Students from the National University of Singapore Pro Bono Group prepared this guide. The guide is for public education and is not legal advice.
The FAA imposes several obligations upon financial advisers. Failure to perform these obligations will result in fines, or civil liability for the advisor. Some of the main obligations include the following:
Do note that a financial adviser may be liable for the actions or breaches of its representatives, so even if the representative that you have dealt with has gone rogue or cannot be contacted, you may still pursue recourse against the financial institution (“FI”).
Step 1: Speak to your FI first
Contact your FI so they have a chance to investigate and resolve your claim. 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 help with these concerns. Get your customer reference number, account or policy number, and other supporting documents ready.
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 FIDReC for mediation. There is no cost to consumers to do so.
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.
Please note these limitations before approaching FIDReC:
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
If your financial adviser has breached any of the above obligations, you may be entitled to recover compensation from the Financial Adviser under section 36 of the FAA by starting legal action. This could result in an order for the financial adviser to compensate you for the loss you have suffered as a result of his / her breach, or other civil sanctions.
The amount of compensation depends on many factors. They include whether you have tried to minimise your losses, or whether you have tried to resolve the issue with the financial adviser before starting proceedings.
If your financial adviser breaches their obligations repeatedly, the Court can make other orders. This includes orders to restrain them from acting as a financial adviser or orders to compel them to do things they have failed to do.
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 here.
Or you may approach the Legal Aid Bureau for legal aid and advice. Do note that you would need to meet the specific prerequisites in order to do so. Find out more here.
Step 4: Reporting to MAS
The MAS is a financial services regulatory authority, and handles regulatory breaches or misconduct by an FI.
You should report to the MAS if you encounter:
Generally, the MAS is unable to resolve disputes involving:
To file a report with MAS, click here.
What is the FAA?
The Financial Advisers Act (“FAA”) governs the conduct of financial advisers. This includes licensing requirements, relevant offences, and sanctions. All financial advisers are required to have a financial adviser’s licence. Licensed financial advisers may recommend investment products such as life insurance policies, etc.What must Financial Advisers do under the FAA?
The FAA imposes several obligations upon financial advisers. Failure to perform these obligations will result in fines, or civil liability for the advisor. Some of the main obligations include the following:
- Obligation to disclose product information (FAA s 34(1))
Financial advisers must disclose all material information relating to the investment product when making a recommendation. This includes:
- The terms and conditions of the investment product;
- The risks and benefits of the investment product; and
- Any premium, costs, expenses, or fees charged in respect of the investment product.
- Obligation not to make false or misleading statements (FAA ss 35(1) & 35(2))
Financial advisers must not make false or misleading statements. They are also not allowed to use any device or scheme to defraud, or engage in any act or business to deceive consumers. If this is done, they will have to compensate the consumer for their loss, as well as potentially face fines and suspension of their licence under the FAA.
- Obligation to have a reasonable basis for recommendations (FAA s 36)
A financial adviser cannot make a recommendation regarding an investment product if the adviser does not have a reasonable basis for making the recommendation.
- A financial adviser does not have a reasonable basis if he did not perform due diligence and consider the investment objectives, financial situation, and particular needs of the person before assessing the investment product to be appropriate (Financial Advisers Regulations (Rev Ed 2004) reg 18B(2)).
- In practice, this means that financial advisers must undergo a comprehensive financial needs analysis of the consumer and use their best efforts to determine what is appropriate given the analysis and the consumer’s needs and situation.
Do note that a financial adviser may be liable for the actions or breaches of its representatives, so even if the representative that you have dealt with has gone rogue or cannot be contacted, you may still pursue recourse against the financial institution (“FI”).
What Can I Do if my Financial Adviser Breached his/her Obligations?
Step 1: Speak to your FI first
Contact your FI so they have a chance to investigate and resolve your claim. 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 help with these concerns. Get your customer reference number, account or policy number, and other supporting documents ready.
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 FIDReC for mediation. There is no cost to consumers to do so.
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.
- 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.
- 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
If your financial adviser has breached any of the above obligations, you may be entitled to recover compensation from the Financial Adviser under section 36 of the FAA by starting legal action. This could result in an order for the financial adviser to compensate you for the loss you have suffered as a result of his / her breach, or other civil sanctions.
The amount of compensation depends on many factors. They include whether you have tried to minimise your losses, or whether you have tried to resolve the issue with the financial adviser before starting proceedings.
If your financial adviser breaches their obligations repeatedly, the Court can make other orders. This includes orders to restrain them from acting as a financial adviser or orders to compel them to do things they have failed to do.
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 here.
Or you may approach the Legal Aid Bureau for legal aid and advice. Do note that you would need to meet the specific prerequisites in order to do so. Find out more here.
Step 4: Reporting to MAS
The MAS is a financial services regulatory authority, and handles regulatory breaches or misconduct by an FI.
You should report to the MAS if you encounter:
- Inappropriate or misleading advice;
- Misrepresentation of (financial) products and/or services;
- Lack of disclosure in the sales and advisory process; or
- Suspicion of fraud, cheating, criminal breach of trust, forgery, or other forms of fraudulent accounting or corruption by your FI.
Generally, the MAS is unable to resolve disputes involving:
- A FI’s pricing policies,
- Private contractual arrangements between you and your FI, and
- Compensation that you want from your FI.
To file a report with MAS, click here.
Sources
- Financial Advisers Act 2001 (2020 Rev. Ed.) ss 34, 35 and 36, Singapore Statutes Online, accessed from https://sso.agc.gov.sg//Act/FAA2001#pr36-.
- Financial Advisers Regulations (Cap 110, Rg 2, 2004 Ed), rgg 14, 18A and 18B, Singapore Statutes Online, accessed from https://sso.agc.gov.sg/SL/FAA2001-RG2?ProvIds=xv-#top.
- MAS, Guidelines on Provision of Financial Advisory Service (July 2019), accessed from https://www.mas.gov.sg/-/media/MAS/Regulations-and-Financial-Stability/Regulations-Guidance-and-Licensing/Financial-Advisers/Guidelines/Guidelines-on-Provision-of-Financial-Advisory-Service-10-July-2019.pdf.
- Tan Kok Quan SC, Some Thoughts on the Recent MAS Notices and Guidelines Issued on the Financial Advisers Act, Singapore Law Gazette (June 2003), accessed from https://v1.lawgazette.com.sg/2003-6/June03-col.htm.
- LOW, Kee Yang, “Product suitability, due diligence and management responsibility: The new regime of regulation 18B of the financial advisers regulations” (2012). Singapore Academy of Law Journal. 24, (1), 298-313.
- Ong Han Ling v AIA [2018] 5 SLR 549 at [187].