Earlier this month, Singapore’s financial regulator launched an enquiry examining whether life companies should be responsible for the training, competency and conduct of intermediaries selling insurance.
“While the intermediated nature of the business means that life companies and advisers collaborate very closely, it is life companies’ responsibility as product providers to ensure that advisers have a clear understanding of our products and how they can meet customer needs,” said Nick Griffin, head of sales at Generali International.
“In essence the two are interrelated but independent.”
However, Griffin also said the only way to ensure clients’ needs are properly assessed is through engaging with them directly, a role which he said “rightly sits” with the adviser.
“The concern from the insurance companies will probably be around how they can control the conduct of financial advisers"
“In terms of educating clients on the applicability of products for their needs, we see technology playing a key role here,” he said.
“Its ability to demonstrate complex subjects and concepts in a simple, smart and animated way will help both advisers and clients alike to ensure that products are suitable for a client’s specific needs.”
Complex issue
Former chief executive of Singapore’s Professional Investment Advisory Services (PIAS) David Bellingham said liability around selling life products is “a complex issue beyond fairness”.
“The concern from the insurance companies will probably be around how they can control the conduct of financial advisers,” he said. “However, it does come back to appropriateness of product and know your client, both of which are captured in Singapore regulations.”
Bellingham, who recently started a new role as director of sales for Europe and the UK at property investment company IP Global, pointed to the balanced scorecard initiative which ensures advisers look more closely at the appropriateness of products for clients.
“An insurance company may therefore impose more requirements on the adviser and the financial advice firm,” he said. “It comes down to capturing the appropriateness of product for the client’s specific circumstances.
“Insurance companies could theoretically ask for information that would allow them to make the same assessments [on whether a product is suitable].
Tightening the terms
“However, in practice they will address this by tightening up the terms of agreement and increasing the obligations of financial advice companies.”
Bellingham suggested the MAS’ proposal is not a question of life companies being responsible instead of advisers, but being responsible as well as advisers.
He said the review is a positive move because it brings the various parties together to address the same issue and raise the standards.
