .
Application of CMFAS Exam Requirements
Advising others on the following products
✓ Securities
✓Collective Investment Schemes
✓ Exchange-traded derivatives contracts
✓ Spot Foreign Exchange Contracts
✓ Over the Counter Derivatives Contract
✓ Life Policies
Not Applicable to individuals who intend to provide
➢ Spot Foreign Exchange Contracts other than for the
purposes of Leveraged Exchange Trading
➢ Structured Deposits
➢ Investment Products (Exempted from S25 to 29 and 36)
Applicable Modules
E-Book
195 of 837
21 “A” FOE
Min. Entry Requirements
Any person who acts as or holds himself out to be an
appointed representative of a financial adviser must:
(a) be at least 21 years old;
(b) satisfy the minimum academic qualification requirements
(c) comply with the examination requirements of this Notice.
E-Book 172 of 731

CMFAS Exam Requirements Do Not Apply
a. Possess specified qualifications or work experience.
b. Provide specific types of financial advisory services to
• Any capital markets product to an expert Investor
• Any investment product to
✓ Accredited Investor,
✓ An Institutional Investor,
✓ A Related Corporation
✓ Person connected to licensed FA
✓ Any Person outside Singapore with no commercial or
physical presence in Singapore
c. Any Government Securities
CMFAS Module 5 for Future Contracts
Re-Taking of CMFAS Module 5
Any Applicant who did NOT
❖ Commence the Provision of Financial Advisory Service
❖ Completed the Non Examinable CMFAS Module 5
Within 3 years from the Date of Passing CMFAS Module 5
E-Book 182 of 731

Administration of the CMFAS Examination
IBF SCI
Module 1A Module 5
Module 1B Module 8
Module 2A Module 8A
Module 3 Module 9
Module 4A Module 9A
Module 4B
Module 6
Module 6A
Module 10
E-Book 184 of 731
Continuing Professional Development
Requirements for Appointed Rep (AP)
The Authority expects AP to undergo continuing education to
keep abreast of developments in the financial advisory industry
and update their skills & knowledge in relation to the type of
Financial Advisory Services that they provide
Every principal must
a. Review & follow up on each of its APs’ structured CPD
training needs on an annual basis
b. Obtain & retain the relevant supporting evidence that each of
its AP has completed the minimum hours of structured CPD
training within the stipulated period
Structured CPD Training includes lectures, conferences,

workshops, courses, product seminars & e-learning courses
Min. Hrs of Structured CPD training required
Types of Core CPD Supp. CPD
Advisory Services Hours Hours
Advising others • 6 training hours in • 10 training
concerning MRTA or Ethics or Rules & hours
Gp Term Policy Regulations or both
• Accredited by IBF
or SCI
Advising others on • 6 training hours in • 24 training
Investment Product Ethics or Rules & hours
or Life Policies Regulations or both
• Accredited by IBF or
SCI
E-Book 185 of 731
Circumstances under which CPD
Requirements Do Not Apply
Appointed as an Appointed Representative of any financial
advisor for the 1st time starting on the date of his 1st
appointment to the last day of the same calendar year
Where an Appointed Representative
➢Is required to take or re-take 1 or more applicable CMFAS

exams in any calendar year
➢Passes the applicable CMFAS exams
Paragraph 38 – Advising others concerning OTC derivatives
contracts
Paragraph 39 – Advising others concerning spot foreign
exchange contracts
E-Book 195 of 731

Retaking of Rules & Regulations Module
Ceased to carry activity of advising others on
1. OTC derivatives contract
2. Spot Foreign Ex contract
Rules & Regulation Module

Need to
More than 1 yr on or
Yes Re-take
after 8 Oct 2018
Module
Product Knowledge Module
More than 1 yr on or
after 8 Oct 2018 and Need to
Does not have at least Yes Re-take
3 yrs of continuous Module
working experience E-Book 195 of 731
CMFAS Module 5
Chapter 5E
Notices On Reporting of
Misconduct of Representatives
by FA
FAA-N14 Notice on Reporting of
Misconduct of Representatives by FA
Submit to MAS not later than 14 days after the discovery
of the misconduct by the FA through MASNET
a. Acts involving Fraud, Dishonesty or offences of a similar

nature – FA to lodge a police report
b. Acts involving Inappropriate Advice, Misrepresentation
or Inadequate Disclosure of Information.
c. Failure to satisfy the Guidelines on Fit & Proper Criteria :
MCG-G01
d. Other Misconduct other than the above.
Including Acts committed by representatives who has ceased

to be a representative of the FA before the misconduct was
discovered or before disciplinary action has been decided
upon or taken
Annual Declaration
If there is no Misconduct Report for any calendar year, the financial
adviser shall submit to the MAS a declaration not later than 14
days after 31 December of that calendar year.
It shall be lodged through MASNET.
E-Book 201 of 731

Investigations
FA is expected to conduct internal investigations and keep

proper records of the following:-
• summary of the facts of the case
• interviews with relevant parties
• documentary evidence of the alleged misconduct
• the investigator’s assessment & recommendation
• disciplinary action taken against the representatives
FD – RWS - T
Disciplinary Action
The type of disciplinary action that a FA may take against its
representatives in respect of any misconduct committed depends
on the severity of the case & includes the following:-
• suspension from providing any FA services
• restitution of misappropriated moneys
• fine
• formal warnings
• demotion
• termination of representative’s employment
E-Book 202 of 731

CMFAS Module 5
Chapter 5F
Notices On Cancellation Period
For Unlisted Debenture
FAA-N15 Notice On Cancellation Period For
Unlisted Debenture
Wef 1 May 2011
This Notice is applicable to
• Holders of FA’s licence
• Exempt FA
• Representatives of FA
• persons who are exempted under Regulation 29 of the FAR
Notice does not apply to the following unlisted debentures

• Tenures < 3 months
• Exempt from prospectus requirements under the SFA
• Purchased by Institutional Client
FAA-N15 Notice On Cancellation Period For
Unlisted Debenture
Sale of Unlisted Debentures
• Not to sell to client any unlisted debentures which does not
contain a right to cancel the agreement to purchase
• Issuers must put in place steps & processes that satisfy the
Guidelines on Cancellation Period
Disclosure of Cancellation Period
When selling an unlisted debenture, the relevant person shall
disclose & explain to the client
• Time frame for client to reconsider his purchase
• Terms & Procedures for exercising his right to cancel his purchase
• Any fall in value during the cancellation period have to be borne
by the client
CMFAS Module 5
Chapter 5G
Notices On Requirements for
Remuneration Framework for
Representatives & Supervisors
FAA-N20 Notice On Requirements for RF*
Persons comprising the ISA Unit who
a. Are independent of the financial advisory unit
b. Do not directly or indirectly or manage the conduct and
performance of any representatives
c. Are competent in reviewing and assessing the quality of the
financial advisory services provided by the representatives of
the financial adviser, against the on-sales KPIs and determining
if infactions have been committed by the representatives
a. Utilise its compliance or risk management function to carry out

FA may
the responsibilities of the ISA unit

b. Outsource the responsibilities of the ISA unit to a 3rd party
provider
Non-Sales KPI = Understanding a client’s needs, Suitability of product
* Remuneration Framework
recommendations, Adequacy of information disclosure & Standard of
ISA = Independent Sale Audit Unit professionalism & ethical conduct (Pg 160)
Requirements of the Balanced Scorecard
ISA Unit to submit reports on its
audit in every calendar quarter
Review Quality of
Determine the FAS provided by Findings by Mystery
effective percentage Rep. Shopping exercise
of specified Income
Determine the Requirements Classifies any

percentage of Infractions
specified Variable committed.
Income
Assign Balanced Number of cases

Scorecard Grade with one or more
infractions.
Non-Sales KPI
Non-Sales KPI
✓ Incorporate non-sales KPIs into its Balanced

Scorecard framework
✓ May incorporate other key performance
indicators into its Balanced Scorecard framework
Variable Income Shall measure 60% of Variable against

Only non-sales KPIs
SVI
Fixed salary & Shall measure 100% of Variable

Variable Income against non-sales KPIs
SVI – Specified Variable Income
Non-Sales KPI
Where any specified variable income of a representative has

been measured against the non-sales KPIs for any calendar
quarter, the FA shall not measure the specified variable income
against the on-sales KPIs in any other calendar quarter.
Rep.is
Sold Life Policy Not measured
entitled to against non-
April to June 2016
receive sales KPIs in the
$1,500 of Received $1,000 Received $500 April to June
the SVI In June 2016 In June 2017 2017
Process & Methods for Reviewing of Rep’s
Performance
Post
Sampling
Transaction
Methodology by
Checks by ISA
ISA Unit
Unit
Review
Findings from
Substantiated Mystery
Complaints Shopping
Exercises
Sampling Methodology of ISA unit
The ISA Unit is to carry out up to 3 rounds of post-transaction
checks for each representatives for every calendar quarter
New Representatives who

Historical has provided financial
Average advisory service for less 3
Transaction months or
Count Method
Actual Existing Representatives
Transaction who has not effected any
Count Method transactions in the past 12
months
ISA Unit must apply the same method in determining the

population for sampling across all representatives & from
quarter to quarter
Measurement Quarter
Transaction 1st 2nd 3rd
Check Round Round# Round**
Selected
10%
Rep##
Dual Additional 5% Additional 10%

2%
Currency Distinct Sample Distinct Sample
Additional 10% Additional 20%

Other Rep 5%
Distinct Sample Distinct Sample
** - Any representative has committed one or more cases of infractions

Infraction means a failure by the representative to meet any of the non-sales KPI
## Selected rep means a representative who has been assigned a balance
scorecard grade B or worse for 2 calendar quarters immediately preceding the
measurement period
Findings from Mystery Shopping Exercise
FA shall review and assess the findings of its mystery shopping
exercise 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
A FA shall factor any infraction committed by a

representative into his performance under the balanced
scorecard framework in the calendar quarter in which the
review and assessment of the findings was completed
Substantiated Complaint
A financial adviser shall investigate every complaint lodged
against a representative arising from any incident
A FA shall factor any infraction committed by a

representative into his performance under the balanced
scorecard framework in the calendar quarter in which the
review and assessment of the findings was completed
MENU – U
Classification of Infractions
✓ Has a material impact on the interests of the client
Category 1
✓ Impinges on the fitness and propriety of the representatives

The Authority considers the following circumstances as
having a material impact on the client’s interest
a. Recommends that is clearly unsuitable for a client
b. Recommends a switch that is unnecessary & wholly or partly for
the representative’s benefit
c. Client would not purchase the investment product if information
is disclosed to him
d. Fail to execute client’s instructions
e. Carried out any act of misrepresentation, gross negligence or
serious misconduct
A FA shall ensure that the ISA unit classifies any infraction which
is NOT a Category 1 infraction as a Category 2 infraction
E-Book 220 of 731
Grading Table for Representatives
Bal. Scorecard Percentage (X) or No. of % of SVI that a
Grade cases with Infractions Rep. is entitled
1 Case with C2
A X < 5% or 100%
Infractions
5% < X < 2 Cases with C2
B 75% to <100%
10% or Infractions
10% < X 3 Cases with C2
C 50% to <75%
< 20% or Infractions
20% < X 4 Cases with C2
D 25% to <50%
< 30% or Infractions
5 Cases with C2
E X > 30% or 0% to <25%
Infractions
Or 1 Case with
C1 Infractions
Recovery of Specified Variable Income
Rep. Sold 4 Life Policies
VI = $10,000 Rep entitled to FA shall recover
SVI = $6,000 only 50% of his 50% 0f $1,200 of
SVI ie $3,000 SVI ie $600
March 2016 June 2016 Sept 2016
FA pays Rep. before

determining what the
Rep. is actually entitled
VI = $2,000
SVI = $1,200
Grading Table for Supervisors
Percentage of Total SVI from Bal. Scorecard
ALL Representatives under Grade for a
his supervision Supervisor
75% to <100% Good

Calendar Quarter
50% to <75% Satisfactory
25% to < 50% Fair
0% to < 25% Unsatisfactory
SVI = Specified Variable Income
Record Keeping
A Financial Adviser shall keep records of its processes and methods
undertaken and every assessment & determination made in
relation to the balance scorecard framework for a period of not less
than 5 years
Maintenance of Register
A Financial Adviser shall maintain a register of all Rep. who only

provide financial advisory services in relation to
✓ Dual Currency investment
✓ Structured Notes relating to equities or commodities
✓ Other products as the Authority may approve
Responsibilities of Board & Sr Management
Board & Senior Management is responsible for charting the
corporate policy & strategy to deliver the Fair Dealing Outcomes
and promote a culture of Fair Dealing with Clients
A Financial Adviser shall put in place measures, such as training

and coaching to ensure that
✓ its representatives meet the non-sales KPIs and
✓ its supervisors carry out their duties or functions in their

supervision of the conduct and performance of their
representatives in a proper manner
Suggested Reading
Annex 1 – Non Sales KPI
Non-Sales KP1 – Understanding a Client’s needs

Non-Sales KP2 – Suitability of Product Recommendations
Non-Sales KP3 – Adequacy of Information Disclosure
Non-Sales KP 4 – Standards of Professionalism & Ethical Conduct
E-Book 237 & 238 of 731

E-Book 239 to 273 of 731
Suggested Reading
Annex 1 – Non Sales KPI
E-Book 237 of 731

CMFAS Module 5
Chapter 6
FAA-N06 Prevention of Money
Laundering & Countering the
Financing of Terrorism
AGED
Underlying Principles
Notice FAA-N06 serve as a guide to all FAs in the conduct of
their operations and business activities:-
❖ Shall exercise due diligence when dealing with customers /
beneficial owners of the customers
❖ Shall conduct its business in conformity with high ethical
standards & guard against establishing any business relations
that may facilitate money laundering
❖ Shall assist and cooperate with relevant law enforcement
authorities in Singapore
E-Book 276 of 731

Risk Assessment & Risk Mitigation
a) Documenting the FA’s risk assessments
Risk Assessment
b) Consider all relevant risk factors before determining the level

of overall risk
c) Keeping the FA’s risk assessment up-to-date
d) Having appropriate mechanisms to provide its risk
assessment information to the Authority
a) Develop & Implement policies to enable FA to effectively

