SCI M8 – Collective Investment Schemes

Correct: Under the Insurance Act of Singapore, licensed insurers are required to obtain the prior written approval of the Monetary Authority of Singapore (MAS) before appointing key executive persons, including the Chief Executive Officer and Directors. MAS evaluates these individuals against the Fit and Proper Criteria to ensure they possess the necessary integrity, competence, and financial soundness to lead a financial institution.

Incorrect: Notifying MAS after the appointment is incorrect because the law mandates prior approval for key roles to prevent unqualified individuals from taking office. While the Singapore Exchange (SGX) has its own listing rules for public companies, it does not replace the statutory requirement for MAS approval under the Insurance Act. Even if a candidate was previously cleared at another institution, a fresh application for the specific role at the new entity is required to ensure the candidate is fit for the specific responsibilities of the new position.

Takeaway: The appointment of a Chief Executive Officer or Director in a Singapore-licensed insurer requires prior written approval from MAS to ensure compliance with Fit and Proper standards.

Correct: Under the Transfer Limitation Obligation of the PDPA in Singapore, an organization may transfer personal data to a country or territory outside Singapore only if it has taken appropriate steps to ensure that the recipient is bound by legally enforceable obligations to provide a standard of protection that is at least comparable to that under the PDPA. This ensures that the privacy rights of Singapore policyholders are maintained even when their data is processed abroad.

Incorrect: The requirement for MAS to provide individual waivers for every data transfer is incorrect, as the PDPA framework is managed by the PDPC and focuses on organizational accountability rather than transaction-specific regulatory approvals. While reciprocal agreements may exist, they are not the primary legal requirement for a firm to transfer data; the firm itself must ensure comparable protection through contracts or other means. A 30-day cooling-off period for data transfers is not a requirement under the PDPA, although the Consent Obligation generally requires that individuals be informed of the purposes for which their data is collected and used.

Takeaway: The PDPA Transfer Limitation Obligation requires Singapore firms to ensure that any overseas recipient of personal data provides a standard of protection comparable to Singapore’s laws.

Correct: According to the Insurance Act of Singapore, registration by the Monetary Authority of Singapore (MAS) is a mandatory requirement for any person or entity wishing to carry on insurance business. MAS has the statutory authority to grant registration and, importantly, to impose specific conditions or restrictions on that registration to ensure the protection of policyholders and the integrity of the financial system.

Incorrect: The suggestion that banks are automatically authorized for insurance business is incorrect; while banks may distribute insurance, the underwriting entity must be a registered insurer. Foreign registration does not provide an automatic exemption from Singapore’s domestic registration requirements for carrying on business locally. Meeting minimum capital requirements is only one of several criteria MAS evaluates; MAS retains discretionary power to refuse registration based on other factors such as the fitness and propriety of management or the business plan’s viability.

Takeaway: Carrying on insurance business in Singapore requires mandatory registration by the Monetary Authority of Singapore (MAS), which retains the power to impose specific regulatory conditions.

Correct: The Life Insurance Association (LIA) Singapore is a trade association that plays a vital role in self-regulation. It sets industry standards, such as the LIA Code of Practice and standardized definitions for Critical Illnesses, which are mandatory for its member companies. These standards are designed to promote consumer confidence, ensure high levels of professional conduct, and provide transparency so that consumers can easily compare products across different insurers. This complements the statutory framework provided by the Monetary Authority of Singapore (MAS).

Incorrect: The approach in option b is incorrect because the Financial Advisers Act (FAA) is statutory legislation administered by the Monetary Authority of Singapore (MAS), not a trade association like LIA. The approach in option c is incorrect because LIA does not dictate product pricing or guarantee investment returns, as these are determined by individual insurers and market forces; price-fixing would also violate competition principles. The approach in option d is incorrect because FIDReC is an independent institution for alternative dispute resolution, and LIA, as an industry body, does not have the legal jurisdiction to override FIDReC’s independent rulings.

Takeaway: The LIA Singapore sets industry-wide codes and standards to ensure transparency and consistency, complementing the statutory regulations set by the Monetary Authority of Singapore.

