MAS proposes tighter FI marketing controls

Singapore

THE Monetary Authority of Singapore (MAS) on Thursday launched a consultation paper outlining proposals to enhance safeguards and controls for the sale of financial products by financial institutions (FIs) at public places and via third-party retailers.

Under the enhanced rules, MAS will require all FIs to notify it of their marketing and distribution activities at retailers and public places. This is to allow MAS to monitor the extent of such activities and tailor its supervisory approach accordingly.

MAS noted that FIs have various distribution arrangements to market their financial products and services, and these include sales at shopping mall atriums, bus interchanges or MRT stations. FIs are also increasing tying up with retailers, such as those selling consumer goods and groceries. MAS said it is seeking proposals to address the risks of consumers buying financial products that may be unsuitable via these channels.

The proposals touch on issues such as impulse purchases by seemingly harassed customers, creating confusion between the role of FI and retailer, enticement to purchase unsuitable products, unconducive environment, and mishandling of cash and cheques.

MAS said it expects FIs to ensure proper controls in their marketing and distribution arrangements at retailers and public places.

Proposed controls and safeguards include FIs conducting callbacks to all customers prospected at these places during a cooling-off period; conducting regular mystery site visits to these channels to ensure standards are maintained; tracking complaints; and maintaining a register of all retailing arrangements. Proposals also touch on the code of conduct of FIs and their sales representatives, collection of funds, and co-brandings which may create confusion.

FIs will also be required to notify MAS and submit information on their marketing and distribution arrangements at retailers and public places on a regular basis.

Noting that most FIs already have many controls in place for their marketing and distribution activities at retailers and public places, and that there are existing regulations covering the marketing and sale of these products, MAS nevertheless feels that the proposed new guidelines will complement these existing rules and practices. They would also ensure consistency and alignment of standards across the financial industry.

Lee Boon Ngiap, assistant MD (capital markets) at MAS, said the authority recognises the importance of marketing and distribution activities of retailers and public places in the business models of FIs.

"These proposals seek to strike a balance between allowing FIs flexibility with their marketing and distribution activities, while safeguarding consumer interest when they purchase products at retailers and public places," he said.

MAS invites interested parties to submit their comments to MnDconsult@mas.gov.sg by Aug 24.