Risk Mitigation
manage and mitigate the risk

b) Monitor the implementation of those policies
c) Perform enhanced measures where higher risks are identified
d) Ensure that the performance of measures address the risk
assessment from the Authority
New Products, Practices & Technologies
FA shall undertake the risk assessment, prior to the launch or
use of new products, new business practices and technologies
and shall take appropriate measures to manage and mitigate
the risk
FA shall pay special attention to any
a. new products, new business practices
b. New or developing technologies
that favour anonymity
Customer Due Diligence (CDD)
Prior to establishing business relations, where the FA has any
reasonable grounds to suspect that the assets of a customer are
proceeds of drug dealing or criminal conduct, the financial adviser
shall
a. Not establish business relations with or undertake a
transaction for the customer
b. File an STR and extend a copy to the Authority for information
STR = Suspicion STRO = Suspicion Transaction Reporting Office, Commercial

Transaction reporting Affairs Department of the Singapore Police Force
Customer Due Diligence (CDD)
When CDD is to be performed?
❖ The FA establishes business relations with any customer
❖ There is suspicion of money laundering or terrorist financing
❖ The FA has doubts about adequacy of information provided
Identification of Customer
FA shall Obtain the following Information
a) Full name Where the customer is a Legal
Identification Of Customers
b) Unique identification person or legal arrangement, the

number
Financial Adviser shall
c) Existing residential
✓ Identify the customer as well as
address, business
address, contact number the Legal Form, Constitution and
d) DOB, Date of registration Powers that regulate and bind the
e) Nationality Legal Person

✓ Shall Identify The Connected
Parties of the Customer
E-Book 279 of 731
Natural Persons Appointed to Act on
Customer’s Behalf
FA shall:
Identification &
Verification
a) Identify each natural persons who acts
b) Verify the identity of each natural person using

reliable, independent source data
Verify the due authority of persons to act on customer’s behalf by

obtaining
a. The appropriate documentary evidence authorising the
appointment of such natural person
b. The specimen signature of such natural person appointed
Verification of Identity of Beneficial Owners
A FA is NOT required to inquire if there

Identification & Verification
exists any beneficial owner in relation to a customer that is:

a) An Entity listed & traded on the Singapore Exchange
b) An Entity listed on the Stock Exchange outside of Singapore
c) A Financial institution
d) A Financial institution incorporated outside Singapore that is
subjected to AML/CFT requirements
e) An Investment vehicle
E-Book 282 of 731

Identification of Beneficiary
FA shall obtain the name of a Beneficiary of a life policy
once he is identified
FA shall obtain sufficient information concerning the

Beneficiary to satisfy the direct life insurer to establish the
identity of the Beneficiary at the time of the payout
Ongoing Monitoring
A FA shall
✓ Monitor on an ongoing basis its business relations with
customers
✓ Ensure transactions are consistent with FA’s knowledge of the
customer, its business & risk profile
✓ Pays special attention to all complex or unusually large
transactions
✓ Ensure that the CDD data, documents and information are
relevant and kept up-to-date
✓ Where are any reasonable grounds for suspicion for money
laundering, FA can consider to retain the customer
CDD Measures for Non-Face-To-Face
Business Relations
A FA shall develop policies and procedures to address any
specific risks associated with non face to face business
relations with a customer
A FA shall perform CDD measures that are a least as stringent
as those that would be required to be performed if there was
face-to-face contact
Reliance on Acquiring FA on Measures
Already Performed
The Acquiring FA shall perform the CDD measures on the
customer acquired with the business at the time of acquisition
except where the Acquiring Financial Adviser has
a) No doubt about the veracity or adequacy of the information so

acquired
b) Any doubt as to the adequacy of AML / CFT measures
previously adopted in relation to the business now acquired
CFT = Countering the

financing of terrorism E-Book 284 of 731
Timing for Verification
FA shall complete verification of the identity of a Customer
before establishing Business Relations with Customer
May Establish Business Relations with Customer

Before completing the Verification
▪ the deferral of completion of the verification is Essential in order

not to interrupt normal conduct of business operations
▪ the risk of money laundering & terrorist financing can be
effectively managed by FA
Joint Account
FA shall perform CDD measures on all of the joint account holders
as if each of them were individually customers of the financial
adviser
A FA shall screen the persons

Screening of Customer
a. When the financial adviser establishes business relations with

the customer
b. On a periodic basis after establishes business relations
c. When there are any changes or updates to
✓ the lists & information provided by the Authority
✓ the natural persons appointed, connected parties or
beneficial owners of a customer
Simplified Customer Due Diligence
FA can perform simplified CDD measures in relation to a
customer if it is satisfied the risks of money laundering and
terrorist financing are low.
The simplifies CDD measures shall be commensurate with the
level of risk, based on the risk factors identified by the FA
Simplified CDD Measures cannot be performed
✓ Where a customer is from a country or jurisdiction in relation to

which the FATF has called for countermeasures
✓ Where a customer is from a country or jurisdiction known to
have inadequate AML/CFT measures
✓ Where the FA suspects that money laundering or terrorism
financing is involved
FATF = Financial Action Task Force
SEA
Politically Exposed Persons
FA shall perform enhanced CDD measures including
➢Obtain approval from FA’s Senior Management to establish or
continue business relations with the customer
➢ Establish the Source of Wealth & Funds of the Customer
➢ Conduct Enhanced Monitoring of Business Relations with the
customer
FA may adopt a Risk-based approach to be performed for
a. domestic politically exposed persons,
b. international organisation politically exposed persons
c. politically exposed persons who have stepped down
from their prominent public functions
Close Associate means a natural person who is closely connected to a PEP

Domestic PEP means a natural person who is or has been entrusted domestically with prominent public functions
Prominent Public Functions includes the role held by a head of state, a head of government, senior civil
servants, senior executives of state owned corporations
Other High Risk Categories
FA shall perform enhanced CDD measures for business
relations with or transactions for any customer where
• a customer is from or in country or jurisdiction in relation to
which the FATF has called for countermeasures
• a customer is from or in country or jurisdiction known to have
inadequate AML/CFT measures
• a customer is a legal person for which the FA is not able to
establish if it has any –
(i) ongoing operation or business activity;
(ii) economic or business purpose for its corporate structure
(iii) substantive financial activity in its interactions with the

financial adviser;
FATF = Financial Action Task Force

Reliance on Third Parties
FA may rely on a 3rd party to perform CDD measures if
a. The 3rd party is subject and supervised for compliance with
AML/CFT requirements
b. The FA takes appropriate steps to identify, assess & understand
the money laundering & terrorism financing risks particular to the
countries that the 3rd party operates in
c. The 3rd party is not one which FA have been specifically
precluded by the Authority from relying upon
d. The 3rd party is able and willing to provide any data or
information obtained by the third party which the FA would want
to obtain
Record Keeping
A FA shall prepare, maintain and retain documentation on all its
business relations & transactions with its customers
A FA to retain documentation for at least 5 years following the

termination of business relation or completion of the transactions
Documents can be retain data, documents and information as
• Originals, Copies, In Paper or Electronic form, Microfilm

provided that they are admissible as evidence in a Singapore
court of law
Personal Data
A FA shall not be required to provide an individual customer

or an individual beneficial owner of a customer with
• any access to personal data about the individual that is in
possession or under the control of the FA
• any information about the ways in which the personal data of
the individual has been used or disclosed by the FA
• any right to correct an error or omission of the personal data
about the individual that is in possession or under the control of
the FA
Suspicious Transactions Reporting
A FA shall keep in mind the provisions in the CDSA and
implement appropriate internal policies, procedures & controls
for meeting its obligations under the law by
➢ To establish a single reference point within an organization to

whom all employees, representatives & officers are instructed to
promptly refer all transactions suspected of money-laundering to
STRO via STRs
➢ To keep records of all transactions referred to STRO
A FA shall promptly submit reports on suspicious transactions to

STRO and extend a copy to the Authority for information
CDSA = Corruption, Drug Trafficking & Other Serious Crimes

Suspicious Transactions Reporting
If the circumstances are suspicious so as to warrant the

filing of an STR and document the basis for its
determination including where
• the FA is for any reason unable to complete the measures
• the customer is reluctant or unwilling to provide any
information requested by the FA & decides to withdraw a
pending application or terminate existing business relations
Where performing any of the measures will tip-off a customer,

the FA may stop performing those measures
Internal Policies, Compliances, Audit &
Training
A FA should develop & implement adequate internal policies,
procedures and controls to help prevent money laundering &
terrorism financing and communicate these to its employees
The policies, procedures and controls shall meet all requirements
of Notice.
Group Policy
Training Compliance
Policies
Employee &
Audit
Hiring
Group Policy
A FA shall develop a group policy on AML/CFT and extend this
to all of its branches and subsidiaries in its financial group
Where the AML/CFT requirements in the host country or
jurisdiction differ from those in Singapore, the FA shall require
that the overseas branch or subsidiary apply the higher of the
two standards
Where the overseas branch or subsidiary is unable to fully
observe the higher standard, the FA shall apply additional
appropriate measures to manage money laundering and
terrorism financing risks, report this to Authority and comply
with such further directions if necessary
Compliance
A FA shall develop appropriate compliance, management
arrangements including the appointment of an AML/CFT
compliance officer at the management level
A FA shall ensure that AML/CFT compliance officer is suitably
qualified & has adequate resources & timely access to all
customers records which he requires to discharge his functions
Audit
A FA shall maintain an audit function that is adequately
resourced and independent and able to regularly assess the
effectiveness of the financial adviser’s internal policies,
procedures and controls and its compliance with regulatory
requirements
Training
A FA shall take all appropriate steps to ensure that its employees
& representatives are regularly and appropriate trained on
a. AML/CFT laws & regulations
b. Prevailing techniques, methods and trends in money laundering
and terrorism financing
c. The FA’s internal policies, procedures & controls on AML/CFT,
the role & responsibilities of staffs in combating money
laundering and terrorism financing
Chapter 7A Notice On Reporting Suspicious Activities &
Incidents Of Fraud Notice No: FAA-N17
Chapter 7B Notice On Notice On Technology

Chapter Summary
Risk Management Notice No: FAA-N18
Chapter 7C Notice On Distribution of Direct Purchase

Ins. Product Notice No: FAA-N19
Chapter 7D Notice On Cyber Hygiene Notice No:

FAA-N21
CMFAS Module 5
Chapter 7A
Notice On Reporting Suspicious
Activities & Incidents Of Fraud
Notice No: FAA-N17
Reporting Suspicious Activities
FA shall lodge Form F1 (Suspicious Activities & Incidents of
Fraud Report) with MAS not later than 5 working days after
the discovery of any suspicious activity or incident of fraud
A FA shall still file STR to the STRO, Commercial Affairs Dept of
the Singapore Police Force, as required under the Prevention
Of Money Laundering & Countering The Financing Of Terrorism
Notices.
Lodge Police Report
Yes No
Submit report Notify Authority

to Authority of the Reasons
for its decisions
STR = Suspicion STRO = Suspicion Transaction Reporting Office, Commercial
Transaction reporting Affairs Department of the Singapore Police Force
CMFAS Module 5
Chapter 7B
Notice On Notice On
Technology Risk Management
Notice No: FAA-N18
Technology Risk Management
• Make reasonable effort to maintain high availability for Critical
System
• Ensure that max. unscheduled downtime that affects licensee’s
operations or service to its customers does not exceed a total
of 4 hours within any period of 12 months
• Establish a Recovery Time Objective (RTO) of not more than 4
hours for each critical system
• Must validate & document at least once every 12 months, how
it performs its system recovery testing
• Shall notify the Authority not later than 1 hour upon the
discovery of a relevant incident
• Shall Submit a Root Cause and impact Analysis Report to the
Authority within 14 days
Critical System = means a system, the failure of which will cause
significant disruption to the operations of the licencee
CMFAS Module 5
Chapter 7C
Notice On Distribution of Direct
Purchase Ins. Product
Notice No: FAA-N19
Distribution of Direct Purchase Ins. Product
A FA must only distribute DPI through its Rep or CSO or by
way of an Online Direct Channel Able to afford the premium payable
Covers his protection needs
Implementation Not misunderstood any features
of Safeguard
Roles & Provision of
Responsibility of Products
Representatives Information
Requirements
Implementation of Avenues to address
Internal Policies & Queries, Complaints
Processes & Claims
CSO = Customer Service Officer
DPI = Direct Purchase Insurance Product
Online direct channel means any web portal in the Internet created or operated by
a FA on which a client may purchase the DPI
E-Book 310 of 731
Implementation Of Safeguard
Enable Client to
a. Determine if the DPI adequately covers his
protection needs
b. Determine the total amount of premium
payable for the DPI based on his Income &
Tools & Calculators Financial Commitments
FA must provide
a. Information relating to the DPI
b. Highlight disclaimer, Special Exclusions
c. Prompt to make Necessary Declaration in
the Proposal Forms
d. Ensure that all Mandatory Fields in the
DPI Information Proposal Forms have been completed
e. Alert client that DPI is NOT a savings
account or deposit & some benefits of the
DPI are not guaranteed & 14 days free-look
period
Provision of Product Information
Client’s application to
purchase DPI by way
Rep. or CSO Online Direct

Channel
• Required a. Provide the Information required
Documents b. Comply with the necessary requirement
c. Ensure all mandatory fields in proposal form
• Fact Sheet & are completed before processing
Checklist d. Access to the full & actual policies wordings
of the DPI
CSO = Customer Service Officer

Implementation of Internal Policies &
Processes
These internal policies & processes must include the following
a.Set out the respective responsibilities of the Rep. & CSO in the
distribution of DPI
b.Training provided must cover the role & scope of responsibilities of
a Rep. & CSO & the risks & features of DPI
c.Instituting controls & safeguards to adequately address information
security risks and putting in place business continuity plan to minimize
system downtime & to ensure continued operation of the Online
Direct Channel at all times
d.Ensure the Proper conduct of the Rep. or CSO who distribute the
DPI.
Roles & Responsibilities of Rep. or CSO
Meet General Product Information
Disclosure Standard
Not False Or
Misleading
Clear Adequate
CMFAS Module 5
Chapter 7D
Notice On Cyber Hygiene
Notice No: FAA-N21
Notice on Cyber Hygiene
Adm Account means any user account, that has full privileges &
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;-
E-Book 320 of 731

Chapter 8A Product Development & Pricing
Notice Nos: MAS 302
Chapter 8B Notice On ILPs

Notice Nos: MAS 307
Chapter Summary
CMFAS Module 5
Chapter 8A
Product Development & Pricing
Notice Nos: MAS 302
Product Development & Pricing MAS 302
✓ Prudent Management Oversight

✓ Prohibited Payout Features
Mandatory
✓ SO has not come into effect
Requirements
✓ SO has come into effect
✓Approval for New Products
2 Part
✓ Notification for Products Launched