Correct: In accordance with the Life Insurance Association (LIA) of Singapore and the Monetary Authority of Singapore (MAS) requirements, the ‘Your Guide to Life Insurance’ and ‘Your Guide to Investment-Linked Insurance Policies’ must be provided to prospective clients at the point of sale. This mandatory disclosure ensures that consumers are educated on the fundamental features, risks, and their rights regarding life insurance products before they commit to a contract.

Incorrect: Providing the guides only after the policy is issued is incorrect because the regulatory intent is pre-contractual disclosure to aid decision-making. The requirement to provide these guides applies to all retail clients, not just those classified as Selected Clients or vulnerable consumers. Furthermore, insurers and advisers are not permitted to substitute the standardized LIA-approved booklets with their own internal brochures, as the guides are intended to provide a neutral, industry-wide standard of information.

Takeaway: The Your Guide booklets are mandatory pre-contractual disclosure documents that must be provided to all prospective clients at the point of sale to facilitate informed financial decisions.

Correct: Under the Financial Advisers Act (FAA) in Singapore, a person is prohibited from acting as a representative of a financial adviser unless they are an appointed or provisional representative whose name is entered in the Register of Representatives maintained by the Monetary Authority of Singapore (MAS). Providing advice on Investment-Linked Policies (ILPs) is a regulated activity, and the entry in the register is a mandatory prerequisite before any such advisory services can be rendered to clients.

Incorrect: The suggestion that supervision by a senior staff member allows for early advisory activity is incorrect because the legal requirement for registration is absolute regardless of supervision levels. Informing the client of trainee status does not waive the requirement for the individual to be an appointed representative on the official register. There is no 14-day grace period or any other duration that allows an individual to perform regulated financial advisory functions before their name is officially listed on the Register of Representatives.

Takeaway: An individual is only legally authorized to conduct regulated financial advisory activities in Singapore once their name is officially entered into the MAS Register of Representatives.

Correct: Under Section 57 of the Singapore Insurance Act, a life insurance policy is void unless the person effecting the insurance has an insurable interest in the life of the insured at the time the insurance is effected. For life policies, unlike general insurance, the law only requires the interest to exist at the inception of the contract. If the business partnership later dissolves, the policy remains valid and enforceable.

Incorrect: The requirement for continuous interest until the claim is a principle often found in general insurance indemnity but does not apply to life insurance under the Singapore Insurance Act. Stating that interest is only needed at the time of claim is incorrect because Section 57 specifically mandates interest at the time the policy is ‘effected’ (inception). Restricting insurable interest only to family members is a misconception; the Act allows for interest based on pecuniary (financial) relationships, such as those between business partners or employers and employees.

Takeaway: In Singapore, insurable interest for life insurance must exist at the time of policy inception, but it does not need to persist at the time of the claim for the policy to remain valid.

Correct: The Policy Owners’ Protection (PPF) Scheme, administered by the SDIC in Singapore, protects guaranteed benefits of life insurance policies (such as death, total and permanent disability, and critical illness) up to specific statutory caps. For Investment-Linked Policies (ILPs), the protection applies only to the guaranteed portions of the policy; it does not extend to the non-guaranteed investment value or the performance of the sub-funds, as the investment risk for those components is held by the policy owner.

Incorrect: The suggestion that the scheme provides unlimited protection is incorrect because the PPF Scheme has specific caps, such as S$500,000 for aggregated sum assured and S$100,000 for aggregated surrender value per insurer. The claim that it is a voluntary LIA fund is false; it is a mandatory statutory scheme administered by the SDIC. Finally, the assertion that ILPs are entirely excluded is incorrect, as the guaranteed benefits within an ILP are covered under the scheme.

Takeaway: The SDIC-administered PPF Scheme protects guaranteed life insurance benefits up to statutory caps but excludes the non-guaranteed investment risks associated with ILP sub-funds.

Correct: According to the Insurance Act of Singapore, specifically Section 8, it is a mandatory requirement that any person or entity wishing to carry on insurance business in Singapore must be registered by the Monetary Authority of Singapore (MAS) for the specific class of business (Life, General, or both). Carrying on business without such registration is an offense.

