Following are the factors in accessing an application for a Financial advisors licence is Fitness and Propriety:
(i) it is a fit and proper person to be licensed;
(ii) all of its directors and chief executive officer are fit and proper persons to hold the office and
(iii) all of its substantial shareholders and representatives are fit and proper persons.

With effect from 26 November 2010, all existing financial adviser’s licences would no longer have to be renewed. Instead, once issued the licence would continue to be valid, subject to the payment of an annual licence fee.

Grounds for refusal are:
(a) if the applicant is not a corporation;
(b) if the applicant is unable to meet or continue to meet such minimum financial requirements or such other requirements as the MAS may prescribe, either generally or specifically
(c) if the applicant does not have in force a Professional Indemnity Insurance policy, the cover of which is consistent with such limit and deductible requirements as may be prescribed, or any other measure as may be approved by the MAS in lieu of a Professional Indemnity Insurance policy.

Following persons are allowed to use the term “financial adviser”:
i. Exempt financial adviser
ii. Licensed financial adviser
iii. Persons approved by the Monetary Authority of Singapore

The Monetary Authority of Singapore (MAS) launched the Representative Notification Framework (RNF):
I. A notice of intent to appoint a representative will have to be lodged with the MAS.
II. A “fit and proper” certification is to be provided to the MAS in respect of the representative.
III. The onus is on the principals to accept only fit and proper individuals to be their representatives.

The Financial Advisers Act provides for two classes of financial advisers’ representatives.

If someone’s status as an appointed financial adviser’s representative has been revoked by the Monetary Authority of Singapore, he/she may appeal this decision within 30 days to the Minister, whose decision shall be final.

The financial adviser should hand over the money:
A. by the next business day after receiving the money
B. upon receipt of the money on the same business day
C. which he has received on a specified day as instructed by the client in writing

Following product information about a designated investment product shall a licensed financial adviser disclose to a prospective client:
I.Risks arising from the product
II.Benefits deriving from the product
III.The relationship existing between the financial adviser and the product provider

The scenarios that would result in the licensed financial adviser (FA) being liable to the customer concerning recommendations made by the FA under the Financial Advisers Act would be the customer acted on the recommendation of the FA, the ones who refrained from acting based on the recommendation of the FA or FA did not have a reasonable basis to make a recommendation to the customer. All of these would make the FA liable to the customer in respect of any damage or loss.

Section 32 of the FAA provides that every licensed financial adviser which receives any insurance money shall establish and maintain a separate account with a bank licensed under the Banking Act (Cap. 19) for its life insurance broking premiums.

The Financial Advisers Regulations provide that no licensed financial adviser shall grant any unsecured advance, unsecured loan or unsecured credit facility to an officer or an employee or any of its representatives, which in the aggregate and outstanding at any one time, exceeds S$3000.

The Financial Advisers Act gives that the Monetary Authority of Singapore has the intensity of power to issue composed bearings, for example, notices which will have a lawful impact.

The objective(s) of prohibition orders under the Financial Advisers Act (FAA) is/are to keep unfit persons from:
Participating in management positions of the financial adviser
Engaging in any or all of the financial advisory services regulated under the FAA
Acting as a director or substantial shareholder of a licensed or exempt financial adviser

The Notice is applicable for any recommendations made on simple life policies sold as ancillary products to mortgage reducing term assurance loans for the insurance cover.

Following will fall under the requirements as set out in the Notice:
I. Know your client’s investment objectives and financial situation.
II. Understand your client’s concerns by conducting a needs analysis.
III. Documentation and record-keeping of the recommendations made.

To inform the client in writing:
The outcome of the Customer Knowledge Assessment
That it is his responsibility to ensure the suitability of the SIP
To confirm his intent to transact the SIP despite the outcome of the Customer Knowledge Assessment

In making a recommendation on a life policy, a financial adviser needs to provide his client with a copy of the product summary, benefit illustration & product highlights sheet.

A financial adviser which makes a recommendation to a client to switch from one designated investment product to another designated investment product shall comply with the requirements as set out in MAS Notice No: FAA-N16 to ensure that the client genuinely benefits from the switch, Ensure that the client makes an informed decision on the switch & inform the client in writing of any fees or charges that he would bear if he were to make the switch.

Statements are to be made in plain language and in a simple manner, be made in accordance with industry best practices & be made in accordance with industry best practices.

An FA does not need to disclose, in writing, to the clients the details of all appointed and provisional representatives registered in the Public Register of Representatives.

A financial adviser is required to disclose the soft commissions from product providers, trailer commissions from product providers & details of all fees payable to be charged to the client.

In making a recommendation for a life insurance policy, a financial adviser shall disclose to the client about the Benefit Illustration in respect of the life insurance policy, the risks factors that may result in the benefits payable to be less than the illustrated values & the terms and conditions for exercising the free look provision under the life insurance policy.

A dual currency investment may be misleading to investors
This includes labeling the product as:
I. A deposit
II. A structured deposit
III. Principal guaranteed in terms of the base currency

FA is allowed to present returns on the CIS only if it covers a period of at least one year.

Excluded investment products are any stocks or shares issued or proposed to be issued by a corporation or body unincorporated, other than where such corporation or body unincorporated is a collective investment scheme.

A client has three consecutive years of working experience in the past ten years. Following will be considered as relevant working experience for assessing whether the client possesses the knowledge or experience in an unlisted Specified Investment Product:
A. Accountancy.
B. Actuarial Science.
C. Treasury Management.

f someone is an introducer under the Financial Advisers Act. He provides factual information on investment products to a client which falls under the definition of “introducing activity” in MAS Notice No: FAA-N02.

By virtue of Section 23B(1)(b) of the FAA, individuals providing financial advisory services as a representative of exempt persons are exempted from the requirement to act as appointed or provisional representatives under Section 23C or 23D of the FAA, respectively, in acting, whether directly or indirectly, as a representative of a financial adviser in giving advice in Singapore, either directly or through publications or writings, or by issuing or promulgating research analyses or research reports, concerning any investment product (other than life policies), to not more than 30 accredited investors on any occasion.

Module 6 in the CMFAS Examinations will not apply to an individual who wishes to advise on and/or arrange life policies, including Investment-linked policies.