Expanded Scope of Fair Dealing Guidelines by the Monetary Authority of Singapore (MAS)

On May 30, 2024, the Monetary Authority of Singapore (“MAS”) issued updated Guidelines on Fair Dealing to enhance customer protection and service standards across all financial institutions (“FIs”). The significant change in these guidelines is the expansion of their scope to include all FIs and all products and services offered to their customers.

These guidelines likely came out as a response to poor practices and policies, as well as complaints of misconduct. Such complaints can arise due to “conflicts of interest,” where representatives of FIs make a commission from selling a product to their clients, and consequently resort to undesirable marketing tactics to pressure customers into purchasing financial products without regard to factors such as the suitability of such products for customers, or whether customers understand these products.

The updated guidelines aim to raise standards of fair dealing and ensure fair treatment for all customers throughout their interactions with financial services providers. FIs will be required to ensure that their business functions are cognisant of the influence on customers’ financial decisions, with special attention to customers who have been identified as being more vulnerable.

The revised guidelines emphasise several key principles, as detailed in this MAS infographic:

Infographic – Fair Dealing Guidelines (accessed from MAS Website)

FIs such as financial advisers, banks, trust businesses, capital markets service providers, payment service providers, and insurance companies will be subject to the new guidelines. This update also extends to FIs in the cryptocurrency and digital assets space, requiring them to adhere to the same standards of fair dealing as traditional financial entities, ensuring consumer protection in this evolving market.

Additionally, these guidelines will apply to various stages of a product’s life cycle, or services rendered. As part of the Financial Advisers Act introduced in 2009, these guidelines originally focused on the selection, marketing, and distribution of investment products and the provision of advice and post-sales services. The updated version expands to include dealings beyond these areas. Every aspect of business including product design and governance, marketing and sales, and the provision of after-sales services and complaints handling will be subject to the guidelines.

These guidelines are aimed at the Board and Senior Management of FIs to set a corporate culture that prioritises fair dealing and a customer-centric approach.

They cover five key outcomes:

1. Customers have confidence in fair dealing as central to the corporate culture. This outcome emphasises the importance of the Board and Senior Management in setting the tone and ensuring that all business functions are aligned with fair dealing principles. Customers must be able to trust the institution’s commitment to fair practices, and FIs should continually monitor the effectiveness of their strategy and policies in achieving fair dealing outcomes.
2. Financial institutions offer suitable products and services for target customer segments. This outcome requires FIs to design and market products that are appropriate for their target customers, especially considering the needs and interests of vulnerable customers. Due diligence is crucial to assess product suitability, and marketing should be tailored to the financial literacy of the customer.
3. Customers are served by competent representatives. This outcome mandates that representatives be well-trained to provide suitable advice and recommendations, with a robust supervisory framework for overseeing representatives of FIs. Remuneration structures within FIs should not incentivise conflicts of interest for representatives (e.g. through a commission-based model), instead ensuring that representatives act in the best interests of customers.
4. Customers receive clear, relevant, and timely information. This outcome focuses on the clarity and accessibility of information provided to customers, especially for those with limited knowledge of financial products. Any disclosures and relevant information relating to the product/service must be in plain language, with key features and risks highlighted accurately to represent what customers can expect to receive. Customers should also receive ongoing updates after the sale, and any revisions to terms and conditions should be communicated effectively and with sufficient notice.
5. Financial institutions handle customer complaints independently, effectively, and promptly. This outcome stresses the importance of FIs having a robust and easily accessible system for documenting and monitoring complaints. FIs should aim to review and resolve complaints in a timely manner and provide a clear basis for any decisions made following the complaint. Systemic issues should also be tackled through trend analysis of recurrent complaints

Each FI should consider how best to achieve these outcomes in a proportionate manner, having considered its own business model, the nature of products and services offered, and potential harm to customers. The FI should also consider the needs and interests of customers, especially for those who are more vulnerable.

In our view, the guidelines for fair dealing in FIs indicate that there is a shift towards prioritising customer trust and satisfaction. Each outcome is designed to ensure that customers are treated fairly and can make informed financial decisions. The guidelines also set out the requirements for complaints handling, as outlined in Outcome 5. To this end, FIs will be expected to structure and update their internal processes as per the guidelines.

For a copy of the full set of guidelines, you may access the MAS Website [fair-dealing-guidelines-30-may-2024.pdf (mas.gov.sg)].

If you have further enquiries, please feel free to contact Krithika Gunasingham (krithika@globalaw.com.sg) or Sivarajan C Sivalingam (siva@globalaw.com.sg), or contact us at:

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The content of this Memorandum is not intended to be exhaustive, and does not constitute a complete analysis of the laws relating to this complex area. Its content, therefore, should not be construed to constitute legal advice. Please contact us if you require any further assistance.