Incorrect: The suggestion that operations can commence immediately upon filing is incorrect because registration must be granted by MAS before business starts. The idea that investment-linked policies are exempt from the Insurance Act is false; ILPs are considered life insurance business under the Act. Finally, registration for general insurance does not grant automatic authority for life insurance; these are distinct classes requiring specific MAS approval and registration.

Takeaway: In Singapore, carrying on any class of insurance business requires formal registration by the Monetary Authority of Singapore (MAS) specifically for that class of business.

Correct: Under the Singapore Insurance Act and related MAS regulations, participating funds are subject to the 90/10 rule. This rule stipulates that for any distribution of surplus, the amount allocated to shareholders (the transfer to the Shareholders’ Fund) cannot exceed one-ninth of the amount allocated to policyholders (the cost of bonuses). This ensures that policyholders receive at least 90% of the distributed surplus.

Incorrect: Non-participating funds do not share in the surplus, so there is no requirement to distribute investment income to policyholders. The claim that 100% of the surplus must go to policyholders is incorrect as the law specifically allows for a shareholder transfer. Furthermore, the distribution of surplus is not at the absolute discretion of the Board; it is strictly governed by the statutory limits defined in the Insurance Act to protect policyholder interests.

Takeaway: In Singapore, the distribution of surplus from a participating fund is legally capped, ensuring that shareholders receive no more than one-ninth of the amount allocated to policyholders.

Correct: The Singapore College of Insurance (SCI) is the appointed body for conducting CMFAS examinations such as M9 (Life Insurance) and M9A (Investment-linked Life Insurance Policies). Under the MAS competency framework, a representative must actually pass these specific modules to be deemed competent to provide advice on the respective products. Providing advice before the results are finalized and the representative is properly appointed violates the minimum competency requirements mandated by the Monetary Authority of Singapore (MAS).

Incorrect: The SCI is an educational and examination body, not a regulator, and cannot grant temporary advisory status or waivers for exam requirements. The responsibility for updating the MAS Register of Representatives lies with the Principal Firm (the bank), not the SCI. Furthermore, there is no automatic grace period or exemption from CMFAS exams based solely on a finance degree for these specific product modules; representatives must pass the prescribed SCI examinations.

Takeaway: Representatives must successfully complete the relevant SCI-administered CMFAS modules before they are legally permitted to provide advice on specific insurance products like ILPs.

Correct: Under Section 27 of the Financial Advisers Act (FAA) and the MAS Guidelines on Recommendation of Investment Products, a financial adviser must have a reasonable basis for any recommendation. This necessitates a comprehensive ‘Know Your Client’ (KYC) process, including a fact-find to understand the client’s financial situation, investment objectives, and risk tolerance. For complex products like ILPs, ensuring the product matches the client’s needs is a core regulatory requirement to achieve Fair Dealing outcomes.

Incorrect: Focusing only on product disclosure documents like the Benefit Illustration is insufficient because the FAA mandates that the advice itself must be suitable for the specific client. Relying on self-declaration waivers to bypass fact-finding is a breach of the representative’s duty of care and the ‘reasonable basis’ requirement. The execution-only framework does not apply when a representative provides a recommendation; once advice is given, the representative is held accountable for the suitability of that advice regardless of who makes the final choice.

Takeaway: The Financial Advisers Act requires representatives to ensure every recommendation has a reasonable basis derived from a comprehensive understanding of the client’s specific financial profile and needs.

Correct: Under the Singapore Insurance Act, insurers are required to maintain separate insurance funds for different classes of business. This segregation, supported by distinct accounting and custody, ensures that the assets of one fund (such as the Participating Fund) are not used to meet the liabilities of another (such as the Non-Participating or ILP Fund). This protects the interests of different policyholder groups and ensures that the financial performance and risks of each fund are isolated and managed appropriately.

Incorrect: Consolidating assets into a single account violates the statutory requirement for fund segregation and risks commingling of policyholder assets. Discretionary transfers between funds to cover shortfalls are strictly regulated and generally prohibited without specific regulatory approval because they compromise the financial integrity of the individual funds. Applying uniform expense ratios is incorrect as it leads to unfair cross-subsidization, where policyholders in one fund may unfairly bear the administrative costs generated by another fund.

