MAS Announces New Regulatory Measures for Financial Advisors
MAS introduced the Balanced Scorecard Framework in 2016, requiring financial advisers to develop an independent sales audit unit for post-transaction checks and quality assessments of advisory services. Weaknesses were identified in safeguarding vulnerable clients and representatives with weaker compliance records.
The key measures from the consultation response include carrying out enhanced checks for vulnerable client, as set out below:
- financial advisers must check and document if a client is vulnerable
- trusted individuals are required to be present throughout the sales process for vulnerable clients, unless declined
- pre-transaction client call-backs must cover specific information
- audio recording of call-backs to vulnerable clients and selected representatives is mandated
- clients to receive copies of audio recordings upon request
- independent sales audit units must review product recommendations for vulnerable clients post-transaction.
These measures demonstrate MAS’ commitment to protecting vulnerable clients from undue influence or unfair practices of financial advisers. While not extended to all retail clients, firms are encouraged to identify higher-risk clients and representatives. A nine month transitional period is granted for implementation.
MAS encourages early compliance with these regulations, prompting firms to review and adjust their systems and processes accordingly. The full consultation response can be found here.
If you would like more information regarding the regulatory requirements for financial advisors, please reach out to your Waystone representative, or contact us below.