PART 3 | Obligation to disclose product information to clients |
34.—(1) A licensed financial adviser must disclose, to every client and prospective client, all material information relating to any designated investment product that the licensed financial adviser recommends to such person, including —| (a) | the terms and conditions of the designated investment product; | | (b) | the benefits to be, or likely to be, derived from the designated investment product, and the risks that may arise from the designated investment product; | | (c) | the premium, costs, expenses, fees or other charges that may be imposed in respect of the designated investment product; | | (d) | where the designated investment product is a unit in a collective investment scheme, the name of the manager of the scheme and the relationship between the licensed financial adviser and the manager; | | (e) | where the designated investment product is a life policy, the name of the licensed insurer under the life policy and the relationship between the licensed financial adviser and the insurer; and | | (f) | such other information as the Authority may prescribe. [1/2009; 11/2013] |
| (2) The Authority may specify, in written directions, the information required to be disclosed under subsection (1)(a), (b) or (c), and the form or manner in which information relating to any designated investment product may be disclosed to any client of a licensed financial adviser. [1/2009] |
(3) The Authority may, in writing, require a licensed financial adviser to submit to it —| (a) | all written communication which sets out information relating to any designated investment product for the time being in use by the licensed financial adviser; and | | (b) | where any written communication mentioned in paragraph (a) is not in English, a translation of such written communication in English. [1/2009] |
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| (4) If it appears to the Authority, after affording the licensed financial adviser an opportunity to make representations orally or in writing, that any written communication submitted under subsection (3) contravenes any provision of this Act, or is in any respect likely to mislead, the Authority may, in writing, direct the licensed financial adviser to discontinue the use, in Singapore, of the written communication immediately or from a specified date. [1/2009] |
(5) Any licensed financial adviser who —| (a) | contravenes subsection (1); | | (b) | fails to comply with a requirement imposed by the Authority under subsection (3); or | | (c) | fails to comply with a direction of the Authority under subsection (4), |
| shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 or to imprisonment for a term not exceeding 12 months or to both. |
[1/2009] |
(6) Where, on or after 18 March 2013 —| (a) | a licensed financial adviser, in making a recommendation to a person, contravenes subsection (1); | | (b) | that person does, or refrains from doing, a particular act as a result of that contravention; | | (c) | it is reasonable, having regard to that contravention and all other relevant circumstances, for that person to do, or refrain from doing (as the case may be) that act as a result of that contravention; and | | (d) | that person suffers any loss or damage as a result of doing, or refraining from doing (as the case may be) that act, |
| then, without affecting any other remedy available to that person, the licensed financial adviser is liable to pay damages to that person in respect of that loss or damage. |
[35/2012] |
(7) In this section —| “client”, in relation to a designated investment product which is a group life policy under which any person insured is liable to pay the premium, includes every person insured under the group life policy; |
| “designated investment product” means a unit in a collective investment scheme, a life policy (including a group life policy), or such other investment product as the Authority may prescribe; |
| “written communication” includes a brochure, a leaflet, a circular or an advertising matter, whether in electronic, print or other form. [25 |
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| False or misleading statements, etc., by licensed financial advisers |
35.—(1) A licensed financial adviser must not make a false or misleading statement —| (a) | as to any amount that would be payable in respect of a proposed contract in respect of any investment product; | | (b) | as to the effect of any provision of a contract or a proposed contract in respect of any investment product; or | | (c) | in connection with the provision of any financial advisory service, |
| if, when the licensed financial adviser makes the statement — |
| (d) | the licensed financial adviser does not care whether the statement is true or false; or | | (e) | the licensed financial adviser knows or ought reasonably to have known that the statement is false or misleading. [35/2012] |
(2) A licensed financial adviser must not, in connection with the provision of any financial advisory service —| (a) | employ any device, scheme or artifice to defraud; or | | (b) | engage in any act, practice or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception, on any person. [35/2012] |
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(3) Where, on or after 18 March 2013 —| (a) | a licensed financial adviser makes a false or misleading statement mentioned in subsection (1) and thereby contravenes that subsection; | | (b) | a person, in reliance on that statement, does, or refrains from doing, a particular act; | | (c) | it is reasonable, having regard to that statement and all other relevant circumstances, for that person to do, or refrain from doing (as the case may be) that act, in reliance on that statement; and | | (d) | that person suffers any loss or damage as a result of doing, or refraining from doing, (as the case may be) that act, |
| then, without affecting any other remedy available to that person, the licensed financial adviser is liable to pay damages to that person in respect of that loss or damage. |
[35/2012] |
(4) Where, on or after 18 March 2013 —| (a) | a licensed financial adviser contravenes subsection (2); | | (b) | a person does, or refrains from doing, a particular act as a result of that contravention; | | (c) | it is reasonable, having regard to that contravention and all other relevant circumstances, for that person to do, or refrain from doing (as the case may be) that act as a result of that contravention; and | | (d) | that person suffers any loss or damage as a result of doing, or refraining from doing (as the case may be) that act, |
| then, without affecting any other remedy available to that person, the licensed financial adviser is liable to pay damages to that person in respect of that loss or damage. |
[35/2012] |
| (5) A reference in subsection (1) to the making of a false or misleading statement includes a reference to omitting to disclose any matter that is material to the statement. [35/2012] |
| (6) Any licensed financial adviser who contravenes subsection (1) or (2) shall, even if a contract does not come into being, be guilty of an offence and shall be liable on conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding 12 months or to both. [26 [1/2009; 35/2012] |
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| Recommendations by licensed financial advisers |
| 36.—(1) A licensed financial adviser must not make a recommendation with respect to any investment product to a person who may reasonably be expected to rely on the recommendation if the licensed financial adviser does not have a reasonable basis for making the recommendation to the person. [1/2009] (2) For the purposes of subsection (1), a licensed financial adviser does not have a reasonable basis for making a recommendation to a person unless —| (a) | the licensed financial adviser has, for the purposes of ascertaining that the recommendation is appropriate, having regard to the information possessed by the licensed financial adviser concerning the investment objectives, financial situation and particular needs of the person, given such consideration to, and conducted such investigation of, the subject matter of the recommendation as is reasonable in all the circumstances; and | | (b) | the recommendation is based on the consideration and investigation mentioned in paragraph (a). [1/2009] |
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(3) Where —| (a) | a licensed financial adviser, in making a recommendation to a person, contravenes subsection (1); | | (b) | the person, in reliance on the recommendation, does a particular act, or refrains from doing a particular act; | | (c) | it is reasonable, having regard to the recommendation and all other relevant circumstances, for the person to do that act, or to refrain from doing that act (as the case may be) in reliance on the recommendation; and | | (d) | the person suffers loss or damage as a result of doing that act, or refraining from doing that act (as the case may be), |
| then, without affecting any other remedy available to that person, the licensed financial adviser is liable to pay damages to that person in respect of that loss or damage. |
[1/2009] |
| (4) In this section, a reference to the making of a recommendation is a reference to the making of a recommendation expressly or by implication. |
| (5) This section does not apply to any licensed financial adviser or class of licensed financial advisers in such circumstances or under such conditions as may be prescribed. [27 [1/2009] |
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| Receipt of client’s money or property |
37.—(1) Without limiting section 135(1), the Authority may, by regulations —| (a) | determine the manner in which a licensed financial adviser may receive or deal with client’s money or property; or | | (b) | prohibit licensed financial advisers from receiving or dealing with client’s money or property in specified circumstances or in relation to specified activities. [1/2009] |
| (2) A lien or claim on client’s money or property in any account, which may be required to be established by any licensed financial adviser under regulations made under subsection (1), is void unless the moneys in the account are for fees due and owing to the licensed financial adviser. [1/2009] |
| (3) A charge or mortgage on client’s money or property in any account, which may be required to be established by any licensed financial adviser under regulations made under subsection (1), is void. [1/2009] |
| (4) In this section, “client’s money or property” means money received or retained by, or property deposited with, a licensed financial adviser in the course of the licensed financial adviser’s business as such for which the licensed financial adviser is liable to account to another person. [28 [1/2009] |
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| Obligation to provide information to Authority |
| 38.—(1) The Authority may, in writing, require any licensed financial adviser to provide it with information about any matter related to its business whether carried on in Singapore or elsewhere if, in the opinion of the Authority, it requires the information for the discharge of its functions under this Act. [1/2009] | (2) A licensed financial adviser which has been required to provide information to the Authority under subsection (1) must comply with such requirement. [1/2009] |
| (3) Any person who, without reasonable excuse, contravenes subsection (2) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 or to imprisonment for a term not exceeding 12 months or to both and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part of a day during which the offence continues after conviction. [29 |