Takeaway: The Singapore Insurance Act mandates the strict segregation of insurance funds to prevent cross-subsidization and ensure that assets are used solely for the purposes of the specific fund to which they belong.

Correct: According to Section 57 of the Singapore Insurance Act, a life policy is void unless the proposer has an insurable interest in the life of the insured at the time the policy is effected. The Act specifically defines persons deemed to have an insurable interest to include the proposer’s spouse, child or ward under 18, and any person on whom the proposer is wholly or partly dependent for maintenance or education.

Incorrect: The suggestion that interest must exist at both inception and death is incorrect because for life insurance in Singapore, insurable interest is only required at the time the policy is effected. The idea that written consent replaces the legal requirement for insurable interest is false, as statutory requirements under the Insurance Act must be met regardless of consent. Finally, the claim that only blood or marriage relationships qualify is incorrect, as the Act explicitly includes dependencies related to maintenance and education.

Takeaway: Under the Singapore Insurance Act, insurable interest for life policies must exist at the time the policy is effected and includes relationships of financial dependency.

Correct: Under Section 8 of the Insurance Act, no person shall carry on any class of insurance business in Singapore as an insurer unless the person is licensed by the Monetary Authority of Singapore (MAS). A representative office is strictly limited to liaison and promotional work and is legally prohibited from engaging in the actual business of insurance, such as issuing policies or collecting premiums.

Incorrect: The suggestion that a security deposit and notification are sufficient is incorrect because the Act requires formal licensing and meeting stringent capital requirements. Operating under a bank’s license is not permitted as the entity actually carrying on the insurance business (the risk-carrier) must hold its own license. Investment-linked policies are classified as life insurance business under the Insurance Act, and there is no exemption from licensing based on the specific type of life insurance product offered.

Takeaway: In Singapore, any entity carrying on life insurance business must be formally licensed by MAS, and a representative office status is insufficient for conducting insurance operations.

Correct: Under the Financial Advisers Act (FAA) and MAS’s market conduct supervision, insurers are responsible for the conduct of their representatives. When a representative is found to have committed a serious breach, such as misrepresentation or failing to provide mandatory disclosure documents, the insurer is required to report this misconduct to MAS. Additionally, the Balanced Scorecard (BSC) framework in Singapore requires that such conduct failures be documented and used to determine the representative’s grade, which directly affects their variable remuneration.

Incorrect: Reporting only to the LIA is incorrect because MAS is the statutory regulator with the authority to oversee individual representatives through the Representative Notification Framework. Waiting for a FIDReC ruling is incorrect because FIDReC handles dispute resolution between the consumer and the firm, whereas the insurer has an independent regulatory obligation to report misconduct to MAS. Providing a refund under the ‘Free-Look’ period does not waive the requirement to report regulatory breaches or disciplinary issues to the authority.

Takeaway: MAS supervises market conduct by requiring insurers to report representative misconduct and strictly adhere to the Balanced Scorecard framework to ensure fair dealing for consumers in Singapore’s insurance industry.

Correct: Under the Financial Advisers Act (FAA) and the Representative Notification Framework (RNF), a principal firm is legally responsible for ensuring that any individual they intend to appoint as a representative meets the Fit and Proper criteria. The firm must notify MAS of the appointment through the RNF, and the individual’s name must be entered into the Public Register of Representatives before they can perform any financial advisory services. This ensures transparency and regulatory oversight from the outset.

Incorrect: The approach of starting advisory services before notification is incorrect because the FAA requires the representative to be notified to MAS and listed on the public register prior to engaging in regulated activities. There is no ‘probationary’ or ‘grace period’ that allows an un-notified individual to provide advice, even with supervision. Furthermore, while passing SCI exams is a competency requirement, it does not constitute a legal appointment; the formal RNF process with MAS is mandatory and cannot be deferred to an annual declaration or a 14-day post-event window.

Takeaway: An individual must be fit and proper and successfully notified to MAS via the RNF before they can legally provide any financial advisory services under the Financial Advisers Act.

