In a speech to the Association of Financial Advisers (Singapore) at its 12th annual congress, MAS executive director Merlyn Ee said the regulator need not intervene if the industry is able to come up with credible solutions: “Take the private banking industry as an example. The Private Banking Advisory Group launched the Private Banking Code of Conduct in 2011 to enhance the competency of private banking professionals and to foster high market conduct standards.”
Ee spelt out the MAS vision for the financial advisory industry in Singapore which she said was for “financial advisers to be viewed as professionals, just like lawyers, engineers and accountants, with their own code of conduct and high standards of practice. We are not there yet. But let’s not lose heart. I believe the financial advisory industry can rise to the challenge”.
This would require financial advisory firms to focus on three key areas:
- the Board and senior management need to set the right tone and culture to promote fair dealing with customers
- representatives have to adopt a long-term view of the business and build trust with their customers
- financial advisory firms need to invest resources to build robust systems and processes to support their business
During a recent meeting with a financial institution, Ee said she was troubled to hear the management team repeatedly refer to their representatives as “sales representatives”. The financial institution emphasised the meeting of sales targets and how they trained their representatives on ways to close more sales.
“While some of you may argue that this is just semantics, I hold a different view. Such attitudes trickle down to the ground and send the message to representatives that they should focus purely on sales instead of acting in the best interests of their customers.”
One of the key challenges faced today is the state of underinsurance and lack of retirement planning among Singaporeans, she said, pointing to a study carried out by HSBC in 2012 entitled “The Future of Retirement – A New Reality” found that 44% of Singaporeans who are not fully retired think that they are not preparing adequately for a comfortable retirement.
Another challenge is that Singaporeans are not always receiving quality advice or being recommended products that are suitable for them. This was demonstrated starkly by the mystery shopping exercise conducted by MAS in 2011 which found that 30% of the products recommended were unsuitable.
“MAS continues to receive complaints about inappropriate advice. Many representatives still focus on pushing products and closing the next deal.”
