MAS to scrap mandatory financial advice for complex investment products

ILPs will now require product highlights sheets under the revised framework.

The Monetary Authority of Singapore (MAS) will proceed with proposals to remove the mandatory financial advice requirement for complex products except for investors who require additional protection.

The changes follow a public consultation on proposed enhancements to product highlights sheets (PHS) and distribution safeguards for complex products, the regulator said in a statement on 15 May.

Complex products include structured notes, derivatives, and, under the revised framework, investment-linked policies, which will now require PHS due to their combined insurance and investment features.

Under the revised safeguards, investors who fail the Customer Knowledge Assessment (CKA) will receive alerts that complex products may not be suitable for them.

All investors will also receive alerts identifying the product as complex, alongside reminders to review product documents, complete learning modules, or seek financial advice where necessary.

MAS said investors who trade complex products repeatedly within a month may receive a streamlined version of the alerts for subsequent transactions.

Mandatory financial advice requirements will remain for “Selected Clients,” unless they pass the CKA and opt out of the safeguard.

The authority defines “Selected Clients” as investors meeting at least two criteria, including being aged 62 and above, lacking proficiency in English, or having below GCE “O” or “N” level qualifications.

MAS will also not proceed with the proposed Product Knowledge Assessment following feedback received during the consultation. Instead, it will work with industry bodies to improve investor education modules.

Legislative amendments to implement the changes will be consulted on at a later date, it added.