MAS Consultation Paper on Enhanced Safeguards for Prospecting and Marketing Activities

      On 25 April 2023, the Monetary Authority of Singapore (MAS) issued two consultation papers, proposing increased controls in relation to prospecting and marketing of financial products through both digital and physical means. Financial Institutions (FIs) and their representatives are required to ensure that advertisements are not false and misleading and provide a fair and balanced view of the financial products to which the advertisements are made.

      Digital Prospecting and Marketing

      Currently, any requirements pertaining to advertisements of financial products and services are set by the following regulations:

      • Regulations 22 to 22D of Financial Advisers Regulation (“FAR”)
      • Sixth Schedule of FAR
      • Regulations 46 and 46AA to 46AD of the Securities and Futures (Licensing and Conduct of Business) Regulations (“SF(LCB)R”)
      • Forth Schedule of SF(LCB)R.

      MAS require FIs and their representatives to ensure that advertisements are not false, misleading, and provide a fair and balanced view of the financial products. Product advertisements require approval from Senior Management prior to dissemination. FIs are also held accountable if third parties, carrying out promotional activities on behalf of FIs, fail to meet MAS’ requirements.

      Addressing issues with advertising 

      MAS has identified issues with advertisements posted on digital media and has therefore proposed the following:.

      1. New Guidelines on Standards of Conduct for Digital Prospecting and Marketing Activities:
        1. Board and Senior Management accountability for ensuring proper controls such as policies and procedures being put in place.
        2. Safeguards cover selecting, assessing , monitoring and addressing risks associated with digital media, providing clear guidance and training to representatives and third-party service providers, and taking appropriate disciplinary actions against representatives and their supervisors for malpractices.
        3. Apply to digital prospecting and marketing of all financial products and related services.
      2. Enhancing current Advertisement Regulations:

      To address risks posed by misleading non-product advertisements and anonymous advertisements, MAS proposes to extend the application of regulatory requirement for FI’s approval to non-product advertisements and require FIs and representatives to disclose their identities in advertisements.

      1. Enhancements to Notice FAA-N02 on Appointment and use of introducers:
        1. Consider digital lead generation firms as introducers and apply the regulatory requirements and monitoring of their activities.
        2. Ensure lead generators are adhering to Personal Data Protection Act (“PDPA”) requirements.
        3. For digital lead generation, FIs to provide key information to lead generation firms for disclosure to customers.

      MAS is proposing a transition period of six to nine months for FIs to comply with the proposed Guidelines and updated Advertisement Regulations and Notice FAA-N02. The existing advertisements posted online would be required to comply with the new requirements once effective.

      Prospecting activities at public places and telemarketing

      MAS has identified various conduct issues relating to prospecting activities at public places and proposes to implement the following:

      1. Guidelines on Standards of Conduct for Marketing and Distribution Activities (“Guidelines”)
        1. Strengthen the current Guidelines by legislating them as requirements in new Notice(s) for investment products and long-term accident and health policies.
        2. For all other financial products such as banking and general insurance products, the Guidelines will continue to apply.
        3. Identify senior managers to exercise oversight and accountability for these activities as part of the adherence to the Guidelines on Individual Accountability and Conduct.
      2. Inform customers of motive and obtain consent before commencing any prospecting activity
        1. Inform customers upfront of intention to market financial products and services, obtain consent either verbal or written prior to prospecting engagement.
      3. Provide adequate time for customers to make properly considered purchase decisions
        1. MAS proposes no sale of financial products at initial prospecting stage unless; FI and representative have offered the customer the option of taking time to consider the purchase before subsequently completing the transaction, the customer has made an explicit request to purchase product at initial prospecting stage, and FI and representatives have documented the customer’s explicit request and the customer has acknowledged this.
        2. MAS seeks a view on the minimum duration to be provided to give customers ample time to consider purchases before FI and representatives are able to complete the transaction subsequently.
        3. Potentially extend the 14-day free-look period for life policies and 7-day cancellation period for collective investment schemes.
      4. Prohibit the use or mention of gift offers to entice customers to purchase financial products or make larger purchases
        1. Ensure any gift offered to customers does not unduly influence their decisions to purchase financial products.
      5. Conduct prospecting at public places in proper and conducive settings, and in a responsible and professional manner
        1. To be held outside of their own premise and conducted only at commercial premises.
        2. Ensure at least 25 square meters of space is demarcated for prospecting events.
        3. Limit prospecting activities to immediate vicinity of the demarcated event space.
        4. Establishing a channel for consumers to provide feedback.
        5. Designating a person to oversee the proper conduct of activities by nominating an individual as a Public Prospecting Management Office.

      MAS suggests applying paragraphs 2 and 4 to telemarketing activities. In this regard, MAS expects telemarketers to disclose their identity and intention to customers and obtain consent before proceeding with prospecting. MAS also proposes that telemarketers do not offer gifts to unduly influence customers’ purchase decisions. Additional measures are also proposed in relation to telemarketing of Medisave-approved policies and to deter influence posed by gift offers including discounts and fee rebates.

      MAS intends to issue new Notices and revise the Guidelines to implement the proposals once responses are provided by the public to the consultation paper. MAS will also publish a subsequent consultation paper on the legal amendments to effect the enhanced safeguards. MAS is intending to provide a transition period of six to nine months for FIs to comply with these enhanced safeguards.

      Have a question about this update? Contact our APAC Compliance Solutions team today to learn more. 

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