M5 Cmfas Flash Card

Front 1

Which 3 Acts was consolidated to the Financial Advisers Act (FAA)?

Back 1

"Securities Industry Act, Futures Trading Act and Insurance Intermediaries Act."

Front 2

What does FAA govern?

Back 2

FAA governs financial advisory activities related to the distribution and marketing of investment products namely life insurance policies and collective investment schemes including unit trusts. Also governs business conduct of persons providing advisory services.

Front 3

What is the Financial Advisers Regulation (FAR)?

Back 3

It’s a subsidiary legislation setting out rules on the application of FAA.

Front 4

What are the principles of FAA and FAR?

Back 4

(a) Consumers' interest (b) Consistency (c) Accountability (d) Independence

Front 5

How is Consumers' Interest exercised?

Back 5

"Financial advice must be conducted in a fair, professional and ethical manner. Recommendations must have a reasonable basis: (a) Know Your Client (b) Needs Analysis (c) Proper Documentation & Record Keeping of recommendations."

Front 6

How is Consistency exercised?

Back 6

Same rules and standards for (1) same products across different distribution channels (2) similar products

Front 7

How is Accountability exercised?

Back 7

"Representatives can have only one principal. The principal is responsible for developing, supervising and monitoring the conduct of representatives."

Front 8

How is Independence exercised?

Back 8

Put customers' interest first by giving good objective advice.

Front 9

Who can provide financial advisory services under the FAA?

Back 9

"Financial Adviser, exempt Financial Adviser and excluded financial adviser"

Front 10

Who are considered exempt Financial Advisers?

Back 10

"(a) bank licensed under Banking Act (b) merchant bank (c) company or society licensed under Insurance Act (d) holder of capital markets services license under Securities and Futures Act (e) Finance company granted exemption under Finance Companies Act (f) securities, futures exchange, market operator or approved holding company (g) others prescribed by MAS"

Front 11

Who are considered excluded Financial Advisers?

Back 11

"(a) lawyers/law firms registered under Legal Profession Act (b) public accountants registered under the Accountants Act (c) Trust companies (d) Newspapers (e) Information Service e.g. Bloomberg (f) Credit Rating Agencies (g) public statutory corporation (h) approved trustees (i) official assignee (j) Public Trustee (k) liquidator, receiver (l) MAS-approved foreign company providing financial advisory effected via related licensed FA or exempt-FA"

Front 12

What are the types of Financial Advisory Services regulated under the FAA?

Back 12

"(a) advising others directly or through publications (b) advising others by issuing research, analyses or research reports (c) Marketing of any collective investment schemes (d) Arranging of any life insurance contract"

Front 13

What are the products regulated under FAA?

Back 13

(a) any capital market product (section 2(1) of Securities and Futures Act) (b) any life policy (First Schedule to Insurance Act) (3) any other products prescribed by MAS

Front 14

What are Excluded products?

Back 14

(a) general insurance policy (b) Deposit-taking products (c) Loans & mortgages

Front 15

What are the factors taken into consideration when granting a FA license?

Back 15

"(a) track record, management expertise & financial soundness (b) able to meet minimum financial and professional indemnity insurance requirements (c) strength of internal compliance systems (d) business plans and projections (e) fitness and propriety: company, CEO, directors, substantial shareholders"

Front 16

What is the renewal process of FA license?

Back 16

"From 26 November 2010, all existing FA license continue to be valid subject to payment of annual license fee, unless (1) license holder ceases regulated activities (2) winding-up (3) revoked or suspended by MAS"

Front 17

What are the grounds for refusing grant of FA license without opportunity to be Heard?

Back 17

(a) applicant is being wound-up (b) in receivership (c) a prohibition order under Section 59 of FAA is in force (d) applicant is convicted of fraud or dishonesty

Front 18

What are the mimimum Financial Requirements to be granted a license?

Back 18

"Regulation 15 of the FAR. (a) Advising/Issuing Reports on forex, futures and other derivatives: paid-up capital not less than S$300,000 or foreign companies net head office funds not less than S$300,000 (b) the rest, paid-up capital or net head office funds not less than S$150,000. May not reduce paid-up capital. Contravene fine: S$25,000."

Front 19

What are the Continuing Financial Requirements for a local licensed FA?

Back 19

Regulation 16 of the FAR. Maintain net asset value of (a) not less than 3/4 of minimum paid-up capital (does not have full preceding financial year) or (b) the higher of 1/4 of annual expenditure or 3/4 minimum paid-up capital (has a full preceding financial year)

Front 20

What are the Continuing Financial Requirements for a foreign licensed FA?

Back 20

Maintain net head office funds of not less than (a) the minimum net head office funds (does not have full preceding financial year) or (b) the higher of 1/4 of annual expenditure or minimum of net head office funds (has a full preceding financial year)

Front 21

What is excluded from the total expediture of the licensed FA?

Back 21

(a) staff bonus (b) employees & Directors' share in profits (c) commission received by financial adviser paid to representatives

Front 22

Who are other exempt persons who provide financial advisory services in Singapore?

Back 22

(a) exempt fund managers serving up to 30 accredited investors (b) exempt corporate financial advises and exempt leverage FX traders for accredited investors (c) exempt financial advisers serving up to 30 accredited investors

Front 23

What prerequisites are to be met by exempt persons?

