Currently, representatives are required to pass the relevant modules under the Capital Markets and Financial Advisory Services Examination (CMFAS), along with other requirements, according to a MAS consultation paper released on Monday.
The CMFAS at the moment includes modules on rules and regulations, as well as product knowledge. The MAS proposes to add contents on ethics and skills to the current CMFAS modules on rules and regulations to form a “Rules, Ethics and Skills” module.
“Given changes in the regulatory landscape for the capital markets and financial advisory industries, MAS has now conducted a review of the examination framework for appointed representatives under the Securities and Futures Act and the Financial Advisers Act,” the MAS said in the paper.
The proposals come at a time when the regulator has penalised a number of individuals and banking entities in light of Malaysia’s 1MDB scandal.
Earlier this month, the MAS slapped a ban on an ex-Goldman Sachs banker, while Standard Chartered and Coutts have been hit with record fines for their roles in the 1MDB scandal.
The regulator also shut down Falcon Private Bank in October and BSI Bank in May for poor anti-money laundering controls and improper conduct by individuals over the scandal.
Additional contents and other revisions
According to the consultation paper, additional contents on ethics will test the representatives’ understanding of ethical principles and response to situations where there may not be explicit rules but which nevertheless present potential conflicts of interest.
The additional skills-related contents will equip appointed representatives with some understanding of processes and skills, particularly with regard to regulatory obligations. For example, representatives will learn how to analyse information provided by the customer, and assess and recommend suitable products based on the information given by the consumer.
The MAS also suggests redesigning the product knowledge modules. For example, it is proposing that the module covering futures and other securities-based derivatives contracts to include new contents on commodity, credit, foreign exchange and rate-based derivatives contracts.
In addition, the regulator is also introducing four new combined product knowledge modules, which cover a wider range of investment products, to allow appointed representatives the option to complete the CMFAS product knowledge examinations in fewer sittings.
Examples of the proposed ethics and skills contents, along with other proposals, are listed on the consultation paper. Comments and feedback have to be submitted by 13 January 2017.
