CMFAS M5 Exam Free Trial Set Two

The concept of independence has been considered by many to be an important condition for customer interests. However, experience from other established markets has shown that this has not been borne out. Therefore, it has been considered more important that representatives of financial advisers put customers’ interests at the forefront by giving good objective advice and be guided by the concept of reasonable basis in providing advice. Consequently, the principles and guidelines on the determination of “independent” have been laid down in Regulation 21 of the FAR and the “Guidelines On The Use Of The Term “Independent” By Financial Advisers”.

Individuals must fulfil the following requirements before they can be an appointed representative:
(a) be at least 21 years old;
(b) satisfy the minimum academic qualification and examination requirements as prescribed in the Notice on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers and Exempt Financial Advisers.

In its enforcement function, SGX investigates alleged misconduct by members, their directors, employees and trading representatives. Where the investigation reveals a possible breach of the SGX rules or bye-laws,disciplinary action may be taken against the offender. SGX initiates disciplinary actions before a disciplinary committee, which may reprimand, fine, suspend and/or expel a member or trading representative.

Where the investigation reveals a possible breach of the SGX rules or bye-laws,disciplinary action may be taken against the offender. SGX initiates disciplinary actions before a disciplinary committee, which may reprimand,fine, suspend and/or expel a member or trading representative. Where the matter also involves a violation of the law, the matter will be referred to the relevant authorities for further action.

The principle of accountability is essential to ensure that there is a higherlevel entity or person who would be accountable for the professional and ethical conduct of a representative of the financial adviser. This principle is captured in the “Representative To Act For Only One Principal” rule under the FAA. Each financial adviser representative can represent only one principal. Hence, if a person is a tied agent, he cannot be a licensed financial adviser representative at the same time.

The benefits of conducting needs analysis are as follows:
(a) It helps to discover the client’s needs and to advise the most suitable product to buy and how much to buy;
(b) It enables more time to spend on the client’s situation than on the product.
(c) If you sell the client additional products based on his needs and objectives, he will be able to see how the products fit into his overall plan.
(d) It also enables you to establish a long-term relationship with your client.

Patients who fulfil the eligibility criteria can apply for Medifund assistance through the Medical Social Workers (MSWs) at the
Medifund-approved institutions. They can also apply through any of the Community Development Councils.

Guideline No: FAA-G10 is issued pursuant to Section 64 of the FAA. The aim of these Guidelines is to provide guidance on the controls, processes and procedures that the MAS expects licensed financial advisers and exempt financial advisers to implement, in order to monitor switching and ensure that their representatives do not advise clients to switch from one designated investment product referred to as “original product”) to another designated investment product (referred to as “replacement product”) in a manner that would be detrimental to the clients.

A 5% penalty for premature withdrawal will also be imposed, unless it is made under exceptional circumstances, such as the following:
(i) Death;
(ii) Medical grounds;
(iii) Bankruptcy; or
(iv) The full withdrawal of the SRS balance by a foreigner who has maintained his SRS account for at least ten years from the date of his first contribution.

As for life insurance products, the following conditions shall apply:
(i) Only single premium products are allowed (including recurrent single premium products, encompassing both annuity and nonannuity plans);
(ii) Life cover (including total and permanent disability benefits) will be capped at three times the single premium;
(iii) Plans can allow for a contribution continuation feature / benefit upon disability;
(iv) Other types of life insurance e.g. critical illness, health and longterm care are excluded;

The valuation error report should be made using the insurer‘s company letterhead and sent via electronic means. The report should contain the following information:
1. State the name of the ILP sub-fund and class(es) of units affected by valuation error.
2. Describe the nature of the error (e.g. overvalued or undervalued) and state the magnitude of error as a percentage of the ILP sub-fund‘s Net Asset Value (NAV).
3. Attach a calculation of the valuation error.
4. State when and how the valuation error was discovered.

If compensation (i.e. valuation error represents 0.5% or more of the ILP sub-funds NAV per unit) is required:
1. State the number of affected Singapore policy owners (as recorded in the sub-fund register) who (a) subscribed; and (b)redeemed, during the time period over which the valuation occurred, if any.
2. State the amount of compensation to be paid to (a) policy owners; and (b) the ILP sub-fund, if any.
3. State the name of the entity that pays for the compensation.
4. Attach a calculation of the total compensation to be made.
5. Describe the measures taken, or to be taken, to improve internal controls and prevent the occurrence of similar incidents.

Guideline No: FAA-G09 is issued pursuant to Section 64 of the FAA. These Guidelines apply to any licensed or exempt financial adviser or its representative, who advises on any structured deposit, except:
(a) where advice is given to an accredited investor, expert investor or institutional investor, as defined in Regulation 2(1) of the FAR;
(b) where advice is given to a high net worth individual as defined in the “Guidelines On Exemption For Specialised Units Serving High Net Worth Individuals” Under Section 100(2) of the FAA.
(c) where advice is given to any person outside Singapore who is:
(i) an individual and:
a) not a citizen of Singapore;
b) not a permanent resident of Singapore.

MONETARY AUTHORITY OF SINGAPORE (MAS)

The MAS was formed on 1 January 1971 after Parliament passed the monetary  Authority of Singapore (MAS) Act in 1970. The Act gives the MAS the authority to regulate all elements of monetary, banking and financial aspects of Singapore, with the purpose of centralising all the various monetary functions associated with a central bank performed by several government departments and agencies under one single control.

In its surveillance function, SGX monitors trading activities of the securities and derivatives markets to detect unusual trading activities, and prohibited trading practices or conduct, including insider trading and market manipulation.

Other ECDD measures that may be performed include:
(a) requiring the first payment to be carried out through an account in the customer’s name with another FI subject to similar or equivalent CDD standards;
(b) using public sources of information (e.g. websites) to gain a better understanding of the reputation of the customer or any beneficial owner of a customer.
(c) commissioning external intelligence reports where it is not possible for a financial adviser to easily obtain information through public sources or where there are doubts about the reliability of public information.

A financial adviser should ensure that the internal process for evaluating whether a matter should be referred to the Suspicious Transaction Reporting Office (“STRO”) via an STR is completed without delay and should not exceed 15 business days of the case being referred by the relevant employee, representative or officer, unless the circumstances are exceptional or extraordinary.

The insurer should ensure that the units of an ILP subfund are valued every business day. Where the ILP subfund:
(a) does not offer dealing every business day, it should be valued every regular dealing day, but in any event, at least once a month;
(b) is a property ILP sub-fund which complies with Appendix 6 (Property Funds) of the Code, it should have a full valuation at least once yearly.

“International organisation” means an entity established by formal political agreements between member countries that have the status of international treaties, whose existence is recognised by law in member countries and which is not treated as a resident institutional unit of the country in which it is located;

A financial adviser shall report to the MAS, upon discovery of any of the following types of misconduct committed by its representatives:
(a) Acts Involving Fraud, Dishonesty or Other Offences of a Similar Nature.
(b) Acts Involving Inappropriate Advice, Misrepresentation or Inadequate Disclosure of Information.
(c) Failure to satisfy the Guidelines On Fit And Proper Criteria