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Students from the National University of Singapore Pro Bono Group prepared this guide. The guide is for public education and is not legal advice.

What is misrepresentation?

Misrepresentation is ​​a false statement of fact that causes you to enter a contract. If there was a misrepresentation made to you, the contract can be void. This means that both parties will no longer have to act according to the contract. You can also claim for the loss that you suffered from entering the contract.

Additionally, section 35(1) of the Financial Advisers Act states that a licensed financial adviser must not make a false or misleading statement:
  • As to any amount that would be payable in respect of a proposed contract for any investment product,
  • As to the effect of any provision of a contract for any investment product, or
  • In connection with providing any financial advisory service.

How do I know whether a statement is a misrepresentation?

For something to qualify as a misrepresentation, you must meet four requirements.
 
  1. A statement of fact

The representation must relate to a fact. It cannot relate to an opinion unless it was made with someone with special knowledge and skill like a licensed financial adviser. For example, forecasts of profits are generally considered opinions. But a licensed financial adviser making a forecast of profits must take care that the forecast is not false or misleading.

The representation also cannot relate to an intention. For example, a company can represent that they intend to give out a 5% dividend at the end of the financial year. This would be a representation of intention. Even if they fail to do so, this will generally not be considered as misrepresentation.

Misrepresentation may be implied by conduct. Silence can amount to misrepresentation if the person making the representation is under a duty to correct an earlier representation that has since become false. For example, when an agent fails to inform you of changes to the terms of an insurance policy prior to you purchasing the policy, he would have made a misrepresentation as to the terms of the policy.
 
  1. False

The representation must be false. A representation that was true at the time it was made, but became false after you entered the contract will not be a misrepresentation. For example, your financial advisor might tell you that the markets are on the upturn. However, you later find out that the market conditions did not improve. This would not amount to misrepresentation if the market was indeed on the upturn at the time when your financial advisor talked to you.
 
  1. Addressed to you

The representation in question must be addressed to you. It cannot have been meant for someone else. For example, you chanced upon an internal circular of your financial advisor’s company. It suggested that it was a good time to invest, and you entered an investment contract based on that information. This would not amount to misrepresentation as the information was not addressed to you.
 
  1. Inducement

Lastly, the representation must have been an important factor in your decision to enter the contract. A good question to ask is: would you have entered the contract even if the representation had not been made? For example, the FI might advertise to you that there will be certain gifts upon buying certain investment products, but the gifts had run out and another gift was substituted. However, if you would have bought the investment products without the gifts, then there is no misrepresentation about the gifts.

In a local case, an insurance agent misrepresented about the terms of an investment linked policy by telling the client that she could stop paying more premiums and withdraw what she had already paid part of the way through the policy term. He also told her that the policy provider would match her first annual premium with an equivalent top-up to the policy amount, when the actual agreement was for the provider to match only half of it. When this was discovered in investigations, the policies were cancelled and the agent was given a prohibition order for 2 years for making false and misleading statements to the client under the Financial Advisors Act.[1]

What do I do if I believe a misrepresentation has been made to me?

Step 1: Speak to the person or institution who made the representation

The first step is to reach out to the person or institution who made the representation to resolve the problem. You should also find out if the misrepresentation was made by a licensed financial advisor or Financial Institution (“FI”). The Monetary Authority of Singapore (“MAS”) expects all FIs to handle all consumer complaints effectively and promptly. You can find your FI's contact details using the Financial Institutions Directory.

Before you contact the FI, you should be clear on your concerns and how you would like the FI to address these concerns. Get your customer reference number, account or policy number, and other supporting documents.

You should actively follow-up with your FI if you do not get a response from them within 2-3 weeks.

Step 2: Approach FIDReC for help

If you cannot resolve the matter with your FI after 4 weeks, you may approach the Financial Industry Disputes Resolution Centre (“FIDReC”) for mediation.

FIDReC is an independent dispute resolution institution handling disputes between consumers and licensed FIs. FIDReC provides a low-cost and effective avenue to resolve problems that cannot be settled directly with your FI.

FIDReC adopts a 2-step process.
 
  1. A case manager will mediate the dispute between you and your FI. If the dispute is not settled by mediation, you can choose to bring your case to the second stage of adjudication.
     
  2. An adjudicator will decide on your dispute based on the facts and merits of the case. If you choose to proceed to adjudication, there is a nominal fee of S$50 (plus GST).

Please note these limitations before approaching FIDReC:
 
  • FIDReC is only able to assist individuals or sole-proprietors.
  • Claims that exceed S$100,000 cannot be referred to adjudication unless the consumer limits their claim or the FI agrees to the higher limit.
  • You must approach FIDReC within 6 months of receiving the final reply from the FI to ensure that FIDReC is able to assist you.
  • Your claim must not fall under the types of claims that FIDReC cannot handle under its Terms of Reference. For example, claims already decided in court or settled privately.


You can find out more about FIDReC's Dispute Resolution Process or file a complaint using the Online Dispute Resolution Form. For more information, please visit FIDReC’s Frequently Asked Questions page or submit an enquiry.

You would need to complete and submit a dispute resolution form to FIDReC for them to assess the dispute. You should also submit details of your communications with the FI, and all other relevant supporting documents.

Do note that the FIDReC adjudication outcome only binds the FI and not the consumer. This means that if you are not satisfied with the outcome, you can continue to pursue other avenues of recourse. This includes taking legal action.

Or you can approach the Consumers Association of Singapore (“CASE”), the Singapore Mediation Centre (“SMC”), or the Small Claims Tribunal (“SCT”). These organisations handle disputes across all types of products and services.

Step 3: Taking legal action against the FI

Resolving disputes through legal action is usually a last resort. Legal action is usually time-consuming and expensive. You should get advice from a lawyer before taking legal action. If you wish to engage the services of a lawyer, you can access the Legal Services Regulatory Authority for a list of practising lawyers by clicking here.

Or you may approach the Legal Aid Bureau for legal aid and advice. Do note that you would need to meet specific prerequisites to do so. Find out more here.

Step 4: Reporting your FI to the MAS

The MAS is a financial services regulatory authority, and handles regulatory breaches or misconduct by an FI.

Generally, the MAS is unable to resolve commercial disputes involving a FI’s pricing policies, private contractual arrangements between you and your FI, or order compensation from your FI on your behalf. However, you may report to the MAS should you come across inappropriate, misleading advice or misrepresentation of financial products and/or services.

To file a report with MAS, click here. For more general guides or information on resolving financial disputes, click here.


Sources

 
[1] https://www.mas.gov.sg/regulation/enforcement/enforcement-actions/2021/mas-bans-lim-chew-keat-for-making-false-and-misleading-statements.
Keywords: Misrepresentation