The Monetary Authority of Singapore (MAS) has released the results of its third mystery shopping exercise, which found that, while majority of recommendations made by financial advisers met the mystery shoppers’ protection and investment needs, there are still areas the industry must work on.
According to MAS, the exercise was conducted on 500 financial adviser (FA) representatives from 12 firms from mid-2018 to end-2019. Since the previous exercise held in 2011, suitable product recommendations improved from 70% to 88%.
MAS hailed this improvement as a product of several years of effort and investment by the industry and regulators to improve the competency of the FA sector. One firm even attained a perfect score, with 100% suitable product recommendations.
While most of the findings were satisfactory, MAS also pointed out several shortcomings that the industry must work on to further strengthen the industry. It found that sales closed at roadshows were more likely to have unsuitable recommendations or inappropriate influence, compared to those that came through customer referrals.
Majority of FA representatives also failed to properly identify if the mystery shoppers were vulnerable customers, such as those who were 62 years old or above, had low English proficiency, or had low educational attainment.
While this has no effect on the suitability of products recommended, MAS strongly believes that FA representatives must be able to identify vulnerable customers to provide additional safeguards.
In light of these findings, MAS has ordered the 12 FA companies to address the identified deficiencies. It will also review its regulations governing conduct at roadshows, as well as look at how to enhance safeguards for vulnerable customers.