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Competition watchdog issues infringement notice against 10 financial advisory firms
THE Competition Commission of Singapore (CCS) on Thursday issued a proposed infringement decision against 10 financial advisory firms for being involved in an anti-competitive agreement to pressurise iFAST Financial to withdraw its offer of a 50 per cent commission rebate on life insurance products on Fundsupermart.com.
The firms now have six weeks to make their representations for CCS to consider before it makes its final decision.
The 10 firms are: Cornerstone Planners, Financial Alliance, First Principal Financial, Frontier Wealth Management, IPP Financial Advisers, JPARA Solutions, Professional Investment Advisory Services, Promiseland Independent, Ray Alliance Financial Advisers, and Wynnes Financial Advisers.
They are all members of the Association of Financial Advisers (Singapore), or AFA in short. They advise on and distribute financial products such as life insurance and unit trusts.
iFAST is a securities dealer and financial adviser. However, it was not a member of AFA at the time of the Fundsupermart offer. iFAST distributes investment products such as unit trusts through Fundsupermart.com. It also offers investment products through a platform to financial advisers. The 10 firms' use of iFAST's platform contributes significantly to iFAST's revenue in Singapore.
On April 30, 2013, iFAST launched its Fundsupermart offer, which allowed life insurance policy buyers to enjoy cost savings from the 50 per cent commission rebate. On May 3, iFAST withdrew its offer. This was reported in the media. CCS started investigating after it received a complaint on this matter, and found that there was an agreement during an AFA meeting on May 2 and further coordination among the 10 firms to pressure iFAST to withdraw its Fundsupermart offer.
Under the Competition Act, businesses should not enter into agreements to prevent, restrict, or distort competition, and should refrain from anti-competitive activities.