Key regulator findings:
- Advisers carried out some degree of fact finding during the shopper visits, but the information collected was inadequate. Some only asked for the shoppers' personal particulars and employment. Pertinent information such as the shoppers' investment experience, financial aims, risk profile and financial situation was frequently left out.
- Most advisers provided basic information on the product, but disclosures on risk factors, amount and frequency of fees and charges, warnings, exclusions and caveats, as well as the free-look period, were left out in a significant number of advisory sessions.
- Almost a third of the product recommendations made by the advisers were assessed by the industry panel as unsuitable. The products recommended often did not match the shoppers' financial objective or their stated investment horizon.
Revealing the findings on July 6th, the MAS said most sales representatives failed to conduct comprehensive fact-finding about the shopper's investment experience, financial objectives, risk preferences and financial situation. This impeded the ability of representatives to make suitable product recommendations, it said.
The MAS also found that while most representatives disclosed basic information about the products recommended, disclosures on risk factors, amount and frequency of fees and charges, warnings, exclusions and caveats, as well as the free-look period were omitted in a significant number of cases. The regulator said inadequate disclosures may result in consumers making poor investment decisions due to a lack of understanding of the product's features and risks.
The top three categories of products recommended were endowment insurance policies, unit trusts and investment-linked life policies, the MAS survey showed. Almost a third of the recommendations were assessed by the industry panel as unsuitable, mainly because the products did not match the shoppers' financial objectives or stated investment horizons.
The survey findings suggest there is "significant room for improvement" for the industry, MAS said.
Mr David Gerald, President and Chief Executive of the Securities Investors Association (Singapore), said the findings were "disheartening" and "disconcerting", saying the lack of disclosure meant that an investment product could appear more attractive than it was.
He said SIAS "will focus on tailoring our investor education programmes to help investors know their needs and clarify their financial objectives and understand their risk preferences."
Mr Tan Hak Leh, President of the Life Insurance Association of Singapore, said the association noted the MAS survey findings and the shortcomings, which "require the industry's further attention".
He did not say what specific steps would be taken to improve the life insurance sales advisory process.
Sources: http://www.todayonline.com/Business/EDC120707-0000038/Coming-up-short Jul 07, 2012
http://news.asiaone.com/News/Latest%2BNews/Singapore/Story/A1Story20120707-357796.html
http://www.businesstimes.com.sg/premium/top-stories/mas-mystery-shoppers-expose-shoddy-financial-advisers
The top three categories of products recommended were endowment insurance policies, unit trusts and investment-linked life policies, the MAS survey showed. Almost a third of the recommendations were assessed by the industry panel as unsuitable, mainly because the products did not match the shoppers' financial objectives or stated investment horizons.
The survey findings suggest there is "significant room for improvement" for the industry, MAS said.
Mr David Gerald, President and Chief Executive of the Securities Investors Association (Singapore), said the findings were "disheartening" and "disconcerting", saying the lack of disclosure meant that an investment product could appear more attractive than it was.
He said SIAS "will focus on tailoring our investor education programmes to help investors know their needs and clarify their financial objectives and understand their risk preferences."
Mr Tan Hak Leh, President of the Life Insurance Association of Singapore, said the association noted the MAS survey findings and the shortcomings, which "require the industry's further attention".
He did not say what specific steps would be taken to improve the life insurance sales advisory process.
Sources: http://www.todayonline.com/Business/EDC120707-0000038/Coming-up-short Jul 07, 2012
http://news.asiaone.com/News/Latest%2BNews/Singapore/Story/A1Story20120707-357796.html
http://www.businesstimes.com.sg/premium/top-stories/mas-mystery-shoppers-expose-shoddy-financial-advisers
