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Financial advisory
RES5Financial Advisory Services✓M5 — RES5 — Rules, Ethics & Skills for Financial Advisory Services
The Financial Advisers Act 2001 (FAA) is the primary law governing the provision of financial advisory services in Singapore. It came into operation on 1 October 2002, consolidating three earlier regimes — the Securities Industry Act, Futures Trading Act and Insurance Intermediaries Act — into one integrated framework. The Financial Advisers Regulations (FAR) took effect the same day as subsidiary legislation the MAS prescribes to give effect to the FAA — setting out application rules, exemptions, and conditions. Together they regulate advising on investment products (life policies, ILPs, unit trusts, etc.), issuing research analyses/reports, and arranging life policies, and they govern the business conduct of persons providing these services. General insurance, deposit-taking products, and loans/mortgages fall outside the FAA.
11 sections~5 min read
The Financial Advisers Act 2001 (FAA) came into operation on 1 October 2002 to regulate the sale of investment products in Singapore. It consolidated three earlier regimes — the Securities Industry Act, Futures Trading Act and Insurance Intermediaries Act — into a single, integrated framework so that intermediaries doing similar activities across investment products face a consistent set of rules.
The Financial Advisers Regulations (FAR) took effect the same day (1 Oct 2002) as subsidiary legislation prescribed by the MAS to give effect to the FAA. The FAR sets out the detailed application rules — exemptions from licensing/approval/registration, how FAA provisions apply, and the revocation or variation of conditions. Both the FAA and FAR are amended frequently; always check the MAS website for the current text.
The FAA covers products of an investment nature. Under s.2(1) an 'investment product' means capital markets products, spot FX (other than for leveraged FX trading), a life policy, or other prescribed products. Structured deposits were classified as investment products from 2 December 2005. Excluded from the definition are general insurance policies, deposit-taking products, and loans/mortgages (no investment element).
The FAA/FAR framework rests on four principles:
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The Financial Advisers Act 2001 (FAA) is the main law governing the provision of financial advisory services in Singapore, administered by the Monetary Authority of Singapore (MAS). It sets out who may advise on investment products, the framework for licensing financial advisers and appointing their representatives, and the conduct standards they must meet. The operational detail sits in subsidiary legislation — the Financial Advisers Regulations — and in the MAS Notices and Guidelines issued under the Act. Confirm the current text on the MAS website.
The FAA regulates the carrying on of a financial advisory service — broadly, advising others on investment products such as life policies, collective investment schemes and other securities; issuing analyses or reports on investment products; and marketing certain collective investment schemes. It governs both the financial adviser (the licensed or exempt firm) and the individual representatives who act for it. Some activities fall under other regimes — for example advising on corporate finance, or work outside investment products such as property agency or tax. Check how the FAA applies to your specific activity with MAS or your firm's compliance team.
A financial adviser is the entity — a licensed financial adviser firm, or an exempt financial adviser such as a bank or insurer — that is authorised to provide financial advisory services. A financial adviser representative (or 'representative') is the individual who carries out those services on behalf of that firm. The firm holds the licence or exemption; the individual is appointed by the firm and their appointment is notified to MAS so they appear in MAS's public Register of Representatives. In short: the company is licensed, the person is appointed as its representative.
The Financial Advisers Regulations are subsidiary legislation made under the FAA that fill in the operational detail the Act leaves open — for example licensing application requirements, exemptions and various conduct-of-business conditions. Alongside the Regulations, MAS issues Notices (which impose legally binding obligations) and Guidelines (which set out expected standards) under the Act. Together the Act, the Regulations, the Notices and the Guidelines make up the FAA framework tested in CMFAS RES5. These are updated over time, so verify against the current instruments on the MAS website.
Core duties for advising on investment products include: knowing your client and having a reasonable basis for any recommendation, made with regard to the client's investment objectives, financial situation and particular needs (sections 34 to 36 of the FAA and MAS Notice FAA-N16); disclosing material information about the product, along with relevant fees, charges and conflicts of interest; not making false or misleading statements; and dealing fairly with customers, which MAS elaborates in its Guidelines on Fair Dealing (FSG-G04). These are summarised for study — confirm the precise, current requirements in the relevant MAS Notices and Guidelines.
Not personally — the licence sits with the firm. To advise clients you must be appointed as a representative by a licensed or exempt financial adviser, and that appointment must be notified to MAS under the Representative Notification Framework so you are entered in the public Register of Representatives. Passing the required CMFAS exams (such as RES5 and the relevant product modules) is a prerequisite for appointment, but a pass on its own does not authorise you to advise anyone until you are appointed and notified. Confirm the current requirements with MAS and your firm.