Correct: Under Section 34 of the Financial Advisers Act (FAA) and MAS Notice FAA-N16, a financial adviser must have a reasonable basis for any recommendation made to a client. This requires the adviser to consider the client’s investment objectives, financial situation, and particular needs. In this scenario, the representative focused solely on the client’s financial capacity (high income) while ignoring the client’s stated risk tolerance and liquidity needs, which constitutes a failure to provide a suitable recommendation.

Incorrect: The suggestion that the representative failed an ‘Income-to-Investment’ ratio is incorrect as no such specific numerical ratio is mandated by the FAA. The claim regarding the Securities and Futures Act (SFA) prospectus is misplaced because the core regulatory issue here is the suitability of the advice under the FAA, and ILP sub-funds are typically governed by MAS Notice 307 disclosure requirements rather than standard SFA prospectuses. The requirement for a third-party audit of the Fact Find form for deviations is not a mandate under the FAA; instead, the responsibility remains with the adviser and the firm’s internal compliance to ensure suitability.

Takeaway: The Financial Advisers Act requires that all recommendations be based on a holistic analysis of the client’s profile, and a high financial capacity cannot be used to override a client’s conservative risk preference.

Correct: Under the Singapore Personal Data Protection Act (PDPA), the Consent Obligation, Purpose Limitation Obligation, and Notification Obligation are central. An organization must inform the individual of the purposes for which it intends to collect, use, or disclose their personal data on or before such collection, and consent must be obtained for those specific purposes. This ensures transparency and gives individuals control over their personal information in the insurance context.

Incorrect: The approach suggesting an opt-out model for new marketing purposes is incorrect because the PDPA generally requires an opt-in consent for marketing, and the Purpose Limitation Obligation prevents using data for purposes not previously disclosed. The approach regarding public sources is incorrect because even if data is publicly available, its use is still subject to certain PDPA obligations and cannot be used for ‘any’ purpose without restriction. The approach regarding sharing medical information is incorrect because sensitive personal data requires explicit consent for disclosure to third parties, and a non-disclosure agreement between companies does not override the individual’s right to consent under the PDPA.

Takeaway: The PDPA requires insurers to obtain informed consent by notifying policyholders of the specific purposes for data collection and use, adhering strictly to the Purpose Limitation Obligation.

Correct: According to the LIA and MAS guidelines on outsourcing, a financial institution remains fully responsible for the outsourced activity. The insurer must ensure that the service provider has the same level of integrity and follows the same standards of conduct, confidentiality, and professional ethics as if the activity were performed in-house by the insurer itself.

Incorrect: The idea that liability can be fully transferred to a provider is incorrect as the insurer retains ultimate accountability to regulators and clients. The suggestion that only an annual audit is required is insufficient, as continuous monitoring and oversight are expected. The LIA does not approve individual outsourcing contracts; rather, it sets the standards and codes that member companies must independently implement and follow.

Takeaway: In Singapore, life insurers retain ultimate responsibility for outsourced functions and must ensure third-party providers comply with LIA and MAS standards of conduct.

Correct: In accordance with the Life Insurance Association (LIA) of Singapore guidelines, insurers and financial advisers are required to provide the relevant Your Guide (either for Life Insurance or ILPs) to prospective clients at the point of sale. This must occur before the client signs the application form to ensure they have access to essential information regarding the product’s nature and risks before making a commitment.

Incorrect: Providing the guide after policy inception or with the first annual statement is incorrect because these documents are intended to be pre-contractual disclosure tools to aid the client’s decision-making process. Making the guide optional based on a client opt-in is also incorrect, as the provision of these guides is a mandatory regulatory requirement for all prospective life insurance and ILP clients in Singapore.

Takeaway: The Your Guide to Life Insurance or ILPs must be provided to prospective clients at the point of sale or before the application is signed to ensure informed consumer choice.

Correct: Under the Singapore Insurance Act, for life insurance policies, the requirement for insurable interest must be satisfied at the time the insurance is effected (at inception). Unlike certain types of general insurance that operate strictly on indemnity principles, life insurance does not require the insurable interest to continue until the time of the claim. Therefore, if a valid insurable interest existed when Mr. Chen took out the policy, the subsequent termination of the business relationship does not invalidate the contract.

