In an address at the Life Insurance Association’s (LIA) annual luncheon on Tuesday, Lee Boon Ngiap, assistant managing director of MAS, said: “While the life insurance industry may not have been at the forefront of the major misconduct cases making global headlines, some of these conduct costs involve mis-selling of products and inappropriate advice.
“The need to pay attention to [good] culture to avoid paying the price of misconduct is clearly equally applicable to the life insurance industry, particularly when it involves poor financial advisory practices.”
Lee added that more could be done to promote good culture, such as board and senior management “walking the talk”, and that remuneration policies must not just motivate high performance based on sales or profits, but also penalise poor conduct.
Firms should also always seek to identify if there is a root cause of bad behaviour, and fix that so the problem “goes away for good”, said Lee.
Balanced scorecard
Meanwhile, newly-elected LIA president Patrick Teow said the balanced scorecard regulations have helped improve the conduct of financial advisers and life insurance agents in Singapore.
Introduced last April by the MAS, as part of its Financial Advisory Industry Review (Fair), the scorecard initiative requires that an individual, other than the wealth manager or financial adviser, must contact clients pre-, during and post-sale to ensure each and every card is completed.
The process involves more than 40 checkpoints for each case and firms were given a one-year grace period to implement the regulation.
“If agents give the wrong advice today, it can come back and bite them in the next quarter in terms of compensation so they are more cautious, and managers today take the trouble to validate if the advice given by agents are in the interests of the customer.
“So conduct-wise the industry has improved tremendously with the BSC framework,” Teow told local media.
