2002-10-01
Added · Updated
Direct life insurers providing financial advisory services must appoint fit and proper representatives under written agreements, cap tier structures at three levels, and limit probation periods to two years. Insurers must train representatives, establish a Compliance Unit headed by a senior officer, and prohibit charging financing costs to life insurance funds by 30 September 2003. Non-compliance may result in disciplinary action, with consistency required in applying such measures.
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Notice No: MAS 306
Issue Date: 1 October 2002
Last revised on 19 February 2021
MARKET CONDUCT STANDARDS FOR LIFE INSURERS PROVIDING FINANCIAL ADVISORY SERVICES AS DEFINED UNDER THE FINANCIAL ADVISERS ACT (CAP. 110)
"financial adviser" has the same meaning as in section 2(1) of the FAA; [MAS Notice 306 (Amendment) 2021] [Deleted by MAS Notice 306 (Amendment) 2021] “representative” has the same meaning as in section 2(1) of the FAA; [MAS Notice 306 (Amendment) 2010, with effect from 26 November 2010] [MAS Notice 306 (Amendment) 2021] Appointment of Representatives
5. In addition to section 35M of the Act, a direct life insurer shall enter into a written
agreement with every individual that carries on financial advisory services as a representative of the life insurer. [MAS Notice 306 (Amendment) 2021]
6. A direct life insurer shall only appoint a person who is fit and proper as its
representative.
Maximum Tier Structure
7. A direct life insurer that operates a tier structure for the provision of any financial
advisory service shall ensure that such a structure is capped to a maximum of 3 tiers:
Manager (Third Tier)
I
Supervisor (Second Tier)
I
Representative (First Tier)
8. A tier exists when overriding benefits are payable by the insurer to a representative
for the provision of financial advisory service by another representative.
9. A direct life insurer shall ensure that its representative that is under probation for the
position as a supervisor shall have a probation period of not more than 2 years. Training and Competency of Representatives
10. A direct life insurer shall ensure that its representatives are trained and assessed as
competent to carry on financial advisory services. A direct life insurer is expected to prepare and implement a Training and Competency Plan for its representatives and refer to the Guidelines on Training and Competency issued by the Life Insurance Association of Singapore in the process.
Loans and Advances to Representatives
11. A direct life insurer shall not provide subsidised loans to its representatives out of life
insurance funds. With effect from 1 Oct 2002, insurers shall not charge the cost of financing schemes for representatives to their life insurance funds except where the financing schemes were disbursed prior to 1 Oct 2002 and in which case, the cost of these financing schemes shall cease to be charged to the life insurance funds by 30 Sep 2003 or one-year from the date of disbursement, whichever is earlier. Compliance Unit
12. A direct life insurer shall ensure that the provision of financial advisory services by its
representatives is in compliance with the FAA and the Act. It should also observe relevant industry guidelines issued by the Life Insurance Association of Singapore. [MAS Notice 306 (Amendment) 2021]
13. A direct life insurer shall set up a Compliance Unit headed by a senior officer i.e.
Compliance Officer. The Compliance Unit should conduct regular audits on the provision of financial advisory service by the life insurer and its representatives and maintain documentation relating to such audits. The Compliance Officer should report directly to the chief executive on any compliance or non-compliance. [MAS Notice 306 (Amendment) 2021] Disciplinary Action
14. Direct life insurers are responsible for the conduct of their representatives. It should
take disciplinary action against representatives for misconduct. Direct life insurers should also have an internal process for representatives who wish to appeal against the disciplinary action.
15. Direct life insurers should ensure consistency in their application of disciplinary
action for the same type of misconduct.
Income and Expenses
16. Section 17 of the Act requires insurers to establish and maintain insurance funds for
insurance business. It also requires receipts properly attributable to the business to which the insurance fund relates to be paid into the insurance fund. Furthermore, assets comprised in the insurance fund are applicable only to meet such part of the insurer's liabilities and expenses as are so properly attributable. [MAS Notice 306 (Amendment) 2021]
17. Direct life insurers should ensure that their provision of financial advisory services is
not detrimental to interests of policyholders. Income and expenses arising out of the
direct life insurer's provision of financial advisory services that is not related to the life insurer as a product provider shall not be paid into or charged to the life insurance funds.
18. For an agency force that was previously financed by the life insurance funds, mainly
the participating fund, proceeds from the sale of an agency force by a direct life insurer should be paid appropriately into the life insurance funds. [Deleted by MAS 306 (Amendment) 2021]
19. [Deleted by MAS 306 (Amendment) 2021]
Notes on History of Amendments:
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Source: Monetary Authority of Singapore — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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