Guidelines
✓ Compliance with Guidelines
SO = Settlement Option
Part 1 – Mandatory Requirements
Prudent Management Oversight
An insurer must exercise Prudent Management Oversight & maintain
Adequate Controls in the development & pricing of insurance
products & ILPs sub-funds
Board of Directors must approve the development & pricing of
insurance products & ILPs sub-funds
Prohibited Payout Features

An Insurer shall not include in any insurance product on or after 1st
October 2013 a term or condition which
✓ the insurance contract entered into provides a settlement option
✓ allows the payment of any part of the policy moneys ascertained to
be due & payable under the policy to be more than 10 years after the
occurrence of the insured event
Before 1st Notify PH Before next
Oct 2013 policy statement
SO has not come
into effect Exercise SO
After 1st Notify PH within 1
Oct 2013 month of exercising SO
Before 1st Notify PH Before next
Oct 2013 policy statement
SO has come into
effect Exercise SO
After 1st Notify PH within 1
Oct 2013 month of exercising SO
The Money payable in accordance with the settlement option
• Is not covered under the PPF* Scheme
• In event of insurer’s bankruptcy. It will be rank after policy
liabilities & equally with the unsecured liabilities of the insurer
* Prohibited Payout Features SO = Settlement Option
✓ Obtain Written Approval before any Product

Approval For Offering
New
Products ✓ Submitted no later than 1 month before
proposed launch date
✓ Not Applicable to Short Term A&H, 5 Years
Term Policy or A Direct Purchase Insurance
Product
Contravention ✓ Penalty as specified in Sec 55(2) of the

Imposed Insurance Act
MAS 302 Part 2 – Guidelines
Notify MAS within 7 working days of any Product launched that
does not require MAS’ approval
Notification should contain relevant information & accompanied by
Product Documents
Notification should include
▪ Introduce SP with Longer / Shorter policy terms for 5 years
existing Endowment Policies
▪ To Increase the Number of Dread Disease covered under Whole
life Policies
▪ Have Option of New Frequency Premium Payment Mode
▪ To Offer TPD cover to any of its Whole Life Policies
CMFAS Module 5
Chapter 8B
Notice On ILPs
Notice Nos: MAS 307
Notice On ILPs
MAS Notice 307 issued in relation to Disclosure, Investment
Guidelines, Borrowing limits & Operational Practices for ILPs
Mandatory Requirements Non-Mandatory Standards

✓ Investment Guidelines
✓ Notification to the Authority
✓ Payment of Redemption Proceeds
✓ Valuation of Units in ILP sub-fund
✓ Transactions with Related Parties
✓ Audit of ILP Sub-Funds
✓ Transactions at Arm’s length
✓ Audit Certificate
✓ Exercise of Voting Rights
✓ Disclosure
✓ Valuation of Assets
✓ Payment from ILP Sub-Fund
✓ Frequency of Valuation
✓ Cash Rebates & Soft Dollars
✓ Rounding Differences
✓ CPF Failed Trades
✓ Valuation Errors & Compensation
✓ Naming of Sub-Fund
✓ Delegation
✓ Notification of Breaches
Definition of Code – Pg 408 of 837
MAS 307 Part 1 – Mandatory Requirements
✓ At Least 21 days before launch of any ILPs sub-
Notification fund
to the MAS
✓ No later than 1 month before any Significant
Change to any ILPs sub-fund ie Investment
Objectives, Replacement of new manager etc
✓ Price is derived by dividing NAV by number of

Units Outstanding
Validation of
Units in the Redemption of Guaranteed
ILP sub-fund Matured Amount
Higher
Guaranteed ILP
sub-fund NAV / units
outstanding
✓ 2 Audit Methods –
Audit of ILP • By Financial Statements – 1st Method
Sub-Funds • By Internal Controls & Processes – 2nd Method
✓ Notify in writing before 1st changing Audit Method
✓ Appoint an external auditor to prepare audit
certificate
Audit ✓ Audit Completed within 6 months of

Certificate to termination/maturity of ILP sub-fund
Matured ILPs ✓ Forward a copy of the audit certificate to MAS
within 30 days of completion of audit
✓ Retained Audit Certificate for 5 years
E-Book 337 of 731
✓ Guiding Principles
✓ Product Summary & Policy & PHS
Disclosure ✓ Statement & Reports to Policyholders – 30 days
✓ Semi-Annual & Audit Reports – 2 & 3 months
respectively E-Book 341 of 731
✓ Advertisements
✓ Cannot Pay any Marketing Expenses out of ILP
Payments
sub-Fund
from ILP Sub-
Fund ✓ Fund Manager cannot retain Cash Rebates arising
out of transactions
CPF failed ✓ Not charge any Cost arising from CPF failed
Transaction Trades to the ILP Sub-fund
MAS 307 Part 2 – Non-Mandatory Standards
E-Book 346 of 731

MAS 307 Part 2 – Non-Mandatory Standards
✓ Investment Guidelines, Borrowing Limits
✓ Payment of Redemption Proceeds
✓ Transactions with Related Corporations
✓ Transactions at Arm’s length
✓ Exercise of Voting Rights ✓Valuation of Assets
✓ Frequency of Valuation
✓ Rounding Differences
✓ Valuation Errors & Compensation
✓ Delegation
✓ Notification of Breaches
Payment of Redemption Proceeds
An Insurer should pay out redemption proceeds to
policy owners
Other
Bond ILP Feeder Hedge Property
Funds Funds Funds Funds Funds
T+4 Stated Allowed

T+6 T+7
Date Date
China Equity Fund

New Manager Asia Property Fund New Fund - Ex Japan 21 days
Not later Global Bond Fund Healthcare Fund
1 month
Transactions With Related Corporations
The Manager should not
• Invest Funds belonging to the ILP Sub-Fund under its

management in the insurer’s own securitites
• Lend Moneys of the ILP Sub-Fund under its management to
related corporations
• Purchase Real Estate owned by the insurer
Valuation of Assets of an ILP Sub-Fund
• The official closing price on the organised market
• The transacted price on the securities at a cut-off time as
specified in the product summary and applied consistently by the
Valuation of Assets
manager
• The value of the ILP sub fund’s assets, in the case where the
transacted prices are not representative or not available to the
market, should be based on fair value. Fair value should be
determined with due care and the basis for determining the fair
value of asset should be documented
Frequency of Valuation
Every Business Day
Exception for Funds investing
No dealing
At least Once A Month
every biz
day
Property
At least Yearly
Funds
Rounding Differences
When calculating the number of units to be issued to a
policyholder, it may 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 an ILP Sub-Fund or arising from calculating the number of
units to be issued should be credited to the ILP Sub-Fund
Assuming a policy owner 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
Price per
unit ($1.224 - $1.22) X 10,000
= $0.004 X 10,000 = $40
Valuation Errors & Compensation
Valuation Error represents 0.5% or more
Compensate Policy Owners

Yes
No need to compensate if amount < $20
Compensate ILP sub-fund for any losses

incurred would apply in all circumstances
Valuation Error represents less than 0.5%
No No need to compensate Policy Owners

Not required to compensate ILP sub-fund for
any losses incurred
E-Book 352 of 731

Disclosure Requirements
Where performance fees are payable by the ILP sub-fund,
the product summary should disclose
1. Performance fee is payable and to whom

2. Performance fee can be levied even if the return of the ILP sub-
fund is negative
3. The maximum percentage of the ILP sub-fund’s NAV
4. Whether the ILP sub-fund
✓ achieves equalisation of performance
✓ How the absence of equalisation may affect the amount of
performance fees borne by the policy owner
E-Book 357 of 731

Calculation Method
The performance fee should be calculated based on:
(A) a fulcrum fee arrangement; or
(B) a high water mark arrangement.
E-Book Page 358 & 359 of 731

Cross Reference E-Book Page 607 & 608 of 731 (C12).
Notification of Breaches
Breach of Action Needed
Appreciation or depreciation in the value of

ILP sub-fund’s investment
Redemption of units ▪ Rectify within
Change in capital of company Allowed Period
Reduction in the weight of a constituent in ▪ No Need to
the benchmark being tracked by the ILP Report to MAS
sub-fund
Downgrade in or cessation of a credit rating
Requirements & Standards ▪ Report within 3

under MAS 307 days to MAS
Appendix H – Product Highlights Sheet
➢ Highlights the key terms & risks of the ILP sub-fund and
complement the Product Summary
➢ Important to read Product Summary before purchasing the ILP
sub-fund
➢ Not to invest in the ILP sub-fund if you do not understand it
✓ Name of Sub-Fund ✓ Market & Credit Risks

✓ Sub-Fund Suitability ✓ Liquidity Risks
✓ Key Features ✓ Product-Specific Risks
✓Investment Strategy ✓ Fees & Charges
✓ Parties Involved ✓ Valuation & Exiting
✓ Key Risks ✓ Contact Information
E-Book 375 of 731

E-Book 376 of 731

Chapter 9A Guidelines On Criteria For The Grant Of A
Financial Adviser’s Licence Guideline No: FAA-G01]
Chapter 9B Guidelines On Fit And Proper Criteria
Guideline No FSG-G01
Chapter 9C Circular On Due Diligence Checks &
Documentation In Respect Of The Appointment Of AR & PR
Chapter Summary
Circular No: CMI 01/2011

Chapter 9D Guidelines On Guidelines On Standards Of
Conduct For FAs & Representatives Guideline No: FAA-
G04
Chapter 9E Guidelines On The Use Of The Term
“Independent” By FAs Guideline No: FAA-G05
Chapter 9F Guidelines On Applications For Approval Of
Arrangements Under Paragraph 11 Of The 1st Schedule To
The FAA Guideline No: FAA-G06
Chapter 9G Guidelines On Exemption For Specialised Units
Serving High Net Worth Individuals Guideline No: FAA-G07
CMFAS Module 5
Chapter 9A
Guidelines On Criteria For The
Grant Of A Financial Adviser’s
Licence
Guideline No: FAA-G01
FAA-G01 Criteria For Grant Of A FA’s
Licence
A FA’s license will only be granted to a Corporation
with a physical presence in Singapore
Criteria for CEO, Directors &
✓ Appoints at least 2 Appointed Representatives

✓ CEO & ED have 5 years relevant working experience
Representatives
✓ At least 3 years in managerial capacity

✓ Board of Directors with minimum 2 members with at least
one member being resident in Singapore
✓ CEO is a resident in Singapore
✓ CEO or EDs are placed in a position of conflict of interest
E-Book 387 of 731
Paid-up Capital
EXCLUDE futures Combination of

contracts fin advisory
svcs INCLUDE futures
$150,000 contracts
$300,000
$300,000
Professional Indemnity Insurance
Standalone Non-Hybrid Professional Indemnity Insurance
 Indemnity NOT less than S$500,000
 Deductible allowed NOT more than 20% of Net Asset Value
Coverage is 5X Standalone Non-Hybrid PII

Group PII
Undertaking if Deductible > 20% of NAV
Sub-Limits set for non-PII sections

Hybrid PII Coverage at least equivalent to Standalone Non-
Hybrid PII
Group Sub-Limits set for non-PII sections

Coverage is 5X Standalone Non-Hybrid PII
Hybrid PII
Undertaking if Deductible > 20% of NAV
Criteria For Grant Of A FA’s Licence
Track Record
• 3 years proven Shareholding
track record • CEO must own more than
Fit & Proper 20% shareholding of the co
• CEO & EDs must own more
than 50% shareholding of the
Other Criteria co
Systems & Processes Supervision by Home

• Adequate Internal Regulatory Authority
Control • Proper Supervision by
recognised home
regulatory authorities
CMFAS Module 5
Chapter 9B
Guidelines On Fit And Proper
Criteria
Guideline No FSG-G01
FSG-G01 Guidelines on Fit & Proper
Criteria
Honesty,
Integrity &
Reputation
Competence
Sound & Capability
Financial
Standing
Onus is on each person to establish that he is fit

& proper person to the satisfaction of MAS
E-Book 394 of 731
Guidelines on Fit & Proper Criteria
• Serious and surrounding circumstances for not
FA or Rep.
meeting the specific criteria

• Relevance of the failure
• Passage of Time since the failure
• Substantial shareholders meet the Fit & Proper

Institution
criteria
• Directors and CEO meet the Fit & Proper criteria
• Adequate Internal Control Systems
Exempt Entity
• Major Shareholders must control > 20% of the

voting power of > 20% of the issued shares
• Key Officers meet the Fit & Proper criteria
• Adequate Internal Control Systems
Honesty, Integrity & Reputation
• Has been issued a prohibition order

• Has been censured, disciplined, suspended
• Contravened or abetted another person in breach of any laws
• Subject to any investigation or disciplinary proceeding by MAS
• Unwillingness to comply with any regulatory requirement or uphold
any professional & ethical standards
• Provide false or misleading information to MAS
• Others
Competence & Capability
• Satisfactory Past Performance or Expertise
• Concurrent Responsibilities to impair his ability
• Satisfactory Educational Qualification or Experience
• Satisfied the Requirements Stipulated
• Appointed Actuary is a Fellow of Singapore Actuarial Society
Financial Soundness
Whether the relevant persons
• Has been unable to fulfil any of his financial obligations
• Under a compromise with creditors
• Be an undischarged bankrupt(for representative)
• Under judgement debt, winding-up petition, receivership (for

corporations)
CMFAS Module 5
Chapter 9C
Circular On Due Diligence
Checks & Documentation In
Respect Of The Appointment
Of AR & PR
Circular No: CMI 01/2011
Circular on Due Diligence Checks &
Documentation for Appointment of Rep.
FI are to ensure that it recruits and retains only a Fit & Proper
person as an appointed or provisional representative.
Fit & Proper

Declaration
Conflicts Due Diligence

Assessment Checks
Continuing
Education
Fit & Proper Declaration
FI must obtain and maintain written self declaration from its
proposed representative and a confirmation that they are
aware that it is an offence to provide false or misleading
information to its principal or to the MAS
In addition to obtaining the written fit & proper declaration

the FI should endeavor to do the following
• Verify relevant documents from representative
• Conduct independent due diligence checks
• Maintain adequate documentation
Annex 1
E-Book 405 of 731
Details of Self Declaration
FIs are encouraged to include questions relevant to Fit &
Proper criteria in the self declaration form
Honesty, Integrity & Reputation
Within the last 10 years, has the individual
a.been refused the right to carry on any trade, business or
profession
b. been issued a prohibition order
c. been disciplined suspended by MAS
d. been the subject of any complaint
e. been the subject of any disciplinary proceedings
Financial Soundness
Within the last 10 years, has the individual
a. been or is unable to fulfill any of his financial obligations
b. entered into a compromise or scheme of arrangement
c. been the subject to a judgement debt
FIRM D
Due Diligence Checks
The Onus is on each relevant person to establish that he is fit &
proper person rather than for MAS to show 0therwise
Probity checks on
Representative’s
Periodic declaration Identity# Probity checks on
& Checks Representative’s Past
records
Not to furnish false or Probity checks on

misleading document Representative’s
Financial Status@
# Notify within 14 days of the change using Form 18 Annex 2
@ Ministry of Law’s Insolvency & Public Trustee’s office Online Portal E-Book 409 of 731
CMFAS Module 5
Chapter 9D
Guidelines On Guidelines On
Standards Of Conduct For FAs
& Representatives
Guidelines on Standards Of Conduct for FA
Purpose is to help foster professional standards & enhance
confidence in the Financial Services industry
• Integrity
• Objectivity
• Confidentiality
• Competence
• Due Care & Diligence
• Disclosure to Client
• Know Your Client
• Conflict of Interest
• Complaints Handling
• Compliance with Laws
Integrity & Objectivity
A FA should conduct its business with honesty, fairness,
integrity & professionalism, in order to maintain good faith & to
Integrity
preserve public trust in the financial services industry.

A FA 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
A financial adviser should exercise reasonable care and

Objectivity
judgement to achieve and maintain objectivity in conducting

its business.
A financial adviser should avoid situations that could impair
its ability to make objective recommendations
E-Book 415 of 731

Competence
A financial adviser should provide advice only in those areas in
which it has the necessary competence and skills
A financial adviser should provide its representatives with

relevant training, so as to enhance their competence,
knowledge and skills
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.
E-Book 416 of 731

Due Care & Diligence
✓ Prompt & Best Execution

✓ Supervision of Representatives
✓ Cessation of business - ensure its liabilities &
obligations are met and clients are serviced by other FAs
E-Book 417 of 731

Disclosure to Clients
FA should make Adequate information about its business and types
of financial advisory service it is authorized to provide
1. Key features of Products
2. Warnings, Exclusions & Disclaimers
3. Information – Clear, Adequate & Not False or Misleading
4. Fact & Opinion
5. Remuneration
Know Your Client its recommendations are
based on thorough
analysis & take into
account alternative
Reasonable
investment options.
Basis
Compliance Record
With Laws Keeping
Prevention of
Complaints
Money
Handling
Laundering
Conflicts of
Interest
E-Book 421 of 731

TOP
Complaints Handling
A Financial Adviser should have in place adequate procedures and
processes for handling complaints relating to its financial advisory
business
It should ensure that

a. Complaints are handled in a fair, timely & Appropriate manner
b. Complaints are promptly investigated & responded to
c. An officer is designated to handle all complaints
CMFAS Module 5
Chapter 9E
Guidelines On The Use Of The
Term “Independent” By FAs
FAA-G05 Guideline On Use of the Term
“Independent” by FA
These Guidelines set out that:
(a) only FA 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”;
(b) before using the term “independent”, FA that they are
in compliances with Regulation 21 of the FAR
Principles-Based Approach
Strong connotations suggesting:
• Operates with Objectivity & Impartiality
• No Potential Conflict of Interest
E-Book 423 of 731
Conditions to Be Met
“Independent” can be used if FA
• Does not receive any commission or other benefits from

Reg. 21(1) FAR
product provider which may create product bias
• Operates Free from any direct or indirect restriction
• Operates without any conflict of interest created by any

association with any product provider
$
Commission & Other Benefits
FA may be compensated by product provider in various ways.
These include by commissions, trailer fees or soft dollar
arrangement
✓ Not restricted to use the word “independent”
Insignificant as the commissions may not create a product
bias
✓ May create a bias in favour of a particular
Commission
Same Level investment product unless it receives a similar

level of commission for similar products
Sharing ✓ Significant commission sharing arrangement

Arrangement may create a bias in favour of certain products
✓ Commission > 20% of FA’s total revenue will

Significant
be generally regarded as significant
E-Book 427 of 731
Product Restriction
 Direct Restriction
e.g. Contractual agreement to sell a range of
investment products
 Indirect Restriction
e.g. Meet specified Sales Targets
 Not Independent if represent less

than 4 product providers for each
class of investment products
Relationship with Product Provider
A FA may be a product provider itself such as a bank or
life insurance company. Under such circumstances, the FA
should not promote its service as being “independent”
✓ Subsidiary
of a Product Whether these ownership links create a
Financial Adviser may be
Provider product bias, MAS will take into account

✓ The • the Ownership Structure of the
Advisory Arm Financial Adviser
of a Financial • the Relationship with the Product
Conglomerate Provider
✓ Life • the Products on which
Insurance or Recommendation is Given
Banking Outfit
CMFAS Module 5
Chapter 9F
Guidelines On Applications For
Approval Of Arrangements
Under Paragraph 11 Of The 1st
Schedule To The FAA
FAA-G06 Applications for Approval of
Arrangement
E-Book 440 of 731

Arrangement
Arrangement
Paragraph 11 of 1st Schedule of FAA Facilitative Approach
• Foreign Company whose provision of any Financial Advisory
Service is effected under an Arrangement between the Foreign
Company & its related corporation which is licensed where such
arrangement is approved by the MAS
• Individuals providing Financial Advisory Service for the foreign
related corporation under an arrangement are NOT required to be
an appointed or provisional representative under the FAA
approved by MAS
Arrangement
Foreign Related
Co Local FA
Assessment Criteria
✓ Possesses competence in Specific area of Business
✓ Discharges its functions in an efficient, honest and fair
Criteria
manner.
✓ Subject to proper supervision by its home regulatory
authority
• The nature of FA services proposed

Consideration
• The role of the Spore entity & its foreign related corporation
• The adequacy of controls & procedures and management
oversight
• The adequacy of record keeping & documentation systems
• Target clientele
Target Clientele
The Authority only permits arrangements that are limited to

serving Accredited investors, Expert Investors & Institutional
Investors as well as Investment vehicles due to their ability
to safeguard their own interests
Applications
The MAS would expect the roles, responsibilities & service
standards of the various parties in the proposed arrangement
to be clearly formalized in a service level agreement
The applicant should ensure that there is proper

documentation of the arrangement for audit trail purposes
The MAS will review the arrangement where there is a

material change in the circumstances of the arrangement like
change in type of financial advisory service, the target
clientele or the role of the Singapore entity
CMFAS Module 5
Chapter 9G
Guidelines On Exemption For
Specialised Units Serving High
Net Worth Individuals
Guidelines on Exemption for Specialised
Units
Section 100(2) of FAA Act

Serving Net Worth Individuals
The Guideline elaborate on:

• The criteria that the MAS would consider in assessing
applications for exemption.
• The types of clients that may be served by the Unit;
• The general conditions that will imposed by the MAS.
Definition of High Net Worth Individual
1. Minimum Assets# of S$1 million*
2. Total Net Personal Assets > S$2 million in value
3. Annual income > S$300,000
4. Applicant to have potential to become the person as
described in (1) within a period of 2 years.
*bank deposits, capital market products

life policies & other investment products
Extent of the Unit Being Separate & Distinct 30
The purpose of the Unit should be to target & serve Prospective
High Net Worth Individuals.
The Unit should have its own marketing or client service staff to
serve the high net worth individuals only
Criteria Used by the MAS
1. Whether Clients Served are considered as High Net Worth
Individuals
Specialised Units
2. Track Record & Reputation of the Applicant
3. Policies and Procedures on Client’s Acceptance
4. Range of Products & Services Offered by the Unit
5. Other Factors that may consider relevant
Chapter 10A Guidelines On Conduct Of Business For
Execution-Related Advice Guideline No: FAA-G08
Chapter 10B Guidelines On Structured Deposits

Chapter Summary
Chapter 10C Guidelines On Switching of Designated

Investment Products Guideline No: FAA-G10
Chapter 10D Guidelines On Fair Dealing

Chapter 10E Guidelines On Guidelines On The

Remuneration Framework For Representatives And
Supervisors Guideline No: FAA-G14
Accurate as a 2022 1st June 2022 Training materials are for training purpose only
CMFAS Module 5
Chapter 10A
Guidelines On Conduct Of
Business For Execution-
Related Advice
Conduct of Business for Execution Related
Advice
Sec 64 of FAA Principles-Based Approach
➢ Execution-Related Advice means advice provided is solely

incidental to the Execution Activities of a dealer with no discrete
fee charged by the dealer for advice rendered
Definition
➢ Execution-related activities means

• Dealing in capital markets products
• Dealing in capital markets products that are future
contracts
Accurate as a 2022 1st June 2022 Training materials are for training purpose only 2
Conduct of Business for Execution Related
Advice
Recommendations on Capital Markets Products
➢ To have a Reasonable Basis of Recommendation
➢ Can proceed with client’s request even when no information
provided
➢ Where products are traded on a margin basis, a dealer should
highlight the risk of such products to the clients
Documentation and Record Keeping

➢ Maintain Proper Records
➢ Keep for at least 6 years.
Disclosure of Conflicts of Interest.

➢ Circumstances in which dealer is NOT required to repeat
disclosure of conflict of interest. (Pg 458 of 731)
Disclaimer
CMFAS Module 5
Chapter 10B
Guidelines On Structured
Deposits
Guidelines on Structured Deposits
Not Applicable to when Advice is given to
a) Accredited Investor, Expert Investor, An Institutional
Investor
Use of Term “Structured Deposits”
A Structured Deposit is a type of deposits and not a unique class of
financial instruments.
Labeling 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.
Guidelines on Structured Deposits
Product Information Disclosure
✓ Clear, Adequate and Not misleading
Past and future performance

✓ Not necessarily indicative of Future Performance
Recommendations on Structured Deposits

✓ To have Reasonable Basis for Recommendations
✓ To have Warnings statements
✓ To have screening in place.
✓ To have training and competency for the representatives.
✓ To fulfill fit and proper criteria
✓ To have segregation of activities
✓ To fulfill requirements under the Banking Act
CMFAS Module 5
Chapter 10C
Guidelines On Switching of
Designated Investment
Products
Guidelines on Switching of Designated
Investments Products
To provide guidance on the controls, processes and procedures that
the MAS expects licensed FA and exempted FA to implement in
order to monitor switching and ensure that their representatives do
not advise clients to switch from original product to replacement
product in a manner that would be Detrimental to the clients.
Guidelines on Switching of Designated
Investments Products
General
Obligations
Remuneration Disclosure
Structure Requirements
Monitoring of
Switches
✓ Front End Monitoring
✓ Back End Monitoring
FAA-G10 Guidelines on Switching of
Designated Investments Products
General Obligations:
➢ Comply with KYC process, Needs Analysis & Documentation
➢ Disclosure of Fees and Charges.
Disclosure requirements
➢ Any Disadvantages that the Client would Suffer as a result of
the switching.
➢ A Prominent Warning of what constitute a Detrimental Switch.
Client’s declaration includes circumstances where the
Front End Monitoring Procedure
original product is:

(a) a different type of designated investment product from
the replacement product;
(b) purchased from other financial advisers
(a) Client to declare in writing:
(i) whether the Rep. has drawn his attention to the costs
& possible disadvantages associated with the switch
(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 Rep. should declare whether he is entitled to any free
switching, so thathe is fully informed of all free switching options.
TURN
A FA should institute processes & procedures to effectively
Back End Monitoring Procedure
monitor & track the switching of designated investment

products, such as
(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 Rep.
with an unusually high volume of switching transactions;
(c) putting in place procedures to ensure that each switch
recommended by a Rep. is reviewed by a supervisor for
appropriateness;
(d) implementing any other procedures and controls to
identify any unusual trends in switching transactions.
E-Book 471 of 731
CMFAS Module 5
Chapter 10D
Guidelines On Fair Dealing
Guidelines on Fair Dealing
What is Fair Dealing?
❖ Focus on Board & Sr Management responsibilities for dealing
fair dealing outcomes to customers
❖ The Guidelines apply to the selection, marketing, distribution
of investment products and the provision of advice for these
products.
❖ It also covers after-sales services and complaints handling.
Outcome 2 4 3 5 1
S SIR
I RCC
C C
FAA-G11 Guidelines on Fair Dealing
Outcome 1 Customers have confidence
Outcome 2 Provide Suitable Products & Services
Outcome 3 Have Competent Representatives
Provide Clear, Relevant & Timely

Outcome 4 Information
Handle Client’s Complaints in Effective &

Outcome 5 Prompt Manner
E-Book 475 of 731

Guidelines on Fair Dealing
The Board is responsible for charting the corporate policy and
strategy to deliver the fair dealing outcomes to customers
The Board and Sr Mgt accountable for setting the culture &
direction of the financial institution to align business practices
with the fair dealing outcomes
In particular
(a) demonstrated commitment by the Board and Sr Mgt 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 Rep. so that they have the skills &
competencies to deal with customers fairly; and
(d) a performance evaluation and remuneration system to
incentivize fair dealing conduct
Industry & Consumer Associations
Industry & Consumer associations play a key role in
promoting the fair dealing outcome. They can do it by
a. Developing case studies
b. Conducting mystery shopping exercises
c. Aligning their codes of practice
d. Conducting training for industry representatives
e. Educating consumers to help them understand the fair
dealing initiative
E-Book 477 to 502 of 731

Fair Dealing Outcome One
Financial Institutions play an important role in influencing
customer’s financial decisions.
Board & Sr Mgt provide leadership and set the culture of the
Financial Institutions
Rationale
Board & Sr Mgt should address key areas:-

✓ devise a Clear Strategy to achieve the Fair Dealing Outcomes
✓ align Organisational Policies & Practices to the Fair Dealing
Outcomes
✓ communicate the Fair Dealing Outcomes as a priority
✓ monitoring Implementation of Fair Dealing Strategy
Fair Dealing Outcome Two
Financial Institutions should carefully assess the suitability of every
investment product before marketing the product to customers
Conduct ✓ Assess and fully understand the features & risk-

Product Due reward characteristics of the product
Diligence ✓ Identify suitable customer segment for the product
✓ Tailor its marketing approach to the profile,