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| Saving for validity of transactions |
39.—(1) Subject to subsection (3), a contravention of any requirement of this Act (including requirements in regulations made for the purposes of this Act) does not affect the validity or enforceability of any agreement, transaction or arrangement.| (2) Failure to comply with any code, guideline, policy statement or practice note issued under section 74 does not affect the validity of any agreement, transaction or arrangement. |
| (3) Subsection (1) has effect subject to any express provision to the contrary in this Act or in any regulations made for the purposes of another provision of this Act. |
| (4) Without limiting section 135(1), the regulations mentioned in subsection (3) may provide that a contravention of any requirement of this Act has a specified effect on the validity or enforceability of any agreement, transaction or arrangement. [30 |
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| Division 2 — Life Insurance |
| Application of this Division |
| 40. This Division applies to licensed financial advisers who provide any financial advisory service in respect of life policies. [31 [1/2009] |
| Insurance broking premium accounts |
41.—(1) Every licensed financial adviser which receives any money —| (a) | from or on behalf of an insured or intending insured for or on account of an insurer in connection with a contract of insurance or a proposed contract of insurance; or | | (b) | from or on behalf of an insurer for or on account of an insured or intending insured, |
| must, for the purposes of this section, establish and maintain a separate account with a bank licensed under the Banking Act 1970. |
[15/2003] (2) The Authority may prescribe, in relation to an account established under subsection (1) —| (a) | the types of moneys that must be paid into or withdrawn from such account; | | (b) | the manner in which moneys should be paid into or withdrawn from such account; | | (c) | the manner in which moneys held in such account are to be invested; | | (d) | the manner in which the proceeds from the investment of moneys held in such account are to be distributed; | | (e) | the rights and obligations of any party in relation to moneys held in such account; and | | (f) | any other matter which the Authority considers to be incidental to or necessary for this section. |
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| (3) A lien or claim on the moneys in any account established by any licensed financial adviser under subsection (1) is void unless the moneys in the account are for fees due and owing to the licensed financial adviser. |
| (4) A charge or mortgage on the moneys in any account established by any licensed financial adviser under subsection (1) is void. |
| (5) In this section, “moneys” means any sum received by a licensed financial adviser as agent for an insured or intending insured, including policy moneys, premiums and claims payments. |
| (6) Any licensed financial adviser who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000. [32 |
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| Negotiation and placement of risk with unlicensed insurer |
| 42.—(1) Subject to subsection (4), a licensed financial adviser must not, in the course of the licensed financial adviser’s business as such, negotiate any contract of insurance with an insurer (directly or indirectly) except with a licensed insurer acting in the course of his business as such. [1/2009; 11/2013] (2) The reference in subsection (1) to a contract of insurance does not apply to —| (a) | reinsurance; | | (b) | business relating to risks outside Singapore; or | | (c) | such other risks as may be prescribed. |
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| (3) In subsection (2)(b), “risks outside Singapore” means any risk which would be classified as an offshore policy as defined in the First Schedule to the Insurance Act 1966 had the risk been underwritten by a licensed insurer in Singapore. [11/2013] |
(4) Where in any particular case the Authority is satisfied that, by reason of the exceptional nature of the risk or other exceptional circumstances, it is not reasonably practicable to comply with subsection (1), the Authority may permit any licensed financial adviser —| (a) | to negotiate the contract of insurance with such insurer as the licensed financial adviser sees fit; and | | (b) | if in the opinion of the Authority the case requires it, to effect the contract of insurance and receive the premium in Singapore on behalf of such insurer. [1/2009] |
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| (5) Any person who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 or to imprisonment for a term not exceeding 3 years or to both. [33 |
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| Representations by licensed financial advisers |
43.—(1) A licensed financial adviser must not, with intent to deceive, in relation to a proposed contract of insurance —| (a) | write on a form, being a form that is given or sent to an insurer, any matter that is material to the contract and is false or misleading in a material particular; | | (b) | omit to disclose to the insurer any matter that is material to the proposed contract; | | (c) | advise or induce the intending insured to write on a form, being a form that is given or sent to the insurer, any matter that is false or misleading in a material particular; or | | (d) | advise or induce the intending insured to omit to disclose to the insurer any matter that is material to the proposed contract. [1/2009] |
