Despite supporting the MAS initiative to standardise fee disclosure, the cross-border investment business said “six months is likely to be a challenging timescale for the industry given the extent of the changes required”.
Old Mutual International also praised the body’s proposal, suggesting it should increase transparency “without stifling innovation”. “There is enough detail in the plan to signpost MAS’ intent and for insurers to respond to the questions raised,” it added.
The MAS suggested insurers should adopt a new standardised ‘product highlights sheet’ to address concerns that policyholders might be unaware of additional charges or savings which arise when purchasing an ILP.
Optimistic
Chris Gill, general manager at Friends Provident International in Southeast Asia, agreed that the proposed length of time providers would have to make the changes is “optimistic” due to the potential need for product changes and additional reporting requirements.
“These types of changes are fairly significant and would require detailed planning and project teams to execute,” he said.
He argued that, while FPI welcomes the proposal as a means to raise standards and improve transparency, new investment-linked policy documents would need to supplement the existing range of disclosure documents.
“Any additional requirements must complement these to ensure important information is truly highlighted to the applicant and does not simply become another document which must be provided,” he said.
Gill also said the proposal leaves some questions unanswered, but that parts of the proposal will be examined and discussed over coming weeks.
Strong reaction and rejection
Deputy general manager of Professional Investment Advisory Services (PIAS), Joseph Kwok, said consumers are still likely to be overwhelmed by the different types of fees and charges presented in the document and might depend on their financial adviser for clarification.
“As such, how much a consumer understands of this new disclosure regulation will depend on the competency and experience level of their advisers,” he said.
Kwok said advisers will probably encounter “strong reaction and rejection” from consumers who would not understand the information on the product highlights sheet and question the high costs involved in an ILP.
“However, in the mid to long run, better educated consumers will help drive down the costs of ILPs and grow the sales of ILPs and other investment products like collective investment schemes,” he added.
No nasty surprises
PIAS and other advisory firms in Singapore generally back the MAS’s proposal, including Global Financial Consultants (GFC).
“Clarity for the customer is always the best thing; no one likes nasty surprises,” said Andrew Shaw, operations manager at GFC.
“Complicated fee structures often confuse the buyer and having more clarity on fees would actually result in us writing more policies,” he said. “When we ask clients why they don’t go ahead, often it’s due to the complexity of calculating the fees.
“Ultimately clarity at a regulatory level means everyone needs to sell in the same way which, when filtered down, the client is left with a clear and transparent choice based on all the facts.”
Sad state of affairs
David Pugh, director at The Fry Group, agreed: “In an era of transparency and unbundled charges, opaque charging structures for advice and investment products should not be accepted. We also need mandatory disclosure of all commission.
“However, it’s a sad state of affairs when regulation has to be introduced into an industry to improve professionalism,” he added.