Marketing to financial objectives & general financial literacy of its
Target target customer segments
Customer
Segment ✓ Its representatives to provide quality advice &
appropriate recommendations on products
Fair Dealing Outcome Three
Customers rely on Rep. to explain investment products and
their recommendation. Financial Institutions should align Reps’
remuneration structures with Customers’ Interest
Ensuring Competency of Rep.
Providing Quality Advice & Appropriate

Recommendations
Aligning Remuneration Structures with

Customers’ Interest
Fair Dealing Outcome Four
Provide Customers with clear & relevant information to enable
them to make informed financial decisions.
Information should be given before, during and after the advisory
& sales process.
Clear Timely
Information Information
Relevant
Information
Fair Dealing Outcome Five
Should establish a robust process to resolve customer grievances
independently, effectively and promptly and to regard complaints
as potential indicators of areas for improvement
✓ Have a formalized complaints handling process

Handling ✓ Resolve complaints fairly and consistently
Complaints
✓ Set clear criteria for assessing the merits of each
complaint
✓ Set service standards for complaints handling &

Resolving resolution
Complaints
Promptly ✓ Devote sufficient resources to attend to customer
complaints within a stipulated times
CMFAS Module 5
Chapter 10E
Guidelines On Guidelines On
The Remuneration Framework
For Representatives And
Supervisors
Purpose of these Guideline
To provide general guidance on some of the
requirements in the Notice, such as the post-transaction
checks & classification of infractions by the ISA Unit
In addition, it set out the measures to applied to all

existing & newly recruited Rep. who have been assigned
Bal. Scorecard Grade

Existing & New Rep. E
Supervisors UnSatisfactory
It also set out the Authority’s expectation for FA to conduct

pre-transaction checks to minimise the impact of the
balanced scorecard framework on Rep. & supervisors.
* Remuneration Framework
Guidance on Post Transaction Checks
The ISA Unit may
a. Incorporate any other assessment criteria in the
documentation review or additional questions in the client
surveys
b. Modify the assessment criteria in the documentation review
or additional questions in the client surveys to suit the business
needs of the financial adviser
Guidance on Post Transaction Checks
The Authority is of the view that conducting client survey
would serve as an additional tool for a FA to –
(a) uncover infractions which may not be detected based
solely on documentation reviews;
(b) complement documentation reviews in the assessment of
potential cases of infraction.
F2F
No response Considered
after 1 Closed After 3
month Written Conduct Phone
Survey Unsuccessful
Survey Calls
Attempts
Electronic No response
Survey after 2 weeks
Representatives Assigned BS Grade “E”
Grade “E” Supervisor
Quarter Satisfactory
Supervisor accompany Rep. Yes No

for 5 closed sales
ISA unit conduct Full Scale Designate a higher tier supervisor
post transaction checks on to conduct the supervisory role
every transaction of “E” Rep. Submit a remedial plan to Authority
for a period of 3 months to improve to performance of the
relevant team
Representatives Assigned BS Grade “E”
Grade “E” Rep. are not allowed to perform any supervisory or
managerial role for at least 1 year from the date he was
assigned balance scorecard grade E
For “UnSatisfactory” Supervisor’s oversight, FA should
1. Conduct a review of supervisor’s oversight
2. Reduce the number of Rep. under the supervisor’s supervision
3. Impose a moratorium on the recruitment of new Rep.
Cannot perform
Supervisory role
for 1 Year
UnSatisfactory UnSatisfactory
X
CEO is ultimately
responsible for the
Q1 Q2 oversight Grade “E”
Supervisor Rep & “Unsatisfactory”
supervisor
Reference Checks On Rep. & Supervisors
To recruit
Request for Last 4 Balance
Scorecard assigned to the
individual by his previous
Existing Rep.
principal within the past 10
or Supervisor
years
The Balanced Scorecard which were assigned to the Rep. or

Supervisor should be disclosed to the 2nd Mentioned FA
FA should not recruit any individual with an “UnSatisfactory”

Balance Scorecard in the final calendar quarter of his tenure
with his previous principal as a supervisor
Pre-Transaction Checks by Supervisor
FA should institute controls to check that its Rep. have followed
through the FA’s prescribed advisory & sales process
FA should require its supervisors to review all the documentation

& basis of every recommendation made or transaction handled
by its Rep. during the pre-transaction stage
Pre-transaction checks would help to minimise the impact of the

balanced scorecard framework on Rep. as any infraction
uncovered by supervisor during this stage will not be factored
into the balanced scorecard framework & will not affect the
remuneration of the Rep. as well as that of their supervisors
Supervisor
Document Client Call

Review Back
A supervisor should review all Supervisor should conduct client call-
documentation made by each backs for any recommendation made
Rep. under his supervision ✓Selected client
✓Selected Rep.
“selected client” means any clients who meets any 2 of the following criteria – “selected representative” means a Rep. who has been assigned
(a) is 62 years of age or older; a balanced scorecard grade B or worse under the balanced scorecard
(b) is not proficient in spoken or written English1 ; framework consecutively for two calendar quarters immediately
(c) has below GCE ‘O’ level or ‘N’ level certifications, or equivalent preceding the measurement quarter; Page 209 of 731
academic qualifications, Page 505 of 731
FA may also engage
Non-sales 3rd Party System Based

Staff Provider Method
Pre-transaction check
✓ Complete pre-transaction check within Free-Look Period or

cancellation period of the investment product
✓ For time-sensitive investment product without free-look
period, complete pre-transaction check within 5 Business days
fr the effective date of the transaction
✓ Modify his transaction
Found Unsuitable Affected
Investment Product ✓ Cancel his transaction
Client is
for Client allowed to ✓ No bear any cancellation or
modification fees
FA should also provide a new recommendation on

another investment product to the client, if so required
FA should ensure that every infraction uncovered during the pre-

transaction checks is rectified
FA should keep records in relation the balance scorecard framework

for a period of not less than 5 years
Examples of Category 1 Infractions
Annex 3
E-Book 522 to 525 of 731

E-Book 522 of 731
E-Book 525 of 731
Chapter 11A Guidelines On Addressing Conflicts Of
Interest Arising From Issuing Or Promulgating
Research Analyses Or Research Reports
Guidelines – FAA-G13
Chapter 11B Guidelines On The Online Distribution Of

Life Policies With No Advice Guidelines – FAA-G15
Chapter Summary
Chapter 11C Guidelines On Application For Approval Of

Arrangements Under Regulation 32CB Of The Financial
Advisers Regulations (RG2)
Chapter 11D Guidelines On Provision Of Digital

Advisory Services Guidelines – CMG-G02
Chapter 11E Guidelines On Standards Of Conduct

For Marketing & Distribution Activities By Financial
Institutions Guidelines – FSG-G02
CMFAS Module 5
Chapter 11A
Guidelines On Addressing
Conflicts Of Interest Arising
From Issuing Or Promulgating
Research Analyses Or
Research Reports
Conflict of Interest – Research Reports
These Guidelines focus specifically on the conflicts of interest
that may arise from issuing or promulgating research analyses
or research reports.
Internal Trading Reporting

Policies Activities Lines
Influence fr Std of Maintenance

Biz Disclosure of Record
Internal Policies on Research Activities
Place appropriate mechanism to ensure the independence of its
FA Service from its other business units
Implent written policies to effectively manage conflicts of interest
which may affect the impartiality of its research analyses & report
The internal conflict management policy should identify sources of

conflicts of interest & address the effects of these conflicts so that
the quality of the research & recommendations is not
compromised.
The internal policies should address

✓ Conflicts arising from trading activities & reporting lines
✓ Standards of Disclosure
Trading Activities & Financial Interest
Conflicts of interest arise when the FI has an incentive or
is in a position to influence the outcome of the research
recommendations
A FI’s trading activities or interests should not be allowed to
prejudice the Research Analyses & recommendation made by its
analysts.
A FI should not issue a research report or recommendation that is
not consistent with its analysts’ actual views regarding a subject
company
The Personal trading activities of the analysts & staff should be
monitored, recorded & subject to a formal approval process
Prior written approval for each trade by the analyst should be
obtained from a Senior Management Staff
Trading Activities & Financial Interest
A FI should ensure that the FA Service & other Business
Functions are not privy to timing of & recommendations
contained in the research reports to be issued
A FI should mandate a “Blackout Period” for trading by analysts &

other staff on those investment products before & after the
issuance of the research reports
Reporting Lines & Compensation of
Analysts
Separate reporting lines should be in place between analysts & staff
from other corporate functions.
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
A potential issuer might be encouraged to engage the
commercial services of the FI if promised favourable reviews
by the research unit.
FI should not issue a research report or recommendation
that is not consistent with its analysts’ actual views regarding
a subject company.
The FI should put in place procedures to manage or eliminate
the undue influence of issuers, institutional investors and other
external parties on its analysts
There should be robust & effective information & system access
barriers between the FA Service & other business dealings of
the FI to ensure independence & objectivity of the anlaysts’
research & recommendation
BISS R
Standards of Disclosure
The FI should disclosure within its research report
• Have financial interest or make a market in the investment
products of an issuer covered
• When its staff or connected persons serve on the Board or in
Trustee positions of an issuer covered
• Reports any Corporate Financial Advisory Relationship between
the FI and issuers of the investment products being covered
• Disclose any compensation or benefit received by them in
connection with the production of a research report
• Disseminate research recommendations to all interested
parties simultaneously to ensure that no one party receive
preferential service
Maintenance of Proper Records
A FI should maintain proper records of the bases &
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.
CMFAS Module 5
Chapter 11B
Guidelines On The Online
Distribution Of Life Policies
With No Advice
Online Distribution of Life Policies with No
Advice
Internal Controls, Offer of
Policies & Equivalent
Procedure DPI* products
Online
Direct
Handling of Queries, Channel
Provision of Key
Complaints & Claims
Information
Provisions of
Tools &
Calculations
DPI* - Direct Purchase Insurance
Offer of Equivalent Direct Purchase
Insurance
Before a FA 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 available, the FA should also make
available that DPI on its online direct channel.
Where a FA has an online platform to distribute life policies,
it should also offer the equivalent DPI online to its clients
DPI – Direct Purchase Insurance
Online Direct Channel means web portal or application in the Internet created, developed
& maintained by any financial adviser on which a client may purchase a life policy
Provision of Key Information
A FA should put in place the following safeguards
• Provision of product information

• Acknowledgment of Conditional
Acceptance
Product
• Incorporate of Prominent Information
Statement (Pg 538 of 731)
• Amount of Life Insurance
Coverage needed
Tools & • Check whether Premium
Calculators Payable Affordable
• Whether Life Policy is
suitable for his needs
• Set up appropriate Avenues
to address general queries Handling of
• Provide information on the Queries,
claims & process for filing of Complaints
complaints
Internal Control, Policies & Procedures
It is an existing obligation for a FA to ensure that it has
adequate policies, procedures and controls to mitigate
money laundering & terrorism financing risks
To address technological risks, FA should

a. Establish a sound & robust technology risk management
framework
b. Strengthen system security, reliability resiliency &
recoverability
c. deploy strong authentication to protect customer data
A FA should put in place an appropriate business continuity plan

to minimise system downtime or component failures and to
ensure the functionality & continued operation to the online
direct channel
CMFAS Module 5
Chapter 11C
Guidelines On Application For
Approval Of Arrangements
Under Regulation 32CB Of The
Financial Advisers Regulations
(RG2)
Valid for 2 years
Further Explanation ACMF Pass
ACMF participant Spore Entity
Cross Border
publication of
Research Report
Relevant Entity Recognised Representative

”ACMF” means ASEAN Capital Market Professional Mobility Framework
“ACMF Pass” means an arrangement between a relevant entity and a Singapore Entity
“Cross-Border Publication of Research Report Arrangement” means an arrangement
between a relevant entity and a Hosting Platform Operator approved by the Authority
“Hosting Platform Operator” means any person who will be making available research reports,
whether in electronic or print 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;
Assessment Criteria of Relevant Entity
The Authority will consider whether the relevant entity
satisfies the following criteria
a) whether it possesses a minimum of 5 years of track
record in the specific financial advisory services that it is
proposing to effect under the arrangement
b) whether it is financially sound & has discharged its
functions in an efficient, honest and fair manner during the
five-year period mentioned
c) whether it is licensed or authorised to conduct the
relevant financial advisory services in a Specified ASEAN
participating country
ACMF Pass
The Spore Entity ensures that all RR of the ACMF Participant
meet the following criteria
✓ At least 21 years old
✓ Licensed to conduct the relevant financial advisory services
✓ Subject to the laws & regulations of the Specific ASEAN
participating country
✓ Satisfies the Fit & Proper criteria
With respect to the RRs’ activities, the Spore Entity must ensure that
• The RR only act as Representatives of the ACMF participant
• Do not solicit or sales any Specified ASEAN capital market
product or provide advice to investors
RR – Recognised Representative ACMF means ASEAN Capital Market Professional Mobility Framework
Validity Period of ACMF Pass
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.
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.
“ACMF Pass” means an arrangement between a relevant entity and a Singapore Entity
Cross Border Publication of Research
Report
The Authority will impose conditions & restrictions to a Cross
Border Publication of Research Report arrangement like
a. The report are issued by ACMF participant to the same class of
investors in Spore & specified ASEAN participating country
b. The HPO has obtained consent from the ACMF Participation to
make the research report available to investors in Spore
c. No change to research reports prepared by the ACMF Participant
d. No endorsement or comment on research report by HPO
e. Disclaimer that the research reports are issued by ACMF
Participant and not the HPO
f. The HPO does not provide a financial advisory service in respect
of research reports
HPO – Hosting Platform Operator Pg 505 of 652

ASEAN Participating Countries
E-Book 552 of 731.

