Enhanced due diligence for new products

• Distributors must assess the suitability of products based on new due diligence steps by answering questions such as 'Who is the product intended for', and whether it matches the firm's customer base.

Advisory process

• Financial advisory firms must document in greater detail the basis for their recommendations and gather additional information.
• This could include whether the invested amount is a substantial portion of the customer's assets and his regular financial commitments.

Restrictions on sale without advice

• Advisory firms may dispense advice only when the customer contacts them on his own initiative to buy the product. This waiver of a client's right to receive advice must be documented.

Restrictions on bank teller activities

• Tellers will be prohibited from referring customers to representatives for the purchase of investment products.

Remuneration for sale of investment products

• This will examine how remuneration structures can be less driven by sales volume and better aligned with customer interests. This could include factors such as quality of advice and complaints received.

Enhanced competency requirements for representatives

• The aim is raise competency levels by introducing a complex-product knowledge module.

Appointment of approved trustee

• Issuers of structured notes must appoint a trustee to safeguard investor interests.

LORNA TAN

This article was first published in The Straits Times.