On 30 April 2013, iFast launched its Fundsupermart Offer, which allowed buyers of life insurance policies to save money via a 50% commission rebate.
The product, however, was withdrawn on 3 May 2013.
The CCS launched an investigation after media reports suggested that the offer had been withdrawn following an industry backlash.
Cloak and dagger
The investigation found that on 2 May 2013, a meeting of financial advisers took place; with representatives from Avallis, Cornerstone, Financial Alliance, Frontier, JPARA, Promiseland, RAY and WYNNES in attendance, all of which are members of the Association of Financial Advisers Singapore (AFA).
“The parties’ conduct to collectively pressurise iFast into withdrawing the Fundsupermart Offer prevented the life insurance market from shifting to a more competitive state."
iFast is not now, and was not at the time, a member of AFA.
The Fundsupermart Offer was discussed during the meeting and Financial Alliance was appointed as their representative to contact and pressure iFast into withdrawing the rebate; which it duly did.
Evidence also shows that two other financial advisers, namely IPP and PIAS, who were copied into the communications from Financial Alliance to iFast, supported the action taken by Financial Alliance.
IPP and PIAS also contacted iFast directly, contributing to the efforts to have iFast remove the offer.
In May 2015, the 10 firms were issued a proposed infringement decision (PID) giving the companies six weeks to make their representations to CCS.
The infringement decision (ID) was issued by CCS on 17 March 2016. No reason was given as to why it took the CCS nearly a year to announce their decision.
The CCS found that the action taken by the 10 financial advice firms, in preventing a competitor from providing a lower-cost offer to consumers, restricted and was likely to have an adverse effect on competition in the market.
Their commercial relationship with iFast in its unit trust business contributed significantly to iFast’s revenues and placed them in a position to exert pressure on the company.
Toh Han Li, chief executive of CCS, said: “The Fundsupermart Offer was an innovative one that allowed iFast to reach out to a wide client base through an established online platform, save on distribution costs, and pass on these cost savings to consumers through a significant commission rebate.
“The parties’ conduct to collectively pressurise iFast into withdrawing the Fundsupermart Offer prevented the life insurance market from shifting to a more competitive state.
“Agreements between competitors to collectively pressurise a competitor to withdraw an offering can constitute anti-competitive conduct. Businesses should instead determine their own individual responses to competition.
“CCS will enforce the law, where necessary, to ensure that new and innovative players can access markets and compete fairly,” Li said.
The 10 firms were collectively fined S$909,302 (£466,429, $669,101, €593,664).
Although Financial Alliance was the nominated representative of the group and actively pressured iFast to withdraw its product, it was not hit with the biggest fine.
In levying the financial penalties, CCS said it took into account the nature of infringement, the circumstances under which the infringement was committed, the duration of the infringement and its effects, aggravating and mitigating factors, as well as representations made by the financial advice firms.