CMFAS Module 5
Chapter 11D
Guidelines On Provision Of
Digital
Advisory Services
Guidelines – CMG-G02
Provision of Digital Advisory Services
DA provide advice on investment products through direct access
to automated algorithm-based tools by clients with limited or no
human adviser interaction
Client inputting an Analyses Client’s If Client accepts

Investment Amt, Risk response. Generates recommendation, it
Tolerance, Investment a Recommended will relay Client’s
Objectives & Time Portfolio trade to brokerage
Horizon firm for execution
DA operating in Spore will have to be licensed for FM, Dealing In

Capital Markets products &/or providing financial advisory services
under the relevant Act.
DA – Digital Advisers (also known as robo-advisers)
Licensing Requirments & Exemptions
There is no separate authorization regime for DA.
Financial CMS Licence

Licence Required
CMS Licence
Adviser’s in Fund Mgt
Licence
Carrying out Offering a platform Having discretion

Financial Advisory for execution of over the mgt of
Services Capital Markets clients’ investment
products portfolio
To allow FAs to provide better services to clients, DA which are FAs

are exempted from holding CMS license if they merely assist to
pass on clients’ buy or sell orders to brokerage firms for execution
provided such dealing is incidental to their financial advisory
activities
CMS – Capital Market Services
DA – Licensing Exemption for FM
It is common for DA to offer rebalancing of client’s portfolios
to address portfolio drift. This rebalancing of portfolios is
automated & performed periodically
DA are exempt from holding CMS licence in Fund Management is
required to
a. Ensure that the rebalancing activity is carried out only for
portfolios comprising solely listed and unlisted CIS
b. Obtain One-time prior written authorization from client to
periodically rebalance the portfolio
c. Provide a Written Disclosure to client
• Scope of rebalancing activities including frequency of rebalancing
• Fees payable
• Provide advance notice period before any rebalancing activities
d. Notify the client prior to each rebalancing transaction
Track Record & Min. Assets under Mgt
DA that seek to provide their services to retail clients but are
unable to meet the 5 yrs track record or AUM of $1b, can apply
to be licensed for FM, if they are able to meet additional
safeguards as follows:-
➢ keys individuals of the digital adviser(eg CEO) have
relevant experience in fund management & technology
➢ only offers to retail client, portfolios that comprise all CIS
that are Excluded Investment Products (EIPs)
➢ digital adviser undergoes a post-authorization audit
conducted by an independent 3rd party at the end of 1st year
of operations
Developing the Client-Facing Tool
In developing the Client-Facing tools, DA should
a. The methodology of the algorithms is sufficiently robust
b. The tool collects all necessary information to make a
suitable recommendation & have proper mechanism to
identify & resolve contradictions
c. Have controls in place to identify & eliminate clients who are
unsuitable for investing
d. Perform sufficient testing to detect any error or bias in the
algorithms
Monitoring & Testing of the Client-Facing
Tool
DA 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
DA should 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 provision of advice if error in algorithms
is detected
d. Regular compliance checks on the quality of advice provided
by client-facing tool
Information on Algorithms
Information on relating algorithms, MAS expects DA to disclose
in writing to clients the following
a. Assumptions, limitations & risks of the algorithms
b. Circumstances under which the digital advisers may
override the algorithms
c. Any material adjustments to the algorithms
CMFAS Module 5
Chapter 11E
Guidelines On Standards Of
Conduct For Marketing &
Distribution Activities By
Financial Institutions
Guidelines – FSG-G02
Conduct for Mkting & Distribution Activities
The MAS expects FI & their representatives to conduct their
marketing & distribution activities at retailers & public places in
a responsible and professional manner.
FI have various marketing & distribution arrangement to market
their product & services to customers. These arrangement
increase the reach of FI to members of public & if not properly
managed may give rise to the following issues
Harassment of Customers
Unconducive environment for the purchase of Financial Products
Confusion over the identities & roles of the FI
Enticement of Customers to purchase unsuitable products
Mishandling of Cash & Cheques collected
Market Conduct Safeguard
1 Exercising Conducting Mkting Providing Safe
Adequate Oversight 2 in Prof. Manner 3 Environment for
Sales Session
1. Conduct Call-Backs 5. Not Placing undue 11. Conducive Venue for

or Surveys for all Pressure on Customer sales session
sales closed at retail
places 6. Disclose Upfront 12. Properly Handled &
their Identities securely kept of all Payment
2. Conduct Mystery collected from customers
Shopping 7. Undergo Proper
Safeguard
Sales Training
3. Track & Monitor
Complaints 8. Have Good
Compliance Record E-Book 592 of 731
4. Maintain a Register (Annex1)
containing information 9. Rewards not ties to
sales performance
Principles-Based
10. Gifts Offered does
Approach
not influence customer’s
decisions
CMFAS Module 5
Chapter 12
Revised Code on
Collective Investment
Schemes
Introduction
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,
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 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.
Code on Collective Investment Scheme
The Code was first issued on 23 May 2002 and was last
revised on 1 July 2021.
The revised Code on Collective Investment schemes aims to

• Provide greater clarity
• Increase the flexibility for fund managers in managing their funds
• Enhance safeguards for retail investors
Code on Collective Investment Scheme
1. Interpretation
Effective 1 October 2011
2. The Trustees
3. The Manager
4. The Scheme
10 1. Core Requirements
5. Accounts & Reports Chapters 2. Money Market Funds
6. Dealing & Valuation
3. Hedge Funds
7. Breaches
7 4. Capital Guaranteed
8. Assets under Management
Funds
9. Recognised Schemes
Appendixes
5. Index Funds
10. ASEAN CIS Framework
6. Property Funds
7. Precious Metals Funds
Chapter 3 - The Manager
• Record Retention
Functions & • Use of Financial Derivatives
Responsibilities • Use of Credit Ratings
• Liquidity Risk Mgt
• Payment of Redemption Proceeds

• Preparation of Accounts
Operational • Exercise of Voting Rights
Obligations • Notification of Significant Changes
• Modifications to the trust deeds
• Cash Rebate & Soft Dollars
Delegation
Investment in
Other Schemes
Payment
Performances • Calculation Method E-Book 600 of 731.

Fees • Disclosure Requirements
Ch 3A – Financial Derivatives/Credit Rating
Use of financial derivatives, the manager should ensure
Financial Der.
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.
The manager should not rely solely on ratings issued by

credit rating agencies
Credit Rating
The manager should establish a set of internal credit

assessment standards & ensure that its investments are in
line with these standards
In event of a difference between the ratings issued by credit
rating agencies & the manager’s internal credit assessment,
the lowest rating should be used
E-Book 600 of 731.
CARROT FC
Ch 3B - Notification of Significant Changes
Inform MAS not later than One Month before the change
a. A change in the Investment Objective

b. An increase in the remuneration payable to the manager or
trustee
c. An increase in any other fees or charges payable
d. An amendment to the trust deed or prospectus
e. The replacement, removal or appointment of a manager
f. A variation in the rights or obligations of participants
g. A change from direct investment to feeder fund structure
h. A change in collateral policy
E-Book 602 of 731.

COP
Ch 3B - Modifications to the Trust Deed
The manager should obtain an extraordinary resolution of
participants for any modification of the trust deed unless the
trustee certifies that
a. Does not materially prejudice the participants

b. Necessary in order to comply with applicable fiscal or official
requirements
c. Remove obsolete provisions or to correct manifest errors
Ch 3C - Performance Fees
1. Be equitable to all participants
2. Payable after considerations of all other payments
3. Frequency of crystallisation of performance fee should be
Requirements
no more than once a year

4. Calculated based on
✓ Fulcrum fee
✓ High water mark
1. Based on appropriate benchmark
2. Consult the Authority if other performance fee calculation
method is used
EP WIN %
Ch 3D - Disclosure Requirements
1. Performance fee is payable and to whom
2. Performance fee can be levied even if the return of the
scheme is negative
3. The maximum percentage of the scheme’s NAV
4. Illustrations of how performance fee is calculated
5. Scheme achieved equalisation of performance or not
6. How the absence of equalization may affect the amount of
performance fees borne by participant
Ch 3D - Calculation Method
Fulcrum Free Agreement and High Water Mark Agreement

Cross Reference E-Book 358 of 731.
E-Book 607 of 731.

Chapter 4 – The Scheme
Name of
Scheme
Prohibited
Advertisement
Activities
Investment: Core Limited

Requirements Liability
Ch 5A – Accounts & Reports
The semi or AR need not be prepared & sent when they cover:
a) a period ending 3 months or less from the start of the initial
launch period of a scheme.; 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.
For eg, the AR for a scheme for the FY ended 31 Dec 20X1,
need not be prepared & sent if the termination or maturity date
of the scheme is on or before 30 April 20X2.
31 Dec 20X1 31 Mar 20X2 30 Apr 20X2

One Month
FY ended AR due Maturity date
FY – Financial Year AR – Annual Report

Ch 5B – Reports
✓ Market Value or % of NAV The semi-annual report & annual
✓ Top 10 Holdings report should contain the following
✓ Exposure to Financial Derivatives

✓ Amt invested in other schemes
✓ Related-party Transactions
✓ Percentage of Borrowings
✓ Performance of Scheme
✓ Redemption & Subscription
✓ Expense & Turnover Ratios
Amount
✓ Contingent Liabilities
✓ Invests >30% of NAV in
another scheme
✓ Soft Dollars Received
✓ Pre-determined Payout
Ch 6 – Dealing & Valuation
A. Dealing In Units
B. Suspension of Dealings
C. Resumption of Dealings
D. Valuation (E– Book pg 614 of 731)
• Valuation of Units in a scheme
• Valuation of assets of a scheme
• Basis other than market quotations
• Frequency of valuation
• Rounding Differences
E. Valuation Errors & Compensation (E- Book pg 7617 of 731)
Valuation E – Book pg 350 of 731

Cross Reference to Chapter 8B Valuation of Errors E – Book 352 of 731
Ch 6D Valuation of Units
✓ Price is derived by dividing scheme’s NAV by
number of Units Outstanding
Validation of
Units in the
Redemption of Guaranteed
scheme
Matured Capital Higher Amount
Guaranteed
schemes NAV / units
outstanding
Ch 6D - Payment of Redemption Proceeds
An Insurer should pay out redemption proceeds to

policy owners
Other
Bond ILP Feeder Hedge Property
Funds Funds Funds Funds Funds
T+4 Stated Allowed

T+6 T+7
Date Date
E-Book 616 of 731.

Ch 6D - Rounding Differences
When calculating the number of units to be issued to a
participant, it may 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
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
Price per
unit ($1.224 - $1.22) X 10,000
= $0.004 X 10,000 = $40
Ch 6D - Valuation Errors & Compensation
Valuation Error represents 0.5% or more
Compensate affected participants

Yes
No need to compensate if amount < $20
Compensate the scheme for any losses

incurred would apply in all circumstances
Valuation Error represents less than 0.5%
No No need to compensate participants

Not required to compensate participants or
scheme for any losses incurred
E-Book 352 of 731

Ch 7 Notification of Breaches
Breach of Action Needed
Appreciation or depreciation in the value of

scheme’s underlying investment
Redemption of units ▪ Rectify within
Change in capital of company Allowed Period
Reduction in the weight of a constituent in ▪ No Need to
the benchmark being tracked by a svheme Report to MAS
Downgrade in or cessation of a credit rating
Requirements & Standards ▪ Report within 3

under MAS 307 days to MAS
Ch 8 – Schemes which Feed into an
Underlying Scheme
➢ Highlight Scheme feeding into Underlying
Scheme
Marketing
➢ Highlight the likelihood of high volatility due
Materials
to its investment policies or portfolio
management techniques
➢ Inform Authority within 14 days after the

condition or restriction has been imposed or
varied
Ongoing
➢ Documentation of Scheme’s revised risk
Notification
management submit to Authority within one
month after approval from home financial
supervisory authority
Ch 9 – Core Investment Reqirements
This module only cover the key core investment requirements
relating to capital guaranteed funds & hedge funds. Guidelines for
money market funds, index funds & property funds which will not
be covered in this study guide.
This allow the reader to have a general idea of the revised CIS Code
A. Permissible Investment E. Efficient Portfolio Mgt Techniques

B. Spread of Investments F. Borrowings
C. Use of Financial Derivatives G. Disclosure Requirements
D. Counterparty of Financial Der.
Ch 9B – Spread of Investment
Single Entity Limit
Investments in:
i) transferable securities; or
ii) money market instruments issued by a single entity should
not exceed 10% of the scheme’s NAV
Group Entity Limit

Aggregate investments in/exposures to, a gp 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
Ch 9B – Spread of Investment
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.
The manager should calculate the global exposure of a

scheme based on the:
a) Commitment Approach; or
b) Value at Risk (VaR) Approach
Ch 9B – Spread of Investment - Hedging
Arrangement
Hedging arrangement is to reduce a scheme’s exposure to financial
derivatives.
The hedging arrangement should
a. Not be aimed at generating a return
b. Result in an overall reduction of the risk of the scheme
c. Offset the general & specific risks linked to the underlying being
hedged
d. Relate to the same asset class being hedged
e. Be able to meet its hedging objectives in all market conditions
E-Book 629 of 731

Ch 9D - Counterparty of Financial Der.
Should be subject to prudential supervision by a financial sup.
authority in its home jurisdiction.
Max exposure to the scheme cannot exceed 10% of the
scheme’s NAV for eligible FI or 5% for others institution
The collateral should meet the following requirements:

a) it is marked-to-market daily;
b) it is liquid
c) on a portfolio basis
d) not issued by the counterparty or its related corporations
e) held by a custodian which is a FI & independent of the counterparty;
f) it is legally secured
g) it can be fully enforced by the trustee at any time
An eligible FI should have a min. LT rating of A by Fitch. A by
Moody’s or A by S&P
Ch 9F - Borrowing
The scheme may borrow, on a temporary basis, for the
purposes of meeting redemptions and bridging requirements
The borrowing period should not exceed one month
The scheme may only borrow from banks, finance companies,

merchant banks or any other deposit-taking institution
Aggregate borrowings should not exceed 10% of the

scheme’s NAV at the time the borrowing is incurred
Ch 9G – Disclosure Requirement
The use of back-testing or simulated past performance data
for disclosure of performance figures in the prospectus,
reports and marketing materials is prohibited
Where the scheme’s NAV is likely to have a high volatility due

to its investment policies, a prominent statement drawing
attention to this possibility should be included in the
marketing material of the scheme
E-Book 645 of 731

Annex 1B – Var Approach - Back-Testing
Back-testing is the comparison of daily profit or loss (“trading
outcomes”) with model-generated risk measures
The manager should classify its back-testing outcomes into three
zones depending on the no. of exceptions arising fr back-testing
The manager should notify the Authority within three business

days whenever exceptions arise.
Appendix 3 – Hedge Funds
A hedge fund hedge fund generally refers to a scheme which
aims to achieve a high return through the use of advanced
investment strategies.
• Name of Scheme
• Prime Broker – subject to prudential supervision
• Single Hedge Funds – Min. sub. of $100k per participant
• Fund-of-Hedge Funds – Min. sub. of $20k per participants
• Capital Guaranteed Sngle Hedge Funds & FOHFs

• Disclosure Requirements
E-Book 658 of 731

Appendix 4 – Capital Guaranteed Funds
This applies to a scheme which guarantees the return of capital
invested by participants at a pre-determined date in the future
• Name of Scheme
• The Guarantor
✓ A capital guaranteed fund should have an eligible guarantor
✓ FI must have a min. LT rating of AA by Fitch, Aa by
Moody’s or AA by Standard and Poor’s
• Guarantee
✓ Should be a first-demand guarantee & should be legally
enforceable in Spore against the guarantor by the trustee
on behalf of the participants
✓ Provision should be made in the agreement for the guarantee
to ensure that the accrued rights of the trustee are not
affected or prejudiced by the termination of such guarantee.
CMFAS Module 5
Chapter 13
Central Provident Fund
How you can help your clients optimize
their CPF Savings
Purchasing
Healthcare
Buying a
Property
Investing
their CPF
Retirement
Planning
E-Book 672 of 731.

