Regulations on complaints handling and resolution for financial advisory firms to take effect on 3 January 2022, MAS issues response to feedback from consultation on policy proposal

30 March 2021

On 11 March 2021, the Monetary Authority of Singapore (“MAS”) announced that the Financial Advisers (Complaints Handling and Resolution) Regulations 2013 (“FA(CHR) Regs”), which establishes requirements on complaints handling and resolution (“CHR”) for financial advisory (“FA”) firms, will take effect on 3 January 2022. MAS also issued its response to feedback received from its consultation papers on the implementation of the policy (“Response”).

Background

On 30 September 2013, MAS issued a consultation paper to seek feedback on the draft FA(CHR) Regs. The FA(CHR) Regs seek to effect the policy proposals on CHR which include the requirements for an FA firm to:

  • establish a process for handling and resolving complaints from retail clients which is independent and prompt; 
  • designate a senior management member or committee comprising senior management member(s) within the firm to be responsible for the oversight of its compliance with the FA(CHR) Regs; 
  • ensure that information on its CHR process is publicly available; 
  • put in place a centralised management system for complaints; and 
  • report its complaints data to MAS on a biannual basis. 

In a second consultation paper released on 26 August 2019, MAS sought feedback on the revised format for the biannual report and the proposed implementation timeline for the FA(CHR) Regs.

Response

In its Response, MAS stated that it has revised the FA(CHR) Regs where appropriate after considering the feedback received.

As the FA(CHR) Regs will only apply to complaints received by FA firms from retail clients, MAS will also amend the Securities and Futures (Classes of Investors) Regulations 2018 (“SF(COI) Regs”) to require FA firms to inform clients that if they opt to be treated as accredited investors, the safeguards under the FA(CHR) Regs will not apply to them.

The draft FA(CHR) Regs and amendments to the SF(COI) Regs are set out in the annexes to the Response. Barring any unforeseen circumstances and editorial changes, the two regulations are scheduled to be published in the Government Gazette in November 2021. MAS states that FA firms are therefore expected to start putting in place the necessary arrangements to comply with the regulations before they take effect on 3 January 2022.

MAS states that in the unlikely event that there are any major changes to the regulations, it will inform FA firms in advance, and postpone the effective date of commencement of the two regulations.

Some of the key areas covered in the Response include the following:

  • Definition of “complaint”: The scope of complaints covered under the FA(CHR) Regs will be confined to complaints relating to FA firms’ conduct of FA services. The definition of “complaint” has been amended to include only complaints made by a named client or named prospective client of an FA firm, containing an allegation of any conduct which may constitute a contravention of a business conduct requirement or an unfair practice under the FAA. 
  • Definition of “senior management”: The term “senior management” has been expanded to include (i) the CEO, (ii) the Chief Operating Officer,
    (iii) any officer who is employed in an executive capacity and responsible for the FA’s compliance functions, (iv) any director who is employed in an executive capacity, and (v) any other person who carries out the duties of any office mentioned in (i), (ii), (iii) or (iv). 
  • Complaints resolved within one business day: MAS will not be proceeding with its proposal to exclude complaints that are resolved within one business day from the set of data to be reported to MAS. Complaints resolved within one business day should therefore be included in the set of data to be reported to MAS.
  • Timeline for handling complaints: MAS has revised the timeline for providing a final response in the FA(CHR) Regs to align it with the existing timeline for complaints to be lodged with FIDReC. An FA firm will be required to provide a final response within 20 business days (i.e. generally four weeks in line with FIDReC’s Terms of Reference) after the date on which the complaint is received. 
  • Board and senior management responsibility: MAS has amended the requirement to allow an FA firm’s board and senior management to delegate the authorisation of biannual report submission to a single member of the FA firm’s senior management. However, the FA firm’s board and senior management will retain overall responsibility for the submission of this report.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg, via the webpages on the consultation paper on Draft Financial Advisers (Complaints Handling and Resolution) Regulations and the consultation paper on Revised Biannual Report and Implementation Timeline for Complaints Handling and Resolution Regulations: