MAS proposes 4 measures on mass movement of financial advisers

The Monetary Authority of Singapore (MAS) yesterday proposed four measures to address the large-scale movement of financial advisory (FA) representatives from one firm to another.

It is also calling for a public consultation, after which it will then be decided if these measures might eventually become regulations.

The first proposed measure recommends that first-year sales target tied to sign-on incentives should not be higher than the representative's average annual sales in the preceding three years.

"Sales targets for subsequent years should be set at a reasonable level based on the representatives' past performance and would be subject to supervisory review by MAS," the central bank said.

The measure aims to reduce the risk of representatives engaging in aggressive sales tactics to meet inflated sales targets.

The second measure suggests that sign-on incentives be spread over a minimum period of six years. The first-year payment should be capped at 50 per cent of the representative's average annual remuneration in the preceding three years.

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The remaining sign-on incentives are to be spread evenly over the next five or more years.

The third measure proposes FA firms be required to claw back the representative's sign-on incentives if the percentage of insurance policies serviced by the representative at his previous FA firm and which remain in force falls below a threshold of between 75 per cent and 85 per cent two years after the representative's departure.

The last measure states that FA firms will be required to undertake enhanced monitoring of their newly hired representatives' sales transactions for a minimum period of two years.

This includes appointing an independent external party to conduct customer call-backs to verify the sales and advisory process has been properly conducted.

The public consultation ends on April 9. - THE STRAITS TIMES