The findings of the Monetary Authority of Singapore’s (MAS’) mystery shopping survey on the financial advisory processes of banks and insurers highlight significant room for improvement for the industry as a whole.
Date: July 13, 2012
Tags: Singapore, Suitability, MAS
The findings of the Monetary Authority of Singapore’s (MAS’) mystery shopping survey on the financial advisory processes of banks and insurers highlight significant room for improvement for the industry as a whole.
The objective of the survey was to assess the financial industry’s implementation of MAS’ guidelines on fair dealing – which set out five fair dealing outcomes, including providing adequate information in the advisory and sales process and ensuring that advice provided to customers is suitable.
Conducted from October 2011 to December 2011, a total of 126 mystery shoppers made 500 visits to 11 licensed banks and four registered insurance companies seeking financial advice from their representatives. The products recommended by the representatives were reviewed for their suitability by a panel of industry practitioners based on the shoppers’ personal profile, their experience during the advisory and sales process, and sales materials obtained from the financial institutions.
The key findings of the mystery shopping survey were:
(i) Fact-find: the survey reveals that most representatives obtained information on the shoppers’ personal particulars and employment but the shoppers’ investment experience, financial objectives, risk preferences and financial situation were less frequently gathered.
(ii) Product disclosure: the survey finds that most representatives disclosed basic information about the products recommended. However, disclosures on risk factors, amount and frequency of fees and charges, warnings, exclusions and caveats, as well as the free-look period, were omitted in a significant number of advisory sessions.
(iii) Product suitability: the top three categories of products recommended were endowment insurance policies, unit trusts and investment-linked life policies. Almost one-third of the product recommendations were assessed by the industry panel as unsuitable, mainly for not matching the shoppers’ financial objectives or their stated investment horizons.
MAS said it will share the results of individual institutions with their respective senior management. In areas where they have fallen short of the fair dealing guidelines, financial institutions are expected to take corrective actions, said the regulator in a statement.
More details: http://www.mas.gov.sg/News-and-Publications/Press-Releases/2012/MAS-Releases-Results-of-Mystery-Shopping-Survey.aspx
