MAS has decided to conduct a mystery shopping exercise focused on financial advisers after reports of undesirable practices in the industry had come to its attention, Ee said in her keynote address during the Association of Financial Advisers (Singapore)’s annual conference yesterday.
“When customer complaints are lodged, it is often difficult to tell which party is right or wrong,” she said.
Mystery shopping will allow MAS to find out what transpires in the conversations between investment representatives and their customers, for example whether the verbal representations made by representatives are misleading or inaccurate.
MAS will be embarking on the exercise soon, Ee said, but did not give an exact date. Once it is completed, the regulator will share the findings with those surveyed as well as the public, she added.
Ee noted that other foreign regulators, as well as banks, insurers and industry associations, also conducted their own mystery shopping. MAS conducted its last mystery shopping six years ago.
“Financial advisor firms should also conduct mystery shopping and on-site visits to ensure that the marketing activities of their representatives comply with the guidelines on standards of conduct for marketing and distribution activities,” Ee said.
Prohibited activities
Over the last few months the regulator received several complaints about individuals soliciting customers at MRT stations and shopping malls in an aggressive manner, in spite of the marketing guidelines MAS issued in December last year, which prohibit such conduct, according to Ee.
The individuals were reported to approach members of the public on the pretext of conducting surveys and to lead them to investment representatives stationed at retail establishments.
Gifts and vouchers were occasionally offered to customers for completing a survey, but one complainant alleged that he was asked to return the vouchers after indicating he was not interested in buying any financial products.
The regulator also observed that some firms were lenient with their representatives when they committed a violation. For example, it found that an insurance firm’s representatives caught using the prohibited term “savings plan” when describing an insurance policy were not properly disciplined.
MAS centralised its enforcement function in August 2016, subsequently taking actions in respect of the penny stock saga and 1MDB-related offences.
“We will not hesitate to take strong enforcement actions where there is evidence of serious wrongdoing or blatant disregard of our rules,” Ee said.
