CMFAS RES5 FAA & FA Regulations question: cannot re-enter the financial advisory industry

CMFAS RES5FAA & FA Regulations

A former representative has been convicted of cheating. MAS wants to ensure he cannot re-enter the financial advisory industry in any capacity — including as a director or substantial shareholder of any FA. The most appropriate tool is:

A A reprimand published on the MAS website to warn the public and the rest of the financial industry
B An offer to compound his offence, with a composition sum to be paid to MAS within 14 days of the offer
C A prohibition order barring him from FA work and from directing, managing or substantially owning an FA
D A civil penalty order requiring him to pay the affected client three times the loss that he caused

Show the answer and explanation

Answer: C. A prohibition order barring him from FA work and from directing, managing or substantially owning an FA

A prohibition order is the tool for keeping an unfit person out of the industry: it can bar him, permanently or for a period, from regulated activities, from taking part in the management of or being a director of a financial institution, and from becoming a substantial shareholder. Since 31 Jul 2024 MAS makes prohibition orders under s7 of the Financial Services and Markets Act 2022 (FAA s68, the old power, was repealed by Act 18 of 2022 on that date). A reprimand (FAA s125) only censures, compounding (FAA s117) only disposes of an offence, and a civil penalty is a market-misconduct remedy, not a bar on re-entry.

Common mistake

A reprimand, a composition or a civil penalty will not shut a person out of the industry — only a prohibition order reaches management/shareholding roles.

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Original study material mapped to the public CMFAS RES5 syllabus. Unofficial, not endorsed by MAS or SCI. Verify figures and rules against current guidance before relying on them.