In the 67-page document entitled ‘Response to Public Consultation on Recommendations of the Financial Advisory Industry Review’, the MAS stated that it will undertake a review “after a period of time, taking into consideration the effectiveness of the current measures and the experience that other countries have with the fee-based regime”.
However, the regulator reiterated that it was not clear if Singaporeans are ready for a move towards a fee-based regime, and that based on a survey conducted in April 2012, 80% of the respondents indicated that they were not prepared to pay an up-front fee for advice.
The implementation of a fee-based regime could also result in consumers needing to pay more for their protection or investment needs, especially for those with smaller investments.
Of the FAIR Panel’s 28 recommendations, MAS fully accepted 19 recommendations, modified eight and dropped one recommendation.
The finalised initiatives include:
- A balanced scorecard remuneration framework which rewards the provision of good quality advice to align the interest of FA representatives with that of customers;
- A direct channel through which basic insurance products can be purchased with a nominal administration fee
- A web aggregator to enhance comparability amongst life insurance products.
The Life Insurance Association of Singapore (LIA) said that the industry welcomed the MAS’s response and that the setting up of a ‘web aggregator’ would best serve as an informational tool that would lead to more widespread awareness of life insurance among Singaporeans.
Pleased that the MAS had “weighed the pros and cons of a web aggregator”, the LIA said it will allow consumers to compare the benefits and pricing structure of basic products.
“However, it does not work for situations in which the consumer needs advice, tailored solutions or personalised ongoing service.”
The trade body liked the fact that the MAS recognized the value that veteran practitioners bring to their clients and to the industry and who will be allowed to continue to service long-time clients and share their wealth of knowledge and experience with younger financial advisers.
It also gave its support to the MAS’s proposal for a balanced scorecard framework for remunerating financial advisers. However, it cautioned that “careful calibration must be considered as it must fully reflect the value of advice and quality of personalised service given at the time of purchase”.