MAS has reprimanded RHB Bank Berhad, Singapore Branch ["RHB"] for contraventions of paragraphs 11 and 15 of the Notice on Recommendations on Investment Products ["FAA-N01"], paragraphs 23 and 27 of the Notice on Minimum Entry and Examination Requirements for Representatives of Licensed Financial Advisers and Exempt Financial Advisers ["FAA-N07"] and section 23B(3)(a) of the FAA.
Paragraphs 11 read with paragraph 7 of FAA-N01 (in effect from 1 October 2002 to 31 December 2011) stated that in order for a financial adviser representative to make a recommendation that takes into account a client’s investment objectives, financial situation and particular needs, the representative shall collect and document the following information from the client:
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- the financial objectives of the client;
- the risk tolerance of the client;
- the employment status of the client;
- the financial situation of the client, including assets, liabilities, cash flow and income;
- the source and amount of the client’s regular income;
- the financial commitments of the client;
- the current investment portfolio of the client, including any life policy;
- whether the amount to be invested is a substantial portion of the client’s assets; and
- for any recommendation made in respect of life policies, the number of dependants of the client and the extent and duration of financial support required for each of the dependants.
Paragraph 15 of FAA-N01 further stipulated that a financial adviser or its representative shall explain to his client the basis for his recommendation.
RHB has contravened paragraphs 11 and 15 of FAA-N01 as it allowed two unauthorised persons to conduct the fact find and to make recommendations to clients from 27 March 2007 to 22 June 2007.
Paragraph 23 of FAA-N07 (in effect from 16 January 2004 to 25 November 2010) stated that an exempt financial adviser shall ensure that its representatives meet the minimum entry requirements stipulated in paragraph 22 of FAA-N07. Paragraph 27 of FAA-N07 further stated that an exempt financial adviser shall, prior to allowing its representatives to commence the provision of financial advisory services on its behalf, ensure that the representatives comply with the CMFAS examination requirements, unless they need not comply with the requirements.
RHB has contravened paragraphs 23 and 27 of FAA-N07 as it failed to ensure that two of its employees met the minimum entry requirements and complied with the CMFAS examination requirements before commencing the provision of financial advisory services from 27 March 2007 to 22 June 2007.
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By GlobalDataSection 23B(3)(a) of the FAA stipulates that a principal shall not permit any individual to provide any type of financial advisory service on its behalf unless the individual is an appointed or provisional representative in respect of that type of financial advisory service.
RHB has contravened section 23B(3)(a) of the FAA as it allowed one employee who was not an appointed representative or provisional representative under the FAA, to provide the financial advisory of advising others, either directly or through publications or writings, and whether in electronic, print or other form, concerning any investment product from 29 November 2010 to 14 February 2011.