Central Provident Fund (CPF)
The CPF started on 1st July 1955 with the objective of ensuring
that every worker would have sufficient income to meet basic
expenses during the retirement years.
The CPF is administered by Central Provident Fund Board, a
statutory board under the Ministry of Manpower
Over time, the CPF has evolved into a comprehensive and
unique social security system providing not only for retirement
needs, but also for healthcare & housing needs of Singaporeans.
In September 2009, the CPF LIFE Scheme was introduced to
realise the ideal of a lifelong retirement income for CPF
members.
E-Book 673 of 731.

CPF Contributions
Employer
Sporean & PR
Foreigners are
Salary >
CPF
exempted fr CPF
$50 contributions
Employee
Employee’s Age By Employer By Employee Total

55 & Below 17% 20% 37%
Above 55 to 60 14% 14% 28%
Above 60 to 65 10% 8.5% 18.5%
Above 65 to 70 8% 6% 14%
Above 70 7.5% 5% 12.5%
B. CPF Contributions
All CPF members, including self-employed, can make voluntary
contributions to top up their own or their family members’
Special/Retirement Account and/or MediSave Account.
Personal Top Up Relief

Self Yes
Employer Yes
From 1 Jan 2022, Personal Top
Family Top Up Up (up to $8K relief) & Family
Spouse* Yes Top Up (another up to $8K
relief). Total relief is up to $16K
Siblings* Yes
Parents Yes
Grandparents Yes
Workfare Income Supplement Scheme
WIS Scheme
To encourage older worker to work and to improve
their retirement adequacy
WSS Scheme
To encourage older low-wage worker to undergo
and complete training so as they can take on
more productive work
Employees will receive their WIS benefits in the form of
cash payments & contributions to their CPF accounts on
a monthly basis, while self –employed persons receive
their Workfare in the form of cash payments &
contributions to their Medisave Account on a yearly basis
WIS – Workfare Income Supplement scheme

WSS – Workfare Training Support scheme
C. CPF Accounts
Ordinary Account
• To Buy Property
• To pay for Insurance
• For Investment Started in
Employee Retirement
• For Education July 1955
Account
Introduced
Special Account in 1987
• For Old Age Introduced
Monthly
CPF
• For Selected in 1977

Contribution Investment
CPF Annuity
MediSave Account Board
Introduced (Life)
• For Hospitalisation in 1984
Employer expenses
• To Pay for Medical
Insurance
C1. Returns on CPF
CPF savings are invested in Special Singapore Government
Securities which are guaranteed by the Government. These are
non-tradeable bonds issued specifically to the CPF Board for the
investment of CPF savings, ensuring that that CPF savings are
safe, regardless of market conditions
Account Basis of Computation Frequency of Review
Ordinary legislated min. Quarterly

interest of 2.5% pa
Special & legislated min. Quarterly
MediSave interest of 4.0% pa
Retirement Current floor interest Annually
of 4.0% pa
C1. Returns on CPF
To help boost retirement savings, extra interest is paid on the first
$60,000 of combined CPF balances (capped at $20,000 for OA).
The extra interest benefits all CPF members, and members with
lower balances benefit more.
C2. CPF Investment Scheme (CPFIS)
Eligibility
▪ at least 18 years old;

▪ not an undischarged bankrupts; and
▪ have savings of more than $20,000 in OA & $40,000 in SA
Balance Balance
Not Not
allowed to allowed to
$20,000 $40,000
invest invest
CPF-OA CPF-SA
From 1st Oct 2018, CPF members need to take the Self-Awareness
Questionnaire before they can start investing under CPFIS
Three Main Aims of the CPF
A Retirement B Healthcare C Property
Adequacy Financing Ownership
1. Retirement 1. Inpatient & 1. Buying a

Sum Topping Up Outpatient Care Property using
2. Matched 2. Long Term CPF
Retirement Savings Disability Care 2. Unlocking
Scheme Property Value
3. CPF Life
4. Members not on
CPF Life
5. Immediate cash
needs in Old Age
A. Retirement Adequacy
The savings in his RA will
Account Account be converted into
OA OA
SA SA monthly payouts when
MA RA the member chooses to
MA start receiving payouts
Today 55 65 Lifetime
The BRS for each new cohort will increase to account for long-
term inflation & improvements in living standards. The BRS for
CPF members who reach age 55 from 2023 to 2027 will
increase by 3.5% for each successive cohort
DRS – Basic retirement Sum
A. Retirement Adequacy
Retirement age at age 55
2022 2023 2024 2025 2026 2027
BRS $96,000 $99.400 $102,900 $106,500 $110,200 $114,100
FRS $192,000 $198,200 $205,800 $213,000 $220,400 $228,200
ERS $288,000 $298,200 $308,700 $319,500 $330,600 $342,300
Estimated Monthly Payout at Age 65 = $850
Estimated Monthly Payout at Age 65 = $1,570
Estimated Monthly Payout at Age 65 = $2,300

BRS – Basic Retirement Sum FRS – Full Retirement Sum ERS – Enhanced Retirement Sum
A1. Retirement Sum Topping Up
Personal Top Up Relief
Self Yes
Employer Yes
Personal Top Up (up to $8K
Family Top Up relief) & Family Top Up (another
Spouse* Yes up to $8K relief). Total relief is
up to $16K
Siblings* Yes
Parents Yes
Grandparents Yes
All cash top-ups and CPF transfers under the RSTU are
irrevocable. These topups cannot be used for housing or
other schemes. Savings in the SA & RA earn a higher base
interest rate of 4%.
A2. Matched Retirement Savings Scheme
Scheme was launched in 2021 to help eligible senior
S’porean who have not reached the current BRS, to build
their retirement savings. From 2021 to 2025, the Govt will
match every dollar of cash top-up made to eligible
members’ RA, up to an annual cap of $600
Eligibility conditions are

•Age 55 to 70 (both inclusive)
•Retirement savings are less than the current BRS
•Ave monthly income is not more than S$4,000.
•AV of residence is not more than S$13,000. This
covers most HDB flats.
•Own not more than one property
BRS – Basic Retirement Sum

A3. CPF Life
CPF LIFE, started in 2009, is an insurance product, which
helps to protect members against the risk of running out of
retirement savings
CPF LIFE addresses the dispersion of life expectancy

members do not have to worry that they will outlive their
savings
Automatically included in CPF LIFE for Sporean & PR born in

1958 or after, and have at least S$60,000 in their RA when
they start their monthly payouts
Those who iare not automatically included in CPF LIFE can

apply to join CPF LIFE anytime between his Payout Eligibility
Age onwards to one month before he turns 80 years old.
A3. CPF Life
Escalating Standard Plan Basic
Plan (Default) Plan
Monthly Payouts Higher Level Lower Monthly

that start lower Monthly Payout Payout
Monthly
but increase by
Payout
2% yearly
Any remaining CPF LIFE premium balance together with any

remaining savings in the CPF member’s CPF accounts will be
paid to the CPF member’s beneficiaries according to his CPF
nomination
A4. Members not on CPF Life
OA
SA A CPF member
RA who is not on
MA CPF LIFE
Today 55 65 70 Lifetime
Scenario 1 Scenario 2
Start monthly payout anytime Payout starts automatically at age
between age 65 to 70 from his RA 70 from his RA account for up to
account for up to 20 years or until 20 years or until savings run out
savings run out
If the CPF member fully draws down his RA but still has funds
in his OA or SA, he will automatically receive monthly
payouts from his OA or SA account
A5. Immediate cash needs in Old Age
For members who are
born in 1958 or later
Today 55 65
Scenario 1 Scenario 2 From 65, they can

OA = $4,000 OA = $150,000 withdraw up to 20% of
SA = $2,000 SA = $90,000 their retirement savings
at 65 (less the S$5,000
withdrawable fr age 55).
Unconditionally RA = $192,000
withdraw
$5,000 OA = $0
OA = $0 SA = $48,000
SA = $1,000 Withdraw $48,000 or leave
saving with CPF account
2. Healthcare Financing
The financing philosophy of Singapore’s healthcare delivery
system is based on individual responsibility & affordable
healthcare for all. The Government has put in place a
financing framework as shown below
MediSave
ElderShield MediFund
Health
Financing
CareShield Life MediShield Life

From 2020 onwards
Private Medical
Insurance Scheme
MediSave, introduced in April 1984, is a national medical
savings scheme which helps individuals to meet their own or
their dependents' medical expenses (including hospitalisation,
day surgery and certain outpatient expenses, as well as
approved health insurance premiums), especially during
retirement.
MediSave
Parents Must be
Singaporeans or
SPRs
Spouse Grandparents
Users
Self Children
Subject to a maximum amount, known as the Basic
Healthcare Sum (BHS). The BHS is designed to be enough
for a CPF member’s basic, subsidised healthcare needs in
his old age
Below 55 yrs old Above 55 yrs old
Amt exceed
BHS
MediSave
Today 55
SA account RA account
The BHS is adjusted yearly to keep pace with the growth in
MediSave use by the elderly and will be fixed for life when the
CPF member turns 65. For members who are below 65 years
old in 2022, the prevailing BHS is $66,000.
Can enjoy S$8,000 tax relief for topping up their own MA
and/or SA/RA, & an additional S$8,000 tax relief for topping
up their loved ones’ MA and/or SA/RA.
MediShield Life, administered by the CPF Board, is a
compulsory national basic healthcare insurance scheme
that protects all SC & PR against large hospital bills for life
MediShield Life
All SC & PR are automatically covered under MediShield

Life from 1 November 2015 onwards
MediShield Life premiums can be fully paid from MediSave
The claim limits are sized for subsidised treatments in

government restructured hospitals
This scheme allows CPF members to use their Medisave savings to
Pte Medical Insurance
buy Medisave approved IPS* for themselves and their dependants.

Dependants refer to a member’s parents, spouse, children &
grandparents.
IPs comprise of 2 parts, a MediShield Life component managed by
the CPF Board, & additional benefits offered by private insurers
The MediShield Life component covers member for life,
including their pre-existing conditions
Age AWL
IP Premiums
Add’l Pte
Below 40 years $300 Insurance
Coverage
An Integrated
41 to 70 years $600 Shield Plan
Above 70 years $900 MediShield

Life
IPS* - Medisave approved Integrated Shield Plans AWL – Additional Withdrawal Limit
It is an endowment fund set up by the Govt in April 1993 to
help needy Singaporean who are unable to pay their medical
expenses
This is also a safety net for patients who face financial
MediFund
difficulties with their remaining bills after receiving

Government subsidies & drawing on other means of
payments, includiing MediShield Life, Private Integrated
Shield Plans, MediSave and cash.
Patients who fulfil the eligibility criteria can apply for
Medifund assistance through the Medical Social Workers
(MSWs) at the Medifund approved institutions
CareShield Life has replaced ElderShield for new cohorts born in

1980 and after, while those born in 1979 or earlier can opt to
enroll in CareShield Life
CareShield Life
Provide better protection & assurance in 4 ways

• Lifetime cash payouts
• Payouts increase over time starting at $600 pm in 2020 and
increase until age 67 or when one makes a claim whichever is
earlier
• Government subsidies to make it affordable
• Premiums can be fully payable by MediSave
Launched by the MOH in September 2002, ElderShield is a
severe disability insurance scheme which provides basic
financial protection to those who need long-term care.
CPF member will receive a monthly benefit if he is unable to
perform at least 3 out of 6 of the specified ADLs
ElderShield
Previously all SC & PR were automatically covered under

ElderShield when they turn 40 years old. Premiums for
ElderShield are payable until the age of 65 years
A CPF member can also use his MediSave savings to pay the
ElderShield premiums for his spouse, children, parents &
grandparents
.
since 2020, there are no new auto-enrolments at age 40
into ElderShield.
3. Property Ownership
CPF OA savings can be used to buy
✓a HDB
✓DBSS flat or
✓Private property.
CPF savings can be used for full or partial payment of the
purchase price of the property, and to service the monthly
instalments of the housing loan, subject to the CPF HL
The CPF HL are in place to help members avoid over-consuming
their retirement savings for their property purchase. The HL
applicable will depend on the type of property purchased, the
type of housing loan, & the remaining lease of the property.
After reaching the CPF HL, members will have to pay the
remaining housing loan fully in cash.
HL - Housing Limits
Buying a Property Using CPF Savings
Housing related cost
HDB Flats Private Pty
CPF Housing Limits
Financed Financed Notification Purchased CPF usage

by HDB by Bank of Changes Multiple after age
Loan Loan to Loan Properties 55
Details
Housing Related Costs
HDB Flats
Can Used for Cannot Used for
• Downpayment • Monthly service & conservancy Fees

• Loan repayment • Tax
• Stamp duty & legal fees • Option fees
• Booking fees
• Agent’s commission/fees
• HDB resale levy
• Construction works and renovation
Private Properties
Can use CPF savings to purchase private residential properties

built on freehold or leasehold land (with remaining lease of at
least 20 years).
CPF Housing Limits – Financed by HDB Loan
BTO
• Use all savings in CPF OA to pay for the initial deposit

• Balance of Purchase Price or housing loan
• Option to reserve up to $20,000 in OA savings
Scenario 1 $450,000
Resale Flats
VL* Lower
Purchase Price $500,000
VL* Lower
Scenario 2 $550,000
Market Value
VL* Lower
VL – Valuation Limit
$500,000
CPF Housing Limits – Financed by Bank Loan
Since 1 Jan 2003, a flat buyer (CPF member) who is not
eligible for a HDB loan can take a loan from a bank
For HDB flats, a CPF member taking a bank loan must obtain a
Letter of Offer from the bank/financial institution before he can
exercise the OTP or sign the Agreement for Lease for the HDB
flat.
Purchase Price
No VL Lower
Market Value
Set aside BRS
Purchase Price
Yes VL Lower
Market Value
+ 20% of
lower limit
OTP – Option to Purchase
CPF Housing Limits – Notification of Changes
A CPF member who has used his CPF savings for the
purchase of a property is required to notify the CPF
Board of the following
• Full redemption of the housing loan

• Refinancing or re-mortgaging of the property
• Increase in loan quantum approved by the financier
• Any change in loan term (applicable if using the CPF for
monthly instalment payment).
CPF Housing Limits – Multiple Properties
1st Pty
1st property
Intends to Buy 2nd covers Owner till
Property at least age 95
No Yes
need to set need to set

aside the FRS aside the BRS
before using before using
excess OA to excess OA to
buy 2nd pty buy 2nd pty
FRS – Full Retirement Sum BRS – Basic Retirement Sum
CPF Housing Limits – Usage after age 55
Members with monies above BRS (with a property pledge)
or FRS can use these funds for various purposes
If members approaching age 55 still need to finance their
housing loan
•Can reserve their OA savings & prevent them from
transferring to the RA, so that they may continue using OA
savings to service their mortgage payments.
•can reserve the funds for their expected future housing
needs after age 55.
CPF Housing Refund
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 property
If the property is sold at market value, and the selling price

(including option monies) is insufficient to refund the
amount used with accrued interest after paying the
outstanding loan, members do not need to top-up the
shortfall
Notification of Sale
CPF member is required to notify the CPF Board of the
intended sale, transfer, assignment and otherwise disposal of
the property one month before the completion of the
transaction
If the member has an outstanding housing loan, the CPF

member is to furnish to the lawyer with the redemption
statement of the housing loan four weeks before the
completion of the sale, transfer, assignment or otherwise
disposal of the property.
Unlocking Property Value
Lease Buyback
Scheme
Silver Housing Home Equity

Bonus Income Loans
Lease Buyback Scheme
An additional monetisation option to help elderly households
living in HDB flats to unlock part of their housing equity while
continue living in their homes & receive a lifelong income stream
✓ All owners should be at CPF Payout Eligibility Age (> 65 yrs)

✓ At least one owner must be Singapore Citizen
✓ Gross monthly household income < $14,000
✓ All flat types excluding HUDC and EC
✓ No concurrent ownership of 2nd property
✓ All owners have been living in the flat for at least 5 years
✓ Have at least 20 years of lease to sell for proceeds
Flat owners have the option to choose length of the lease and
have to top up their FRS to qualify for a bonus of up to $30,000
Silver Housing Bonus
Members selling their current flat or private property with AV not
exceeding S$13,000 & buying a 3-room or smaller HDB flat
Under SHB, they can receive up to S$30,000 cash bonus when
they top-up their proceeds into their RA & join CPF LIFE.
Eligibility criteria are as follows:

(a) At least one owner is a SC aged 55 or above;
(b) Monthly household income is S$14,000 or less;
(c) HDB flat or pty with AV less than $13,000 & don’t own 2nd
property;
(d) New HDB/resale flat must be a 3-room or smaller HDB flat
(e) Booking of new HDB/resale flat must be before sale of existing
pty or within 12 months of completing sale of existing pty
(f) Application must be submitted within one year from date of
completion of the second housing transaction (sale of purchase)
Home Protection Scheme
A mortgage reducing term insurance which insures CPF
members and their families against losing their HDB flats
in the event of death, terminal illness, or TPD.
Covers up to age 65 or until the housing loans are paid

up, whichever is earlier
Compulsory to apply for HPS when using his CPF savings

to pay his housing instalment payment.
HPS does not cover private residential properties, ECs or

HUDC flats
Voluntary Housing Refund
Members who have used OA savings for their property can
refund any amount capped at the full principal amount they
have withdrawn for the property, with the accrued interest,
without disposing their property
The refunded savings will start earning prevailing interest

rates in the CPF account from the following month.
Dependants' Protection Scheme
An affordable term-life insurance scheme that covers
insured CPF members if he suffer from terminal illness,
TPD or death
Solely administered by GE
Covers CPF members who are SC or PR, between age 21
and 65, upon a valid working CPF contribution.
Max SA = $70,000 Max SA = $55,000
21 60 65
Automatically renewed every year except when
▪ insured reached 65 years old
▪ Insufficient CPF savings to pay premium for SA of $5K
▪ Claim made
▪ No CPF contributions for 3 consecutive years
Education Loan Scheme
Under this Scheme, CPF members can use their CPF OA
savings to pay for their own, children's, spouse’s or relatives’
tuition fees for full-time courses at approved educational
institutions.
Need to start repaying the amt withdrawn plus interest
incurred upon withdrawal in cash, 1 year after graduation or
termination of studies
Members can instead consider taking up the MOE Tuition Fee Loan
The loan is interest-free during the course of study, with cash
repayment commencing no later than 1 or 2 years after they
graduate from poly or U respectively.
Repayment & interest can be suspended in periods of economic
downturn.
Legacy Planning
When members pass on, their CPF savings will be distributed
based on their CPF nomination.
The CPF nomination covers members’ CPF savings in their OA,

SA, MA & RA, any CPF LIFE premium balance, & discounted
Singtel shares
If no nomination, his CPF savings will be distributed in

accordance with ISA or inheritance certificate(for Muslims)
CPF savings do not form a member's estate and cannot be

included in a will.
Protected fr creditor claims on members’ outstanding debts.

CPF nominations will be revoked upon marriage.
Supplementary Retirement Schemes
A voluntary scheme and participants can contribute a
varying amount to SRS. Only 50% of the withdrawals
from the SR are taxable at retirement
• SC, PRs and Foreigners;

Eligibility Criteria
• At least 18 years old;

• Not undischarged bankrupts;
• Sound mind
CPF Scheme CPFIS Scheme SRS Scheme
Compulsory Voluntary Voluntary
S, PR S, PR S, PR,
Foreigner
Supplementary Retirement Schemes
• Open an SRS account with one of the following SRS operators:
- DBS / OCBC / UOB
• Each participant is allowed to have only one SRS account at
any point in time
• SRS account can be transferred between different SRS
operators
• SRS operators are allowed to levy charges and deduct them
from the participant’s SRS account
SRS Contributions
An employer can contribute to the participant’s SRS account.
Such contributions are taxable in the hands of the participant
The participant will be given tax relief for such contributions
in the subsequent year of assessment
SRS Withdrawal
Wef 1st July 2015, can withdraw investment fr their account
Withdraw BEFORE Withdraw AFTER

statutory retirement age statutory retirement age
• 100% of the withdrawn amount • 50% tax concession on
is subject to tax the amount withdrawn
• 5% penalty if premature • Withdrawal can be spread
over 10 Years
withdrawal
• Except
➢ Death
➢ Medical Grounds
➢ Bankruptcy
➢ Full withdrawal by foreigner
who has maintained his SRS
account for at least 10 years
from date of first contribution
SRS Investments
▪ Can invest in wide range of financial assets in the market
(except direct property investments)
▪ Conditions impose on life insurance products:
✓ Only SP & recurring SP policies are allowed
✓ Life cover (including TPD benefits) capped at three times

the single premium
✓ Plans can allow for a contribution continuation feature /
benefit upon disability
✓ CI Insurance, Health Insurance and LTC Insurance policies
are not allowed
✓ Trust nomination not allowed for life insurance products
CMFAS Module 5
Chapter 14
Needs Analysis
Benefits of Conducting FNA
• Discover client’s needs.
• No product pushing.
• Complement existing plans.
• Establish long-term relationship.
Stages of Needs Analysis
Needs analysis is a process that is designed to assist prospective
client in Identifying his Financial Needs & Goals
Help client to make better Informed Decisions on the purchase
of investment products
Establish Relationship
Gather Data
Financial Plan
Implement
Analysis Financial
Review
Status
Develop Financial
Plan
Stage 1 – Establish Relationship
✓ Introduce your Company

✓ Disclose your status
✓Types of Financial services you
provide
✓ Purpose of meeting
✓Help client understand the sales
advisory process & form his
expectations
✓ A positive & dynamic mutual
relationship
Stage 2 – Gather Data
Client’s
Main Sources
Financial Fact Finding
of Money
Needs
3 Broad Categories • CPF • Personal Details

• Accumulation • SRS • Empt. Details
Needs • Savings & • Dependents
• Retirement Investments • Financial
Needs • Existing Information
• Protection needs Insurance • Existing
Policies Insurance
Policies
• Financial
Objectives
Stage 2 – Client’s Financial Needs
Accumulation
Retirement
Protection
Untimely Death
- Final expenses, interim and long term family income,
education, estate Settlement
Protection Needs
Serious Injury and Permanent Disability

- Current income, current expenses, current commitments
- Plan : Disability Income Insurance
Serious Illness
- Reduced level of debt, future income, peace of mind
F
• Personal details
• Employment details
• No. of dependants
Fact Finding
• Financial information
• Existing insurance policies
• Objectives & preferences
• Retirement needs
• Saving goals
1. Monthly Income & Expenditure

✓ Committed (Fixed)
Fact Finding
✓ Manageable (Variable)
Monthly income – Expenditure = Net Cash Flow
2. Assets & Liabilities

Assets – Liabilities = Net Worth
Client’s Investment Preference
Risk Classification
Low Risk High Risk

Low Potential High Potential
Return Return
Keeping Pace with

Inflation
Areas of Concerns
Investment Investment is
Income Per Easy to
Year Manage
Concerns
Easy Access
Capital
to Cash
Growth
Stage 3 – Analyse & Evaluation
An analysis of the client’s goals & objectives is important.
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
3 factors which should be considered when analysing your

client’s goals & objectives
1. To establish whether the objective is short term or long

term
2. To establish whether the objective is for the benefit of
the client or for others, such as his children
3. To assess the priority of the identified needs.
• Each need must be quantified to the amount of coverage
required and current cost of providing for it
Identify & Quantify Needs
• Ask questions to prompt client into giving specific

information:
Have you started

When do you to save for your
intend to retire? retirement?
Retirement ✓ Replacement Ratio

Needs ✓ Expense Ratio
Quantifying Needs
Protection ✓ Multiple Approach

Needs
✓ Needs Approach
Accumulation ✓ Future Value of

Needs the target amount
E-Book 720 of 731

Stage 4 – Develop & Present Recommendations
Need to explore relevant alternatives to meet your client’s
financial objectives.
Design a solution and offer options that can reasonably meet
your client’s financial objectives.
Explain to your client at this stage the basis of your
recommendation, as well as the costs & charges involved and
the features of the recommended
There are 2 basic principles that you should be aware of before

Product Rec
you start making any product recommendation:

1.you should only recommend products if your client needs
them; and
2.you should only recommend products which are the most
suitable for your client given his situation & circumstances
Stage 4 – Develop & Present Recommendations
• Product Suitability
• Client’s Objectives & Needs
• Financial Situation - Affordability
• Tax Consideration
Stage 5 – Implement Recommendations
Accumulation
Needs
Types of Products available
(Refer to Table
14.1, Pg 723 of
731)
Protection
Needs (Refer to Table
Retirement 14.2, Pg 725 of
Needs 731)
Table 14.1
E-Book 723 of 731
E-Book 725 of 731
Stage 5 – Implement Recommendations
Presenting Recommendation
• Client understands the products recommended.
• Reasons for recommendation.
• Explain features & benefits of product.
Stage 6 – Review with Client Periodically
• When personal circumstances change
• External developments, e.g. CPF & MAS regulations.
• Better quality service and forges client-adviser relationship
Trainer’s profile
• Helping Entrepreneurs become
millionaires (more than 2 years)
• In Financial Industry since 1989

• (more than 18 years of experience)
• In Training Consultancy since 2003

(more than 13 years of experience)
HELP US
IMPROVE!!!
We would be HAPPY to hear your
opinion about our Platform.
What is Good?
What can be Better?
Please share your thoughts.
They will help us improve.

M5 Chap 1 To 14 Slides

Uploaded by

Copyright:

Available Formats

M5 Chap 1 To 14 Slides

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

M5 Chap 1 To 14 Slides

Uploaded by

Copyright:

Available Formats

Welcome to

Exam Format : Computer Screen

• Questions – 100 MCQs

• Pass Mark – 75%

• No marks deducted for wrong or blank answers

Tenet 2 Shared Responsibility

Tenet 3 Risk Appropriate

Tenet 4 Responsive to Change & Cycles

Tenet 5 Impact Sensitive

Tenet 6 Clear & Consistence

* 1- Risk Focused * 3 – Disclosure-Based

* 2 – Stakeholder Reliant * 4 – Supportive of Enterprise

Standard of Professional Conduct covers the following areas

Fair ➢ To provide favourable outcome to both

Open & ➢ To build an environment of trust &

• Outlines rules on the application of FAA :

No person shall hold himself as a Financial Adviser unless he is a

Sec 2(1) of FAA

“Financial Adviser” means a person who carries on the business

E-Book 387 to 391 of 731 (Ch 9A) (Pg 39)

✓ Appoints at least 2 Appointed Representatives

✓ In addition 3 years of managerial capacity

Systems & Processes Supervision by Home

• Licensed Bank (Banking Act)

• Advising others concerning any investment product, other

• Issuing or promulgating research analyses or research

• Arranging any life policy other than a contract of reinsurance

Structured Deposits has been classified as an investment

The following products are EXCLUDED from the definition of

• General insurance, Deposit-taking products, Loans &

• Track record, management expertise & financial

• Ability to meet the minimum financial requirements &

• Strength of internal compliance systems

• Business plans & projections

• Fitness and Propriety

• The licence lapses due to winding-up of the licence holder

• The licence is revoked or suspended

Professional Indemnity Insurance Policy

Grounds for Refusal to Grant FA’s Licence

Without Opportunity to Be Heard

Minimum Financial Requirements

Sec 8(2)(b) of FAA

• Maintain such minimum financial requirements

• Have in force a Professional Indemnity Insurance policy.

Sec 8(4) of FAA

The Authority may refuse the grant of a FA’s Licence without

• The Applicant is in the course of being wound up

• A receiver has been appointed in respect of any property of the

• A Prohibition Order has been made by the MAS

• Convicted of an offence involving fraud or dishonesty

Concerning Future Other Case

Offence: Fine not exceeding $25,000

Preceding 3/4 of Min.

Preceding Min. Paid Up

In the case of an Exempt Fund Managers, the total number

Fit & Proper Maintain Minimum

• A Corporation with net assets > $10 million

offer or invitation for subscription only to accredited investors

Only Licensed or Exempt Financial Advisers shall use the