Incorrect: The suggestion that interest must persist until the insured event is a misconception often confused with indemnity insurance principles; the Singapore Insurance Act specifically focuses on the inception of the life policy. Labeling it a wagering contract is incorrect because the initial legal interest prevents it from being classified as such under Singapore law. Notification to the insurer regarding the cessation of interest is not a statutory requirement for maintaining the validity of a life policy that was validly issued at the start.

Takeaway: In Singapore life insurance, insurable interest is required at the inception of the policy and does not need to be maintained at the time of the claim for the policy to remain valid.

Correct: Under the Financial Advisers Act (FAA), the Monetary Authority of Singapore (MAS) has the statutory power to issue prohibition orders against individuals. This action can be taken if the individual has contravened the FAA, its regulations, or if MAS is satisfied that the person is not fit and proper to provide financial advisory services. This ensures that only qualified and ethical individuals operate within the Singapore financial industry.

Incorrect: The suggestion that MAS only supervises corporate entities is incorrect because the FAA grants MAS direct authority over individual representatives to maintain market integrity. The claim that MAS only monitors capital adequacy is false, as MAS’s mandate includes both prudential supervision (solvency) and conduct supervision (market behavior). Finally, MAS is an independent statutory board and does not require approval from industry bodies like the Life Insurance Association (LIA) to exercise its enforcement and regulatory powers.

Takeaway: MAS maintains a robust regulatory framework that allows for direct enforcement actions, such as prohibition orders, against individuals to ensure compliance with the Financial Advisers Act and the Fit and Proper Criteria.

Correct: In Singapore, the Policy Owners’ Protection (PPF) Scheme, administered by the SDIC, protects the guaranteed benefits of life insurance policies. For Investment-Linked Policies (ILPs), this includes guaranteed death benefits (subject to the cap of S$500,000 for aggregated guaranteed sum assured). However, the investment value of the units in an ILP is specifically excluded from the PPF Scheme because the investment risk is inherently borne by the policy owner, not the insurer.

Incorrect: The suggestion that the total market value of units is protected is incorrect because the PPF Scheme does not cover market risks associated with the underlying assets of an ILP. The claim that protection only applies after a five-year period is a fabrication, as coverage applies to all valid policies from member insurers. Finally, the PPF Scheme is not unlimited; it is subject to specific caps, such as S$500,000 for aggregated guaranteed sum assured and S$100,000 for aggregated guaranteed surrender value per life insured per insurer.

Takeaway: The PPF Scheme in Singapore protects guaranteed death benefits of ILPs but excludes the investment value of units as the policy owner bears the investment risk.

Correct: Under Section 8 of the Insurance Act of Singapore, it is strictly prohibited for any person to carry on any class of insurance business in Singapore as an insurer unless they are registered by the Monetary Authority of Singapore (MAS) specifically for that class of business. This is a fundamental regulatory pillar to ensure that only entities meeting the MAS’s rigorous capital, solvency, and fit-and-proper requirements can provide insurance services to the public.

Incorrect: The suggestion that an entity can solicit applications or collect premiums before registration is finalized is incorrect, as the Act requires registration to be completed before business commences. Representative offices are restricted from conducting insurance business and are not exempt from registration requirements regardless of the client’s net worth. Furthermore, registration for life insurance business does not grant an automatic right to conduct general insurance business; insurers must be specifically registered for each class or as a composite insurer if they intend to do both.

Takeaway: In Singapore, strict registration with the MAS for specific classes of business is a legal prerequisite under the Insurance Act before any insurance business can be conducted.

Correct: Under the Singapore Insurance Act, participating funds (also known as With-Profits funds) are subject to the 90/10 rule. This means that at least 90% of the distributed surplus must be allocated to the policyholders (usually in the form of bonuses), and the amount allocated to shareholders cannot exceed one-ninth (approximately 11.11%) of the amount allocated to policyholders. This ensures that the majority of the fund’s profits benefit the policyholders who share in the risks and rewards of the fund.

