As financial institutions (FI) jostle to get a bigger share of the consumer dollar by sending their salespeople to hawk everything from credit cards to insurance and investment products at shopping malls, MRT stations and other public places, the Monetary Authority of Singapore (MAS) has stepped in to minimise the risks to consumers from such aggressive marketing tactics.
In a consultation paper released today (July 23), the financial regulator proposes `Market Conduct Guidelines’ setting out safeguards that FIs — including banks, non-bank credit card and charge card licensees, insurance companies, capital markets and financial advisers — are required to implement while marketing their products and services at retail outlets and public places.
“These proposals seek to strike a balance between allowing FIs flexibility with their marketing and distribution activities, while safeguarding consumers’ interests when they purchase financial products at retailers and public places,” said Mr Lee Boon Ngiap, assistant managing director of capital markets at the MAS.
He emphasised that the regulator does recognise the importance of such marketing initiatives as a part of the FIs’ business models. The proliferation of such practises could lead to problems including harassment of consumers, confusion over the roles of the FI and the retailer, enticing consumers to purchase unsuitable products, buying financial products in an unconducive environment and mishandling of monies collected, the MAS said.
Under the proposals, FIs will have to notify the MAS of their marketing and distribution activities at retailers and public places on a quarterly basis so that the regulator is able to monitor the situation more closely and tailor its supervisory approach accordingly.
The MAS also proposed that the board and senior management of FIs be accountable for ensuring proper controls over their marketing campaigns at such places. FIs are also expected to call back customers roped in at public places before or within the free-look or cooling-off period to ensure they have understood the insurance and investment schemes they purchased. FIs must regularly conduct mystery shopping and site visits to ensure that their representatives adhere to the required standards and guidelines.
The proposals complement existing rules and practises, and ensure consistency and alignment of standards across the financial industry, the MAS said, referring to existing guidelines that most FIs already have in place.
Mr Antony Eldridge, financial services leader at business consultancy PwC Singapore said: “Given innovations in marketing and distribution techniques used by FIs, these proposals should not be unexpected. In fact, the proposals should also help to protect FIs in Singapore from getting caught in the kind of hugely costly scandals that have hit a number of overseas institutions.”
Mr Rajan Raju, head of retail clients at Standard Chartered Bank Singapore, said: “The initiative is about responsible selling, treating customers fairly, and ensuring a robust process for the marketing of financial products and services. Treating customers fairly remains a key priority for us at Standard Chartered.”
The Life Insurance Association of Singapore said its members are aligned with the MAS in safeguarding consumers’ interests. The implementation of numerous initiatives such as compareFIRST, balanced scorecard and Direct Purchase Insurance products are some examples of the industry’s efforts to ensure that consumers are well-informed and given flexibility in managing their portfolios to meet their protection, savings and investment needs, LIA added.
The public consultation will close on Aug 24.
