Singapore: Financial advisers to prepare for complaints handling and resolution regulations for retail clients

The Financial Advisers (Complaints Handling and Resolution) Regulations 2021 to come into force on 3 January 2022

In brief

The Monetary Authority of Singapore (MAS), adopting the Financial Advisory Industry Review’s recommendation to raise financial advisory (FA) standards of practice, has strengthened regulatory requirements on FA firms’ complaints handling and resolution (CHR) processes to ensure consistent standards across the industry.

When in force on 3 January 2022, the Financial Advisers (Complaints Handling and Resolution) Regulations ("Regulations") will require FA firms to carry out the following:

  • Establish an independent and prompt CHR processes for retail clients
  • Designate senior management members responsible for overseeing compliance with the Regulations
  • Ensure public availability of information on its CHR process
  • Set up a centralised management system for complaints
  • Report, in the prescribed template, its complaints data to the MAS on a biannual (half-yearly) basis

Contents

Recommended actions

The MAS expects all of the following firms who serve retail clients to commence putting in place the necessary arrangements to comply with the Regulations prior to the effective date of 3 January 2022:

  • FA firms granted a licence under section 13 of the Financial Advisers Act (FAA)
  • FA firms exempt financial advisers as defined in section 23(1)(a), (b), (c), (d), (e), (ea) or (f) of the FAA
  • Private banking units
  • Fund management companies that provide financial advice or carry out direct sales (including investment products sold via online channels)

The Regulations only cover complaints by individuals, non-corporates and retail clients, and exclude clients who opt to be treated as accredited investors (AIs). Accordingly, the Securities and Futures (Classes of Investors) Regulations 2018 ("SF(COI) Regulations") will consequentially be amended as follows:

  • For existing clients onboarded as AIs before 3 January 2022, FA firms should note the following summary provided by the MAS on the AI opt-in process under the Regulations and the SF(COI) Regulations:
Before 3 January 2022 On 3 January 2022 Before 3 April 2022 On and after 3 April
2022
FAs should provide the statements required under Regulation 3(5) of the SF(COI) Regulations (“requisite statements”) to these individuals to offer them the choice to opt out of being treated as AIs for all of the consent provisions, including the Regulations. When the Regulations and amendments to the SF(COI) Regulations come into force, there will be no change in status for existing AIs who opted in before this date and did not opt out. FAs must complete the process of providing the requisite statements to these individuals if FAs want to continue treating them as AIs, and FAs must keep proper records of the fact that the requisite statements were provided. FAs who did not provide the requisite statements to any individual will have to cease treating that individual as an AI.

 

  • For new clients who are onboarded as AIs after the effective date of the Regulations, FA firms will have to obtain their consent to be treated as an AI under the Regulations, in addition to all relevant consent provisions under the SF(COI) Regulations.

By every 30 June, and then again by 31 December, the FA must prepare in the prescribed template half-yearly reports setting out the following:

  • Every complaint received by the FA
  • Actions the FA undertook to resolve each complaint

Please do not hesitate to reach out to our team for more detailed advice on any aspect of the above or the full scope of compliance expected by the MAS.

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