Incorrect: The suggestion that the entire surplus can be transferred to shareholders is incorrect as it violates the statutory 90/10 rule for participating funds. The idea of combining non-participating and participating surpluses is incorrect because the Insurance Act requires insurers to maintain separate funds for different classes of business to protect the interests of participating policyholders. The claim that the 90/10 rule only applies to investment income is false; the rule applies to the total distributable surplus, which includes investment gains, mortality gains, and expense savings.

Takeaway: In Singapore, the Insurance Act mandates that for participating funds, the shareholders’ share of distributed surplus is capped at one-ninth of the policyholders’ share.

Correct: In Singapore, the Singapore College of Insurance (SCI) is the designated examination body for insurance-related modules under the Capital Markets and Financial Advisory Services (CMFAS) framework. This includes Module 9 (Life Insurance and Investment-linked Policies) and Module 9A (Life Insurance and Investment-linked Policies – Advanced). Their role is operational, focusing on the development of the syllabus, the administration of the test centers, and the conduct of the examinations themselves.

Incorrect: The other options describe roles belonging to the Monetary Authority of Singapore (MAS). The MAS is the regulator that maintains the Register of Representatives and issues licenses, not the SCI. The MAS also determines the ‘fit and proper’ criteria for representatives and acts as the primary enforcement agency for the Financial Advisers Act (FAA). The SCI does not have regulatory, licensing, or enforcement powers over financial institutions.

Takeaway: The SCI serves as the operational examination body for insurance-related CMFAS modules, while the MAS retains all regulatory, licensing, and enforcement authorities.

Correct: Under the Financial Advisers Act (FAA) and the Representative Notification Framework (RNF), an individual is prohibited from acting as a representative or holding themselves out as one unless their name is entered in the Public Register of Representatives. Even if the principal has completed the fit and proper checks and submitted the notification, the legal right to conduct regulated activities such as advising on investment-linked policies only begins once the name appears on the public register.

Incorrect: Supervision by a senior representative does not waive the legal requirement for an individual’s name to be on the Public Register before conducting regulated activities. There is no provision in the FAA for a 30-day transitional grace period for new appointments to provide advice before registration. Furthermore, registration is firm-specific; being registered with a previous firm does not allow an individual to provide advice under a new principal until the new appointment is reflected on the Public Register.

Takeaway: An individual must be officially listed on the MAS Public Register of Representatives before they can perform any regulated financial advisory activities under the FAA.

Correct: Under the Insurance Act of Singapore, insurers are required to maintain separate insurance funds for different classes of business. For life insurers, this specifically involves maintaining separate funds for participating, non-participating, and investment-linked businesses. This segregation ensures that the assets of a specific fund are reserved exclusively for the liabilities and policyholders of that fund, preventing cross-subsidization or the use of one fund’s assets to cover another’s losses.

Incorrect: Consolidating assets into a single master fund with only ledger tracking is insufficient as the law requires the actual establishment and maintenance of separate funds. Using assets from one fund to meet the liquidity needs of another is strictly prohibited to protect the integrity of each fund’s asset base and ensure that assets are available to meet the specific liabilities of that fund. There is no minimum asset threshold (such as SGD 500 million) for the requirement to maintain separate funds; it is a fundamental regulatory requirement for all licensed insurers in Singapore regardless of their size.

Takeaway: Singapore’s Insurance Act mandates the strict segregation of insurance funds by class and type to protect policyholder interests and prevent the misuse of assets across different business lines.

Correct: Under Section 57 of the Singapore Insurance Act 1966, a life insurance policy is valid if the person effecting the insurance has an insurable interest in the life of the insured at the time the policy is made. Unlike general insurance, life insurance does not require the insurable interest to continue until the time of the claim; once the policy is validly established at inception, it remains valid even if the underlying interest (such as a business partnership) ends.

Incorrect: The requirement for insurable interest to exist at both the time of inception and the time of loss is a principle of indemnity typically found in general insurance, not life insurance. Suggesting that interest is only required at the time of claim is incorrect because the Insurance Act specifically mandates interest at the time the policy is ‘made’ to prevent gaming or wagering. There is no provision in the Singapore Insurance Act that requires periodic re-validation of insurable interest once the policy has been legally issued.

Takeaway: In Singapore life insurance, insurable interest is strictly required at the inception of the policy but is not required to persist at the time of the claim.