Back 23

"(a) fit and proper (b) maintain suitably sized operations in Singapore, adequate resources including compliance arrangements (c) financial viability: maintain paid-up capital, cover six months operational costs, positive shareholder equity"

Front 24

What is the definition of an Accredited Investor?

Back 24

"(a) individual whose net personal asset exceed S$2m or income not less than S$300,000 (b) corporation with net asset exceeding S$10m (c) trustee of a trust exceed S$10m (d) other non-corporation entity with net assets exceed S$10m (e) partnership other than LLP in which each partner is an accredited investor (f) a corporation whose sole business is to hold investments, whose share capital is owned by individuals qualified as accredited investors"

Front 25

What conditions must be fulfilled for FAs to use the term independent?

Back 25

They must (a) not receive or payout any commission or benefit that creates a product bias (b) operate free from any direct or indirect restriction of recommendations (c) operate without any conflict of interest due to association with any product provider

Front 26

What changes did the Represenatative Notification Framework (RNF) make?

Back 26

(a) Onus of fit-and-proper certification of Representatives now lies on financial advisers (b) notice of intent to be lodged with MAS

Front 27

What information is disclosed by MAS of representatives in the public register of representatives?

Back 27

"(a) name, (b) name of current and past principal (c) current and past financial advisory services (d) disciplinary proceedings and actions taken by MAS (e) other information as required by MAS"

Front 28

What types of Representatives are there?

Back 28

"Appointed Representatives (met requirements and passed exams) and Provisional Representatives (met entry requirements, not passed exams)."

Front 29

In what situation(s) can a representative represent more than one principal?

Back 29

"An appointed representative may represent more than one principal if the principals are related corporations, or approved by MAS in writing."

Front 30

What are the Requirements to apply to be a Representative?

Back 30

(a) at least 21 years old (b) min academic qualificationsand exam requirements (c) fit and proper (d) any other criteria stipulated by MAS

Front 31

What is the consequence for the Respresentative of acting as a representative without proper licensing?

Back 31

"Fine not exceeding S$25,000 or imprisonment for a term not exceeding 12 months or both. Plus S$2,500 per day continued offence."

Front 32

What is the consequence for the Financial Adviser of permitting representative without proper licensing providing financial advisory services?

Back 32

"Fine not exceeding S$50,000 plus S$5,000 per day continued offence."

Front 33

What are the Requirements to be an Appointed Representative?

Back 33

"(a) satisfy entry and exam requirements, (b) name entered in public register (c) not suspended, revoked or prohibited by MAS, (d) entry in public register does not indicate he ceased to be so (e) principal is licensed to provide the financial advisory services stated"

Front 34

Under what situations would an appointed representative be considered not as one?

Back 34

"(a) under suspension (b) ceased to act as a representative, and has not resumed acting as a represenative for a continuous period of one month"

Front 35

What are the Requirements to be a Provisional Representative?

Back 35

"(a) satisfy entry requirements, (b) name entered in public register (c) not suspended, revoked or prohibited by MAS, (d) entry in public register does not indicate he ceased to be so (e) principal is licensed to provide the financial advisory services stated (f) not been previously appointed as provisional representative (g) who is not disqualified from acting as a provisional representative (h) must be currently or previously licensed in their own country for more than 12 months, and have not ceased more than 12 moths before current application (i) MAS is satisfied with the law and practices of that jurisdiction"

Front 36

How soon must a Provisional Representative fulfill exam requirements?

Back 36

3 months

Front 37

What is allowed of the Provisional Representative?

Back 37

A Provisional Rep is allowed to provide financial advisory services

Front 38

What are the representative notificaion documents to be lodged with MAS ?

Back 38

"Forms 3A and 3B: notice of intent, certicate of fit-and-proper, undertaking for provisional representative"

Front 39

How long must such documents be kept?

Back 39

5 years

Front 40

How soon must changes of particulars of the representatives be furnished to MAS?

Back 40

14 days with Form 18

Front 41

What responsibilities must principals undertake for Provisonal Representatives?

Back 41

"(a) supervision measures for conduct and activities (b) proper training (c) accompanied by aappointed rep, director or officer (d) cc to authorised person any email (e) does not communicate by phone with any client or member of the public unless by teleconference in presence of authorised persons"

Front 42

Under what situations can MAS refuse entry of register or revoke/suspend representatives?

Back 42

"(a) ceases to act (b) insufficient info as needed by MAS (c) undischarged bankrupt (d) judgement of debt execution returned unsatisfied (e) entered into a compromise or scheme with creditors (f) convicted of fraud, dishonesty or any offence under FAA"

Front 43

Under what situations can MAS refuse entry of additional type of financial advisory service?

Back 43

"(a) MAS is not satisfied with his education, qualification, experience of the additional service (b) fail fit and proper (c) past record (d) MAS has reason to believe he will not perform with efficiency, honesty and fairness"

Front 44

Where a false statement is made what is the penalty?

Back 44

"Fine not exceeding $50,000"

Front 45

How can licensing and suspension/revoking appeals be made?

Back 45

"Within 30 days of notification by MAS, he can appeal to the Minister. "