SINGAPORE - In a move to improve consumer confidence in life insurance and financial advisory services, the authorities are launching a review of the financial advisory industry.
The review, announced yesterday at the Life Insurance Association gala dinner, will look at the qualifications and competencies of financial advisers, the quality and focus of financial advisory firms, making insurance products more affordable, and promoting a culture of fair dealing.
"The overriding aim of FAIR (Financial Advisory Industry Review) is to protect and benefit the consumer. Putting the customer first - that must be at the heart of all our efforts," said Monetary Authority of Singapore (MAS) chief Ravi Menon, who announced the review.
The review comes at a time when there is a "large protection gap". "A 2009 study by the Nanyang Technological University found that the existing life cover of the average Singaporean is only about a third of what his dependants will need in the event of his early death," Mr Menon said.
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- This is likely going to have a far reaching effects on the insurance industry in Singapore, although the changes are likely to be more gradual then what we've seen in other countries. On the positive side, the regulator has an examples of number of countries that have tried to tweak their insurance regulations to help closer align customer and insurance distributor interest. One of the most recent examples is India where regulator banned certain types of commission on Investment linked products to avoid tempting advisors to unnecessarily push that type of products to customers.
Ultimately both the insurance companies and regulators have the best interests of customer at heart, so although the changes are always hard short terms, in the longer term the changes will hopefully ensure that the industry becomes more robust and able to serve customer's interests even better.
One of the interesting ideas, to lower distribution costs, the regulator suggested exploring selling simple term life insurance products online.
