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BACKGROUND
On 30 May 2024, Monetary Authority of Singapore (“MAS”) issued a revised Guidelines on Fair Dealing Outcomes (“Guidelines”) which affects all Financial institutions (“FIs”). In today’s dynamic and competitive financial landscape, the concept of fair dealing has emerged as a cornerstone of trust and integrity within the industry. FIs play a pivotal role in ensuring that customers have confidence in the services they provide. The recently revised Guidelines provides FIs with a comprehensive framework to uphold the principles of fairness, transparency, and customer-centricity in all aspects of their operations. The Guidelines are to be applied across all financial products and services, and to all customers.
The Guidelines set out five fair dealing outcomes for financial institutions. These are:
Outcome 1 – Customers have confidence that they deal with financial institutions where fair dealing is central to the corporate culture
FIs build trust by prioritizing fair dealing throughout their culture. The way FIs manufacture, select, market and distribute financial products and services will affect customers’ financial decisions. Leadership should set the tone by promoting fair dealing in corporate culture. This commitment fosters trust and loyal relationships.
Outcome 2 – Financial Institutions offer products and services that are suitable for their target customer segments
Making financial decisions can be a complex and difficult process for some customers. FIs should aim to offer products that focus on the needs and interests of their target customer segments, and to pay special attention to those who have been identified as being more vulnerable. The Board and Senior Management should ensure that policies and practices align with fair dealing. This includes strong due diligence, clear partnership standards, and conflict-of-interest management, ultimately leading to customers receiving appropriate products that enhance trust and satisfaction.
Outcome 3 – Customers are served by competent representatives.
The Board and Senior Management are to implement effective controls on supervision and performance reviews that incentivise fair dealing practices. Additionally, they should implement measures to ensure representatives are competent and properly trained, appropriate advice and recommendations are provided, performance evaluation and remuneration frameworks are aligned with customer’s interest.
Outcome 4 – Customers receive clear, relevant, and timely information that accurately represent the products and services offered and delivered.
FIs are to provide customers with accurate, timely, and easy-to-understand information about products and services.
FIs should provide customers with clear and relevant information that can be readily accessed and understood, to assist them in making informed decisions and having realistic expectations. FIs should regularly review the communication processes to ensure transparency and easily understandable information for customers, and that information presented in documents are consistent. This can be achieved through after-sales update and/or material developments, whether written or verbal.
Outcome 5: Financial Institutions handle customer complaints in an independent, effective, and prompt manner
The Board and Senior Management are responsible for managing customer complaints in an independent, effective, and prompt manner. They should oversee the complaints handling process, ensuring that representatives handling complaints are properly trained. Fair dealing by a financial institution to its customers should continue even after the sale of the product or provision of service. Complaints should be assessed and independently reviewed. There should also be a process to escalate significant complaints to the Board and Senior Management for resolution.
WHAT’S NEXT?
Management should:
- Put in place governance structures, policies and processes to promote fair dealing.
- Incorporate the good practices mentioned in the Guidelines.
- Understand the supervisory expectations of MAS.
And more…
HOW CAN WE HELP?
Contact Capital Governance today to schedule a consultation and discuss your specific needs. Let us assist you with promoting fair dealing outcomes for your valued customers.