(2) A licensed financial adviser must not, with intent to deceive, in relation to a claim under a contract of insurance —| (a) | fill up, in whole or in part, a form, being a form that is given or sent to an insurer, in such a way that the form is false or misleading in a material particular; | | (b) | omit to disclose to the insurer any matter that is material to the claim; | | (c) | induce the insured to fill up, in whole or in part, a form, being a form that is given or sent to the insurer, in such a way that the form is false or misleading in a material particular; or | | (d) | advise or induce the insured to omit to disclose to the insurer any matter that is material to the claim. [1/2009] |
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| (3) Any licensed financial adviser who contravenes this section shall, even if a contract of insurance does not come into being, be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 or to imprisonment for a term not exceeding 12 months or to both. [34 [1/2009] |
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| Division 3 — Specified Products |
[4/2017] | Application of this Division |
| 44. This Division applies to licensed financial advisers who provide any financial advisory service in respect of specified products. [35 [1/2009; 4/2017] |
| Licensed financial adviser to disclose certain interests in specified products |
| 45.—(1) Where a licensed financial adviser sends a circular or other similar written communication in which the licensed financial adviser makes a recommendation, whether expressly or by implication, with respect to any specified products, the licensed financial adviser must include in the circular or other communication, in type not less legible than that used in the remainder of the circular or other communication, a concise statement of the nature of any interest in, or any interest in the acquisition or disposal of, the specified products that the licensed financial adviser, or a person associated with or connected to the licensed financial adviser, has at the date on which the circular or other communication is sent. [1/2009; 4/2017] (2) Where a licensed financial adviser is charged with an offence in respect of a contravention of subsection (1), it is a defence for the licensed financial adviser to prove that, at the time the circular or other communication was sent, the licensed financial adviser was not aware and could not reasonably be expected to have been aware —| (a) | that the licensed financial adviser had an interest in, or an interest in the acquisition or disposal of, the specified products; or | | (b) | that the person associated with or connected to the licensed financial adviser had an interest in, or an interest in the acquisition or disposal of, the specified products, |
[1/2009; 4/2017] |
(3) For the purposes of subsections (1) and (2) —| (a) | an interest of a person in the disposal of any specified products includes any financial benefit or advantage that will, or is likely to, accrue directly or indirectly to the person, upon or arising out of the disposal of the specified products; | | (b) | without limiting paragraph (a), a person who has entered into an underwriting agreement in respect of any specified products is deemed to have an interest in the acquisition or disposal of the specified products; and | | (c) | despite section 2(1) or 3, a person is not connected to or associated with another person unless the person and the other person are acting jointly, or otherwise acting under or in accordance with an arrangement made between them, in relation to the sending of the circular or other communication. [4/2017] |
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| (4) When a licensed financial adviser sends to a person a circular or other communication to which subsection (1) applies, the licensed financial adviser must preserve a copy of the circular or other communication for 5 years. [1/2009] |
| (5) For the purposes of this section, a circular or other communication sent to a person is, if it is signed by an officer of a licensed financial adviser, deemed to have been sent by the financial adviser. |
| (6) The Authority may, by regulations, exempt any person or class of persons, or any specified products or class of specified products, from the application of this section, subject to such terms or conditions as the Authority considers appropriate. [4/2017] |
| (7) Any licensed financial adviser who contravenes this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 or to imprisonment for a term not exceeding 12 months or to both. [36 [1/2009] |
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| Division 4 — Appointed and Provisional Representatives |
| Business conduct requirements for appointed and provisional representatives |
| 46.—(1) Subject to the provisions of this Act, sections 34, 35, 36, 38, 42, 43 and 45 apply, with the necessary modifications, to an appointed or provisional representative in respect of his or her acting as such as if he or she were a licensed financial adviser. [1/2009] | (2) The Authority may, on the application of a licensed financial adviser or an exempt financial adviser, exempt any of its representatives from complying with any of the provisions mentioned in subsection (1). [1/2009] |
| (3) An exemption granted under subsection (2) need not be published in the Gazette. [1/2009] |
| (4) The Authority may withdraw an exemption granted to any person under subsection (2) if the person contravenes any provision of this Act, or if the Authority considers it necessary in the public interest. [1/2009] |
| (5) Where the Authority withdraws an exemption granted to any person under subsection (2), the Authority need not give the person an opportunity to be heard. [1/2009] |
| (6) A licensed financial adviser or an exempt financial adviser which is aggrieved by the decision of the Authority to withdraw an exemption granted to any of its appointed or provisional representatives under subsection (2) may, within 30 days of the decision, appeal in writing to the Minister. [1/2009] |
(7) A withdrawal under subsection (4) of an exemption granted to any person does not operate so as to —| (a) | avoid or affect any agreement, transaction or arrangement relating to any investment product entered into by the person, whether the agreement, transaction or arrangement was entered into before, on or after the withdrawal of the exemption; or | | (b) | affect any right, obligation or liability arising under any agreement, transaction or arrangement mentioned in paragraph (a). [37 [1/2009] |
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| Division 5 — Remuneration |
| Remuneration framework for representatives and supervisors |
47.—(1) A licensed financial adviser must establish and maintain a remuneration framework in conformity with subsection (2) for the purpose of —| (a) | reviewing and assessing the performance of its representatives and its supervisors; and | | (b) | determining the remuneration of its representatives and supervisors. [18/2015] |
| (2) Every remuneration framework in respect of representatives and supervisors of a licensed financial adviser must contain terms consistent with the requirements prescribed under section 135 or specified by the Authority by written notice, from time to time. [18/2015] |
| (3) A licensed financial adviser must ensure that every agreement or arrangement entered into between the licensed financial adviser and each of its representatives or supervisors on or after 1 January 2016 does not contain terms which are inconsistent with the remuneration framework mentioned in subsection (1). [18/2015] |
(4) A licensed financial adviser must —| (a) | review and assess the performance, and determine the remuneration of its representatives and supervisors; and | | (b) | pay remuneration accruing on or after 1 January 2016 to its representatives and supervisors, |
| in accordance with the remuneration framework mentioned in subsection (1). |
[18/2015] |
(5) This section applies despite —| (a) | any written law in force on 1 January 2016 or rule of law to the contrary; or | | (b) | any agreement or arrangement entered into before, on or after 1 January 2016. [18/2015] |
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(6) In carrying out any act in accordance with the remuneration framework mentioned in subsection (1), the licensed financial adviser is not to be treated as having —| (a) | breached any rule of law or written law mentioned in subsection (5)(a); or | | (b) | breached any agreement or arrangement mentioned in subsection (5)(b) entered into before 1 January 2016, |
| and no such agreement or arrangement is taken to be brought to an end by frustration solely by reason of any act done in compliance with the remuneration framework or any requirements prescribed or specified under subsection (2). |
[18/2015] |
| (7) Any licensed financial adviser who contravenes subsection (1), (3) or (4) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part of a day during which the offence continues after conviction. [18/2015] |
(8) The Authority may by regulations under section 135 prescribe —| (a) | the persons to whom this section does not apply; and | | (b) | the circumstances in which this section does not apply. [18/2015] |
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| (9) A written notice issued under this section need not be published in the Gazette. [18/2015] |
(10) In this section, “remuneration” includes —| (a) | any monetary commission, incentive, benefit or reward; | | (b) | any non-monetary incentive, benefit or reward; and | | (c) | such other consideration as may be prescribed under section 135 or specified by the Authority by written notice. [38 [18/2015] |
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| Independent sales audit unit |
| 48.—(1) A licensed financial adviser must have an independent sales audit unit comprising only individuals who have the qualification or experience and perform the duties prescribed under section 135 or specified by the Authority by written notice. [18/2015] (2) The licensed financial adviser must ensure that the independent sales audit unit reports only to —| (a) | the board of directors and chief executive officer of the licensed financial adviser; or | | (b) | such other unit of the licensed financial adviser determined by the board of directors or the chief executive officer, which is independent from all units of the licensed financial adviser which provide financial advisory services. [18/2015] |
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(3) The licensed financial adviser must ensure that the independent sales audit unit —| (a) | audits the quality of the financial advisory services provided by the representatives of the licensed financial adviser at such times and in such manner as may be prescribed under section 135 or specified by the Authority by written notice; | | (b) | carries out such other functions and duties as may be prescribed under section 135 or specified by the Authority by written notice; and | | (c) | applies the processes, criteria and methods prescribed (if any) under section 135 or specified by the Authority by written notice, in connection with the functions and duties in paragraphs (a) and (b). [18/2015] |
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| (4) Any licensed financial adviser who contravenes subsection (1), (2) or (3) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part of a day during which the offence continues after conviction. [18/2015] |
(5) The Authority may by regulations under section 135 prescribe —| (a) | the licensed financial adviser or class of licensed financial advisers to whom this section does not apply; and | | (b) | the circumstances in which this section does not apply. [18/2015] |
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| (6) A written notice issued under this section need not be published in the Gazette. [39 [18/2015] |
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